The development of Line 15 will provide Boulogne-Issy with improved connections to residential areas to the South and East of Paris. Reduced journey times will therefore increase the attractiveness of this site for corporates. In addition, this area is reaching the end of its regeneration programme with the last remaining major projects, such as “Pont d’Issy” or the redevelopment of Ile Seguin, now underway. Assuming all of these projects are finalised, this area (which has almost 2 million sq m of office space) will see the development of an additional 500,000 sq m. These latest urban projects will also bring improvements to the quality of life in the town with new retail and leisure facilities (Ile Seguin in particular) as well as giving structure to the economic development of the area and generating a positive image (new technology, smart city).
Beyond Boulogne-Issy, an additional large office area is also taking shape on the other side of the ring road in the 15th district of Paris which should further strengthen the office image of this area. In 2015, almost 200,000 sq m of office space was delivered in the South of the 15th district, opposite Issy-Les-Moulineaux:
- 135,000 sq m in the Balard site where the Ministry of Defence has consolidated its operations;
- the first two buildings (45,000 sq m) of the “Qu4drans” scheme developed by AXA which will have 85,000 sq m of office space upon completion;
- and 7,500 sq m at the “Print” building.
This area also has other office developments which are at the project stage:
- 35,000 sq m at the SMABTP project on Rue Louis Armand, due for delivery in 2017;
- 40,000 sq m in the North and West buildings at “Qu4drans”, due for delivery in 2018;
- Unibail’s “Triangle”, a mixed-use 180 m tower, which is part of the renovation of the Parc des Expositions at Porte de Versailles which will include: 70,000 sq m of office space, a 120-room 4-star hotel, a sky bar, a public restaurant, 2,200 sq m of coworking space, a conference centre and public spaces for use by local residents (crèche, retail, cultural spaces). The project could be delivered by 2020-2021.
Considering all of the projects recorded in Boulogne-Issy, as well as those in the South of Paris, upon completion this area could constitute an office are on a similar scale to La Défense and be the number one office market in the Greater Paris Region, after La Défense.
This area also has some considerable strengths compared with the La Défense business district:
- traditional-format, low-rise office buildings, unlike the towers in La Défense;
- the area has a better mix of offices, housing and retail;
- Boulogne-Issy is close to many residential areas for employees in the Greater Paris Region;
- the building format is more liquid which is a perfect match for the core of the Paris market in terms of investment.
All of these elements that contribute to the appeal of the area will be further strengthened over the next few years (transport, environmental quality, stock and company density) giving real strength to this market.
However, the development schedule for these projects does still need to be closely adhered to as over-supply is still as risk – but to a lesser extent than was seen in recent years with the development of Trapèze in Boulogne. In addition, the new métro Line 15 will create a new connexion with the office district in the secondary area, offering competitive levels of price.
Boulogne-Issy: still has potential for growth in office values
Boulogne-Issy’s score in terms of the attractiveness criteria is already high: a diverse range of transport options, quality of life and environment, a deep and mature market. Its weakness is mainly linked to the journey times to the main Parisian railway stations (>30 minutes). The various projects (transport and development) will have a direct impact on its scores for quality of life and environmental quality. However, Line 15 will do nothing to reduce journey times to Paris. In light of the most recently launched projects, improvements to services to other suburban residential areas and the likely incorporation of the Boulogne-Issy market into the Southern Paris market, the rental and investment markets should gain in terms of depth and strength. However, for the same reason, Boulogne-Issy will be more directly in competition with the secondary area and its competitive prices.
Price changes in Boulogne-Issy will be reflected both in terms of the level of rent and yield:
• changes in prime rent at the same rate as the Paris market, equivalent to a stable value of between €500 and €520 per sq m by 2022-2025 (compared with an average of €464 per sq m over the last 10 years);
• a fall in the prime yield for the area, with a risk premium compared with the reference rate for the CBD of around 50-60 basis points instead of the 90-basis point average (2006-2015).
Compared with current values, office prices could increase by as much as 15% by 2022-2025.