retail property market france 2016

Retail Property Market France | 2

THE ECONOMY

The French economy is expected to have ended the year 2015 with

GDP growth of 0.2% in the fourth quarter. Household consumption

declined by 1.1% in November (−0.3 % in the fourth quarter) and

remains fragile. This weakness is due mainly to unseasonably mild

weather, which reduced consumer spending for heating and winter

clothes.

The job market does not bode well for a rapid, strong recovery in

consumer spending. Unemployment reached 10.2% in the third

quarter of 2015, compared with 10% in the third quarter, belying

INSEE’s forecast for stabilization by the end of the year. Above all,

it was the terrorist attacks of November 13 that undermined

consumer spending. The effects of the attacks are indisputable and

significant, as seen in the 4.9% fall in specialized retail in

November¹ and the 2.8% decline in clothing sales in December.²

Department stores in Paris also experienced a sharp slowdown in

sales. Unsurprisingly, the tourism sector has been especially hard

hit. Although 2015 was on its way to being a good year in Paris,

occupancy rates of Paris hotels (all categories) collapsed by 25%

during the end-of-year holidays,³ traditionally a busy period for the

sector.

It remains to be seen whether winter sales will make up for

business lost after the attacks of November 13. Figures from the

first few days indicate that the sales period is off to a good start,

no doubt aided by the substantial discounts offered by retailers.

Consumers are doing their share by going into shops and buying.

The encouraging start to the new year reinforces our optimistic

view for retail in 2016. In addition to GDP growth of 1.2%−1.5%

forecast for 2016 (compared with 1.2% in 2015), low inflation, and a

timid improvement in purchasing power, the latest polls show that

consumer confidence is withstanding the terrorist threat and

sluggish economic recovery. Despite hesitant consumer spending,

the consumer confidence indicator held steady at 96 in December,

down from 97 in September and the long-term average of 100, but

higher than the average (94) for 2015.

¹ Source: Procos. ² Source: IMF. ³ Source: MKG/OTCP.

RETAIL PROPERTY MARKETFRANCE | 2016

ECONOMIC INDICATORS (IN %)

2015E 2016F

GDP growth 1.2 1.5

Consumer prices 0.1 1.1

Unemployment rate¹ 10.2 10.2

Household consumption 1.5 1.4

Source: Oxford Economics / E: estimate / F: forecast / ¹Metropolitan France.

THE LETTINGS MARKET

High streets

Prime retail locations in France continue to be vigorously sought

after by a variety of occupiers. This demand is underpinned by the

expansion of relatively recent retailers (Pandora, Tiger, Hema), the

arrival of newcomers (Nyx) as well as by the repositioning of long-

standing players. The proliferation of single-brand stores reaffirms

the attractiveness of this retail model in numerous sectors (Maille,

Lipault, Le Creuset, Asics). In addition to market momentum,

overall demand is driven by the rapid growth of pop-up stores,

pure-player stores (AM/PM, Spartoo, Sensee, Smallable), and

original concepts for restaurants and food shops (Vapiano,

Chipotle, Kusmi Tea, etc.).

Paris

Although the terrorist attacks have badly hurt tourism in Paris,

supply still drives a retail-property market that is characterized by

robust demand. The scarcity of suitable properties and often high

rental values tend to slow retail development projects in vibrant

sectors such as food and restaurants, where operators are severely

limited by industry constraints. Even large international groups

have limited room for development in certain neighborhoods. In an

effort to maintain profitability at sales points, or to boost growth or

begin development, many retailers choose locations in more

distant parts of key high streets or on nearby side streets. This

spillover effect has been especially visible near rue du Faubourg

Saint-Honoré and rue Saint-Honoré. However, geographical

expansion and the upmarket trend in Paris retail are not limited to

the luxury sector. Some streets in Le Marais (rue des Archives, rue

Sainte-Croix-de-la-Bretonnerie) have seen numerous development

projects and openings. This trend is also visible on the Left Bank,

especially in the form of significant redevelopment projects

(Banimmo / Marché Saint-Germain and Emerige / boulevard

Raspail).

Although large retail spaces remain hard to find, sales and

transactions carried out recently on the investment market provide

exceptional opportunities on the busiest thoroughfares. Although

calm in recent months, the Champs-Élysées is expected to return

to center stage thanks to a few high-profile transactions. In

addition, department stores continue their projects on the

boulevard Haussmann, such as the lease by Galeries Lafayette of

the former La Halle store.

PRIME RENTAL VALUES (€/M²/YEAR ZA)

High Streets Q4 2014 Q4 2015

Paris | Champs-Élysées 18,000 18,000

Paris | Faubourg St-Honoré 11,000 13,000

Paris | Boulevard St-Germain 6,500 6,500

Paris | Boulevard Haussmann 8,000 8,000

Paris | Rue des Francs-Bourgeois 4,500 4,500

Paris | Rue de Rivoli 3,500 3,500

Bordeaux | Rue Ste-Catherine 2,200 2,200

Cannes | La Croisette 8,000 8,000

Lille | Rue de Béthune 2,000 1,800

Lyon | Rue de la République 2,400 2,400

Marseille | Rue St-Ferréol 1,800 1,600

Strasbourg | Grandes Arcades 2,000 1,800

Nice | Avenue Jean Médecin 2,200 2,200

Toulouse | Rue d’Alsace-Lorraine 2,200 2,200

Source: Cushman & Wakefield.

Harmont & Blaine | 35 Boulevard des Capucines, Paris (75002)



Provinces

In recent months, the best-known shopping districts have

dominated markets in large regional cities. More than ever, retailers

favor prime retail locations in terms of profitability, risks related to

openings, and heightened visibility. These locations are targeted by

international retailers recently arrived in France, by retail

newcomers, and by single-brand stores beginning their

development outside Paris. Momentum continues unabated in

cities such as Lyon, Toulouse, and Bordeaux. After a busy 2014, the

past few months have seen significant activity in new leases and

openings, with Michael Kors in Lyon, and Maille and Burger King in

Bordeaux. Bershka, Sabon, and Pandora have been active in

Toulouse, where Nyx opened its first store in France.

Major transactions were carried out in other large cities in 2015.

Several such operations reflect the ongoing demand for large

stores, which remain scarce in city centers because of structural

limitations. However, such operations do little to conceal the

challenges facing high streets in regional cities, such as rue Saint-

Ferréol and rue Paradis in Marseille. In Lille, rue de Béthune has

been penalized by the announced departures of major anchors

from Le 31 shopping center. Instead, other streets such as rue

Faidherbe—more affordable, still central, and offering quality

supply—are enjoying increasing success, as Lille’s retail market

restructures. In general, vacancy rates in midsized cities continue

to rise. However, a few cities such as Annecy, Biarritz, and La

Rochelle continue to see steady demand, thanks to tourists and

local consumers with high purchasing power.

Maille boutique | 40 cours de l’Intendance, Bordeaux (33)

SIGNIFICANT OPENINGS AND DEALS IN 2015

CITY ADDRESS RETAILER AREA M²

PARIS 9th 21-23 boulevard Haussmann GALERIES LAFAYETTE 3,200

PARIS 2nd 5 boulevard Montmartre MAISONS DU MONDE 2,580

PARIS 8th 36 rue Marbeuf VAPIANO 1,260

PARIS 8th 71 avenue des Champs-Élysées DUBAIL 490

PARIS 8th 17 rue François 1er BRUNELLO CUCINELLI 450

PARIS 4th 20 rue Sainte-Croix-de-la-Bretonnerie NATURE & DÉCOUVERTES 450

PARIS 2nd 35 boulevard des Capucines HARMONT & BLAINE 360

PARIS 6th 6 rue de Montfaucon CHIPOTLE 300

PARIS 1st 12 rue Cambon PACO RABANNE 60

MARSEILLE 75 rue Saint-Ferréol H&M 4,400

TOULOUSE 10 rue d’Alsace-Lorraine BERSHKA 680

LILLE 50 rue Faidherbe COSTA COFFEE 240

NICE 2 avenue de Verdun FURLA 210

CANNES 17 boulevard de la Croisette VAN CLEEF & ARPELS 160

LYON 74 rue du Président E. Herriot MICHAEL KORS 120

BORDEAUX 40 cours de l’Intendance MAILLE 120




Rue Saint-Honoré14%

Faubourg Saint-Honoré

13%

Avenue Montaigne9%

Saint-Germain-des-Prés8%

Vendôme/Paix6%

La Croisette6%

George V/François 1er

5%

Le Marais5%

François Sibilli4%

Champs-Elysées3%

Others27%

GEOGRAPHIC DISTRIBUTION OF OPENINGS | FRANCE 2011−2015

FOCUS ON THE LUXURY MARKET

Grand openings in the fourth quarter—Dubail on the Champs-

Elysées, Baccarat on rue du Faubourg Saint-Honoré, and Glashütte

on rue de la Paix—brought to 63 the number of luxury stores

opened in France in 2015, a significant increase over the 34

openings in 2014. While creations accounted for half of the

openings of luxury stores in France in 2015 (compared with 65% in

2014), relocations, refurbishments, and extensions also contributed

more than one-third of total openings. There were nine relocations

in 2015, and 2016 is slated at least to equal this solid performance.

In 2015, rue Saint-Honoré was the most desirable street in Paris for

luxury retailers. Eight stores opened on rue Saint-Honoré in 2015,

bringing to nearly 30 the number of stores opened there since

2011, when the Mandarin Oriental was launched. Other streets

outside the traditional Paris luxury district also stood out in 2015.

With four openings, rue des Archives came in fourth place, after

rue Saint-Honoré (eight openings), rue du Faubourg Saint-Honoré

(five openings), and rue de la Paix (five openings). Seven luxury

stores opened in Le Marais in 2015, confirming the demand there

for cosmetics, accessories, and men’s fashion. The French luxury

market is less lively in other parts of France. In 2015 there were 11

openings in French cities other than Paris, including five in Cannes

(e.g., Hermès and Van Cleef & Arpels) and three in Saint-Tropez

(e.g., Lanvin and Giorgio Armani).

Twenty-three openings are planned in France for 2016, a

satisfactory figure that suggests the year could be a good one for

the French luxury market. However, several factors could

compromise this outlook, the foremost being the heightened

terrorist threat. Although 2015 was on the way to being a very

good year for tourism, the attacks of November 13 put an end to

that trend, especially in Paris. Reservations fell dramatically for the

year-end holiday period, and occupancy rates declined in

ultraluxury hotels. This challenging environment—scarce supply of

retail properties and rising rental values—could limit the number of

store openings in France. With the aim of propping up their

margins, retailers may be tempted to sit on the sidelines. Retailers

may also decide to pay more attention to optimizing their sales

network by means of refurbishments, store relocations, and new

creations in locations just off the most prestigious high streets.

With regard to less established districts, any expansion by retailers

will be cautious and opportunistic, most likely in less exclusive

market segments such as accessories and beauty products.


The various types of openings include: creations of new boutiques, reopenings after refurbishment, store relocations and extensions, pop-up stores, and retailer name changes.

Boulevard de la Croisette | Cannes (06)



Shopping centers

The latest footfall index from the CNCC (Conseil National des

Centres Commerciaux, or French Council of Shopping Centers)

confirms the delicate position of shopping centers in France. The

November terrorist attacks have added to long-standing problems

such as the growth of online sales and the weakness of household

consumption. The large number of refurbishments and extensions

of existing sites, as well as the steady clip at which retail parks are

innovating, could also delay the development of shopping centers

and explain why they are often slow to get up to speed.

However, this global view does not necessarily apply to every

shopping center. Some shopping centers opened in 2015 have

been very successful (Promenade Sainte-Catherine in Bordeaux).

The expansion of new retailers (Pandora, Kiko, Hema, Tiger) and

the arrival of unorthodox concepts that meet consumer

expectations also contribute significantly to market growth. The

upmarket trend of shopping centers goes hand in hand with the

success of upmarket formats in the restaurant and beauty sectors

(Big Fernand in Val d’Europe and Les Docks Marseille, Rituals in

Italie 2), the growth of single-brand stores (Maille in Le Carrousel

du Louvre, Lego in Forum des Halles, Lipault in 4 Temps), and

openings of fashion retailers usually located only in high streets

(The Kooples in 4 temps, Cos and & Other Stories in Polygone

Riviera, near Nice).

These new sales points heighten the contrasts of the French

market and give further advantage to prime retail locations at

existing regional shopping centers. Creation and extension projects

tend to go to established and well-known sites, which are able to

supply retailers with significant footfall. Established shopping

centers also add value by providing a product-enhancing context

for retailers. However, the largest and newest shopping centers are

not alone in driving the market. Medium-sized shopping centers

and local malls can also do well, provided that landlords make the

necessary investments and offer leases that attract new retailers

and retain existing occupiers. On the other hand, shopping centers

that are badly located or poorly designed suffer declining visitor

numbers. They are also more exposed to arbitrages made by

retailers in search of cost savings, and by long-standing retail

powerhouses weakened by internet competition and innovative

newcomers.

FOOTFALL INDEX FOR SHOPPING CENTERS IN 2015

-6,00%

-5,00%

-4,00%

-3,00%

-2,00%

-1,00%

0,00%

1,00%

2,00%

3,00%

Janu

ary

Feb

ruar

y

Mar

ch

Ap

ril

May

June

July

Aug

ust

Sep

tem

ber

Oct

ob

er

No

vem

ber

Dec

emb

erSource: CNCC / Data from a panel of 145 shopping centers.

PRIME RENTAL VALUES (€/M²/YEAR)

Shopping centers* Q4 2014 Q4 2015

Regional centers | Ile-de-France 2,000 2,000

Regional centers | Provinces 1,400 1,400


*For 150 m² of well-located retail space (clothing retailers or services) in existing shopping centers that are leaders in their catchment areas.



Retail parks

The French retail-park market receives steady demand from retailers

of children’s clothing (Orchestra), sporting goods (Intersport, Sport

2000), footwear and clothing (Chausséa, Gémo, Besson), and home

furnishings (Meubles Gautier, Maisons du Monde). Long present on

city outskirts, home-furnishings retailers grew nationwide in 2015 at

a rate unmatched since 2008. Discount retailers also boosted the

number of openings. Established French retailers continued their

expansion in peripheral zones (Centrakor, Gifi, Stockomani), while

international retailers new to France proliferated (Action) and

newcomers began their development in France (Kruidvat). More

low-cost retailers are expected to arrive. These budget retailers

adapt their offer to the French consumer's need for good value in a

weak economy.

The diversity of retailer demand was reaffirmed in 2015. Attracted

by innovative retail-park designs and by moderate occupancy costs,

retailers are equally interested in the consumer potential of

peripheral zones. French demographic growth is strong outside

towns and cities, where retailers are able to develop their activity

even on a limited budget. Retail parks are now attracting retailers

that before were largely (or even fully) absent from retail parks.

Clothing retailers traditionally located in shopping centers are now

opening in retail parks as opportunities arise (H&M, C&A, Célio) and

where they can test new concepts (Happy Chic). New trends in

French consumption can be seen in the restaurant sector, where

chains such as Burger King often provide drive-through service.

Entertainment and activities constitute an increasingly large part of

new development projects (Dock 39 in SuperGreen, near Thionville).

Developed by Frey, SuperGreen promotes the F-Expérience, a “new

concept based on FUN & FOOD FOR FAMILY, all part of a surprising

and original shopping experience.”

However, this success does not eliminate the problems

overshadowing the French market. Most retailers are focused on

store profitability and the need to optimize sales networks.

Relocations are on the rise, often to new retail parks or to better-

adapted space within the same zone. Such operations add to the

flow of releases and ultimately speed the decline of certain zones.

These changes can result in lower standards, with independent

retailers and discount chains developing at minimal cost.

PRIME RENTAL VALUES (€/M²/YEAR)Retail parks* Q4 2014 Q4 2015

France 180 180

Action store | ZAC des Courtes Épluches, Villabé (91)


*For 1,000 m² and new space in prime slots in strong catchment areas.



RETAIL INVESTMENT ACTIVITY IN FRANCE

1,92,3

4,8

1,2

1,9

3,63,3

3,64,0

7,7

5,2

0%

20%

40%

60%

80%

100%

0

1

2

3

4

5

6

7

8

9

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Retail investment €bn Share of total investment (%)


THE INVESTMENT MARKET

Amounts invested

Investor appetite for retail properties remains robust, while rising

market values bring fresh supply to the market. This dynamic

explains the healthy performances of the retail investment market.

More than €5.2 billion was invested in retail properties in 2015,

representing 21% of all investments made in France. Although

investment in 2015 declined by 32% from the level of 2014 (€7.7

billion), it was 53% higher than the most recent ten-year average

(€3.4 billion).

The near-total absence of megadeals played a decisive role in

investment decline in 2015. There was only one transaction of more

than €500 million (Celsius portfolio), compared with five large

deals totaling €4.5 billion in 2014 (Klepierre/Carmila portfolio,

Beaugrenelle, etc.). However, transaction amounts in 2015 were

much more evenly distributed than in 2014. Of the 128 transactions

in 2015, five were larger than €200 million, with total investment

coming to approximately €1.6 billion. On the other hand, the

number of deals between €100 million and €200 million doubled

year on year, and accounted for 33% of total investment (€1.7

billion, compared with €800 million in 2014). Transactions of

between €50 million and €100 million also trended upward, with 27

such deals in 2015, worth €747 million, compared with €581 million

in 2014. Smaller deals (less than €50 million) were virtually

unchanged in both number and volume.

INVESTMENT AMOUNTS*

0,40 0,41

0,78 0,75

0,58 0,75

0,80

1,74

5,13

1,56

0

1

2

3

4

5

6

7

8

9

2014 2015

1-15 €M 15-50 €M 50-100 €M

100-200 €M > 200 €M

Source: Cushman & Wakefield/*Total investment in French retail properties.



38%

60%

19%

43%

29%

55%

19%11%

26%

France Ile-de-France Provinces

High streets Shopping centers/Malls

Retail warehousing

Investment in shopping centers

As in previous years, investment in 2015 went mainly to malls and

shopping centers. These two categories attracted €2.2 billion and

accounted for 43% of total retail investment in 2015 in France.

The most high-profile transactions included the Celsius portfolio,

sold by CBRE Global Investors to a joint venture comprising the

CIC Chinese sovereign wealth fund and AEW Europe. The deal

was for more than €500 million. Other major deals were the

acquisition for €312 million of Nicetoile by Allianz (90%) and

Hammerson (10%) from Unibail-Rodamco, and the roughly €200

million sale by Orion Capital Managers to Altarea Cogedim of 50%

of Qwartz.

Nevertheless, amounts invested in this market segment fell by

61% from levels a year earlier. This decline was due to the limited

number of very large deals. In 2015, investment activity was

focused mainly on high-potential smaller assets in midsized

provincial towns (Geric in Thionville, Les Cordeliers in Poitiers)

and in Ile-de-France (Bercy 2 in Charenton-le-Pont). In addition,

several shopping-mall portfolios traded hands in 2015. The

Ouessant portfolio, comprising 22 assets, was sold by Immochan

to Primonial Reim for €125 million, and the Pulse portfolio was

acquired by Carmila from CBRE Global Investors for €92 million.

Investment in high streets

In 2015, the amounts invested in high streets rose by 27% year on

year, to €2 billion. This solid performance was attributable mainly

to the finalization of several transactions of more than €100

million for ground-floor shops and mixed-use buildings.

The sale of 49−53 avenue des Champs-Élysées (L’Atelier Renault,

Häagen-Dazs) by Westbrook for approximately €300 million was

the largest ground-floor deal in 2015. Other high streets attracted

investors, especially in the luxury sector. For example, CBRE

Global Investors acquired the Roberto Cavalli flagship at 261 rue

Saint-Honoré, and La Française Real Estate Partners (on behalf of

a French institutional client) acquired the flagship Céline store at

53 avenue Montaigne. There were deals elsewhere in France too,

such as Amundi’s acquisition of the Louis Vuitton store on rue

Grignan in Marseille. In less upmarket sectors, the sales of the

Printemps department stores in Strasbourg and Lyon, and the

acquisition by a Grosvenor fund of H&M at 62 rue de la

République in Lyon, were among the largest deals outside of

Paris.

ASSETS AND GEOGRAPHIC DISTRIBUTION*

Le Printemps | Strasbourg (67)



Source: Cushman & Wakefield/*% in value in 2015.

60%

10%

7%7% 6%

3%7%

France ChinaMiddle East GermanyUSA SwitzerlandOther

NATIONALITY OF INVESTORS IN 2015*

Investment in retail warehousing

In 2015, €986 million was invested in peripheral zones, compared

with €590 million in 2014 (+67% year on year). Acquisitions of

retail parks remain rare because of the scarcity of high-quality

supply on the market. Investors seek assets with large catchment

areas, well-known retailers, and firm commitment periods. The

largest deals in 2015 included La Française REM’s acquisition of

Urban Valley in Cormeilles-en-Parisis (Val d’Oise), for €35 million,

and the sale to TH Real Estate of the Park Avenue complex in

Saint-Maximin (Oise), for €25 million.

Portfolios of stores spawned a significant number of deals in 2015.

The portfolio acquired by Tikehau for approximately €240 million

included 100 stores leased to Babou, C&A, Kiabi, etc. A portfolio

of 18 Décathlon stores was acquired by Ciloger for €101 million.

Two portfolios of Buffalo Grill restaurants were sold to Perial (€40

million) and to La Française (€30 million). Finally, five But stores

were sold to Financière Teychené for €21 million.

Investor nationalities and profiles

The share of French investors in total retail investment volume

declined in 2015, even though they retained majority status (60%,

compared with 69% in 2014). French investors are active in

market segments via OPCIs and SCPIs, property-investment firms

/ REITs, insurance companies, and pension funds. The share of

French investors is higher in the provinces (76%), where there are

fewer foreign investors because of the limited supply of assets

that meet their acquisition criteria.

The share of foreign investors in total investment rose from 31% in

2014 to 40% in 2015. One of the highlights of 2015 was the first-

ever acquisition in France by the CIC Chinese sovereign wealth

fund. This transaction alone explains the rise in the share of

foreign investors in total retail investment in 2015. Activity of

North American and Middle Eastern investors was stable year on

year, while Europeans invested nearly €700 million less in 2015

than in 2014.

Villebon 2 | Villebon-sur-Yvette (91)

PRIME YIELDS (%)

Q4 2014 Q4 2015

Regional shopping centers 4.50 4.00

Shops 3.50 3.00

Retail parks 5.75 5.00Source: Cushman & Wakefield.



Source: Cushman & Wakefield/*Total investment in French retail properties in 2015.

FRENCH RETAIL PROPERTY STOCKGeneral trends

After Surcouf in 2012, Virgin Megastore in 2013, and Bata in 2014,

more large retailers went out of business in 2015, while others

endeavored to stay afloat (Sinequanone and especially La Halle).

Disposals carried out by these retailers brought properties to the

market and replenished the supply of large stores, always highly

sought after by retailers. Despite sufficient demand, as confirmed

by the takeover of several Virgin stores (by H&M in Marseille and

Tati in Rennes) and several La Halle stores (by Galeries Lafayette

on boulevard Haussmann and by Action, C&A, and Orchestra in

peripheral zones), supply is still available and should enliven the

French market in 2016. Furthermore, the list of retailers and sectors

under strain is expected to grow longer, while several large

acquisitions (FNAC/Darty, Sergent Major/DPAM, Burger

King/Quick) foreshadow an acceleration of arbitrages.

Disposals will fuel the supply mainly of secondary sites and

midsized cities. This trend is all the more worrisome because

openings, though far from levels seen in 2012, recovered sharply in

2015 (775,000 m²) after a 32% decline in 2013 (840,000 m²) and

2014 (575,000 m²).

Trends in the supply of high streets

Although disposals may have created exceptional opportunities on

some of the most prestigious thoroughfares of Paris and other

French cities, prime retail slots remain rare and expensive. Retailers

are therefore forced to make do, either by refurbishing what they

already have or by looking at alternative locations that are less

expensive and offer more abundant supply. Several renovation

projects have replenished the supply of more-or-less prime sectors

in Paris and other French cities.

In Paris, the largest projects are mainly on the Left Bank, where the

renovated Marché Saint-Germain (3,500 m²) is expected to open in

2016. Large operations are also under way on the Right Bank. The

renovation of the Samaritaine, and the redevelopment of the Poste

du Louvre and the Louvre des Antiquaires, are planned for

2017−2018.

Elsewhere in France, several large projects will be launched over

the next few months: renovation of the Bourse de Lille, extension

of the Passage Pommeraye in Nantes, and redevelopment of the

Banque de France buildings and the Hôtel Dieu in the historic heart

of Lyon.

Marché Saint-Germain | Paris (75006)

RETAIL OPENINGS FRANCE (THOUSANDS OF M²)*

960840

575775

0

200

400

600

800

1000

1200

2012 2013 2014 2015


*Excluding redevelopment and including high streets, shopping centers, retail parks, factory-outlet centers, and transit areas.



SIGNIFICANT OPENINGS | RETAIL PARKS

2015 M²

Toulouse Fenouillet | Fenouillet (31) 33,500

Sens Sud | Sens (89) 28,300

SuperGreen | Terville (57) 28,000

Enox | Gennevilliers (92) 26,700

St-Max Avenue | Saint-Maximin (60) 15,500

PAC Auchan | Saint-Jean-de-la-Ruelle (45) 9,000

2016 M²

La Petite Madelaine | Chambray-les-Tours (37) 31,500

Les Montagnes | Champniers (16) 22,200

Les Blancs-Monts | Cormontreuil (51) 18,500

Park Avenue | Saint-Maximin (60) 15,500

Cap Émeraude | Pleurtuit (35) 13,500

L’Hippodrome | Toulouse (31) 10,500

Trends in the supply of shopping centers

In 2015, 375,000 m² of shopping centers were opened, 12% more

than in 2014 and a completion rate of 80% of annual projected

volume. This increase is attributable to the relatively small size of

the development projects. Furthermore, while the number of

openings was the same in 2014 and 2015, it was the strong rise in

creations that demarcated 2015 from previous years. Creations

accounted for 83% of volume in 2015, compared with roughly 50%

during the period 2012−2014. Recent development projects, such

as Les Terrasses du Port in Marseille and the Polygone Riviera near

Nice, confirm the trend of large shopping centers characterized by

high-quality supply and architecture.

The construction of large complexes (e.g., the completion of

Ametzondo, near Bayonne, slated for the end of 2016) results in

the consolidation of the most-established sites. Major property-

investment firms have launched large-scale projects for extension

and redevelopment, such as Forum des Halles (opening 2016), Cap

3000, and Val d’Europe (2017). In addition to establishing the

domination of jumbo complexes, which occupy an increasingly

large position in the leisure and food sectors, these projects are

designed to adapt to new forms of consumer behavior. This trend

is all the more striking in the case of Vill’Up, which will open this

year in Paris, and Alpha 17 in Aubagne, a model for the large

shopping centers of tomorrow.

Trends in supply of retail parks

With 370,000 m² in 2015, i.e. 63% of annual projected volume, the

volume of completed retail parks is far from levels seen at the end

of the 2000s (580,000 m² per year on average during the period

2007−2010). This decline in volume results from the caution

exercised by developers since the beginning of the economic crisis

and from the maturation of certain geographic zones. Nonetheless,

business in 2015 was 32% higher than in 2014 thanks to large

deliveries (Enox in Gennevilliers), the partial redevelopment of

established zones (St-Max Avenue in the Oise at the former

Castorama), and the ongoing development from scratch of high-

quality complexes that leave more space for leisure activities and

restaurants (SuperGreen in Terville).

These trends are expected to continue in 2016, with the completion

of smaller projects boosting the number of openings. Retail parks

are now appearing on the outskirts of midsize cities and in rural

areas, while property-investment firms of large distribution

retailers are expanding their portfolios beyond hypermarkets to

include medium and large units (Immochan strip-mall projects, one

opened in 2015 near Orléans, in Saint-Jean-de-la-Ruelle, and the

other planned for Louvroil, near Maubeuge, in 2016).

SIGNIFICANT OPENINGS | SHOPPING CENTERS

2015 M²

Polygone Riviera | Cagnes-sur-Mer (06) 74,000

Les Saisons de Meaux | Meaux (77) 30,000

Le Jeu de Paume | Beauvais (60) 24,000

Promenade Sainte-Catherine | Bordeaux (33) 20,000

Les Docks | Marseille (13) 17,000

Les Passages Pasteur | Besançon (29) 14,700

2016 M²

Ametzondo | Saint-Pierre-d’Irrube (64) 76,000

L’Avenue 83 | La Valette-du-Var (83) 51,000

Vill’Up | Paris (75019) 24,000

Centre Bourse | Marseille (13) 21,000

Espace Fenouillet | Fenouillet (31) 17,000

Forum des Halles | Paris (75001) 11,000

Source: Cushman & Wakefield. Extensions and redevelopment projects are highlighted in blue.



Source: Cushman & Wakefield. Extensions and redevelopment projects are highlighted in blue.

REGULATORY UPDATE

In 2015, French Economy Minister Emmanuel Macron pushed

through a controversial bill intended to promote growth, business

activity, and equal economic opportunities. The new law, which

had been debated for many years, raises the number of Sunday

openings authorized by the Mayor’s office from 5 to 12 per year

(authorized by the Paris Prefect). Retailers located in international

tourist zones (ITZ) are allowed to open every Sunday and to

remain open until midnight every night of the week. The law

applies to several districts in Paris, as decreed in the official

gazette of September 26, 2015. Deauville, Cannes, and Nice are

also concerned, though the official texts with regard to those cities

have not yet been published.

It remains to be seen whether the extension of retail hours and

Sunday openings will provide any real benefit to the economy, or

what the law’s impact will be on rental values and valuations of

assets located in ITZs. The few areas that were already authorized

to open on Sundays may be viewed as less attractive. However,

the law cannot take effect until negotiations have been completed

between management and unions. Some groups and retailers

anticipated the new law and began discussions in advance. For

example, Darty and Inditex have already reached labor

agreements. By contrast, negotiations have stalled at the FNAC

and at major department stores, despite offers of terms considered

more advantageous than those available elsewhere in France.

Department stores have at least managed to avoid the application

of an amendment that would have extended the TASCOM tax to

city-center retailers of more than 400 m² opened before 1960.

Presented by members of congress Sandrine Mazetier (Paris) and

Pascal Cherki (Paris), this amendment was adopted by the National

Assembly after the first reading but rejected by the Senate in

December of 2015.

Intended to promote growth, business activity, and equal

economic opportunities, the new law contains other provisions that

over time could affect the French retail market. The law reflects the

current government's desire to simplify the procedures for

obtaining a building permit and to limit abusive claims. This topic is

especially important because of the growing gap between the time

needed to complete retail projects and the rapid changes in

consumer behavior.


The world is changing rapidly, and it is not slowing for us. This new world awaits neither regulations nor governments. It moves fast, is disruptive, and therefore has a destabilizing effect on social, fiscal, and regulatory issues. However, this new world is an extraordinary source of new jobs, innovation, and productivity.

Emmanuel Macron, French Economy Minister, speaking at the OECD on September 18, 2015.


Cushman & Wakefield France21 rue Balzac75008 Paris

CONTACTS

Christian DuboisHead of Retail Services

Cushman & Wakefield France

[email protected]

David BourlaHead of Research

Cushman & Wakefield France

[email protected]

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