Outlook 2024: Logistics and Retail to rebound in France

Retail and logistics are on the rebound in the French market, delegates heard at Real Asset Media’s European Outlook 2024: Focus on France briefing, which took place recently in Paris.

Gautier Beurnier, Country Manager France, Head of Transactions, CBRE Investment Management

“Retail is now the largest, most valuable and most liquid asset class bar none,” said Gautier Beurnier, country manager France, head of transactions, CBRE Investment Management. “Retail was never dead, it was just mispriced for a very long time. Now prices are almost too good to be true, so there’s a revival underway.”

The rebound is in high street retail, across shopping centres and in the luxury sector, which has seen a succession of big-ticket deals in central Paris in the last few months.

“High street retail is the biggest winner of the Paris Olympics, as a huge amount of money has been spent by the luxury firms,” said Irène Fossé, director research and strategy, AEW France.

The Games, which open at the end of July 2024 and are expected to attract three million visitors spending €4 billion, have also led to renewed activity in the hospitality sector.

“Many new hotels have already opened and some are about to open,” said Silke Nadolni, avocate associée, partner, LPA-CGR Avocats. “There’s a lot of work going on, they’re under great time pressure to be ready in time for the Olympics.”

The city’s improved new look will last long after the Games, she said: “There’s a new zoning plan coming in that will make Paris even more attractive, more environmentally friendly and more biodiverse. Now’s the time to buy, renovate and upgrade buildings.”

Silke Nadolni, Avocate associée, Partner, LPA-CGR Avocats.

While the retail renaissance is taking place in Paris, logistics is expanding its horizons to different parts of France.

“There are very attractive opportunities in less developed areas of the country like Alsace and the regions on the Atlantic Ocean,” said Salvi Cals, managing director France, Panattoni. “There are big population shifts to those areas but there is no logistics infrastructure at all there, and often barriers to entry as local authorities are opposed to development.”

The challenge for the logistics sector is that a lot of the existing stock was built 20 years ago or more and needs to be upgraded or replaced, but there are restrictions on the rezoning of land from agricultural use and very little other land is available.

“There’s a real conundrum, as we need to replace old assets but we can’t do it on greenfield land, while everyone is fighting over the few brownfield sites,” said Cals. “We’ve done a lot of development on brownfield land, but the amount available is shrinking all the time.”

But now would be a good time to develop across France as prices have come down and demand is expected to increase.

“We’re close to the bottom of the market and prospects going forward are positive,” said Cals. “New businesses are being created, companies are expanding, so the demand is there. We need to invest now, given the time it takes to complete a project.”

One of the factors driving rental growth is that companies want to move out of older assets into energy-efficient buildings.

“Rental growth is very strong now, especially around Paris and Lyon,” said Cals. “The average used to be €40-45 sq m, but now we are above €50 and even up to €60 in some markets.”