Marked recovery in the first quarter of 1 for commercial real estate, driven by a few major transactions

Despite this rebound, the rental market remains fragile, with demand down 6% for offices and 2% for logistics.

A still fragile economic context

As inflation continues to decline (+0,8% year-on-year in March 2025), the French economy remains under pressure. Forecast growth for 2025 has been lowered to 0,7%, and employment is deteriorating, with 68.000 jobs cut in Q4 2024 and 106.000 expected by mid-2025[1], particularly affecting the private sector and executives (-8% recruitment in 2024 according to APEC, -4% anticipated in 2025). While the ECB has lowered its key rates to 2,75%, the cost of financing remains high, hampering both consumption and investment.

Trends marked by caution and selectivity

The recovery that began in the second half of 2024 is gaining momentum but remains highly polarized. Three major transactions, including the sale of Kering's real estate portfolio, account for 45% of investment volumes. Investment funds, which represent 66% of the amounts committed, clearly dominate a market where caution remains the rule, particularly in office space, which continues to face declining demand and abundant supply.

Contrasting dynamics depending on the asset classes

Retail stands out, with €1,2 billion invested, mainly thanks to the Kering and Forum des Halles transactions. Offices total €1,1 billion, but the rental market remains sluggish: take-up fell by 6% (419.200 m²), while immediate supply continues to grow to reach 5,8 million m². The logistics and industrial sector continues to perform, with €675 million invested, despite a slight 2% decline in take-up for warehouses (798.000 m²). Diversification assets, particularly in the hotel sector, posted €185 million invested, reflecting a growing interest in more resilient sectors.

A geography dominated by Paris, the regions supported by logistics

Within Paris, 53% of investments are concentrated, particularly in the central business district (CBD), which is bolstered by large-scale commercial operations. Conversely, the inner and outer suburbs of the Île-de-France region remain relatively inactive. The regions are performing well in the logistics segment, with €572 million invested, confirming their strategic role in the growth of industrial and distribution platforms.

Outlook 2025: towards a gradual rebalancing of the market

After a start to the year driven by a few exceptional transactions, 2025 could usher in a more balanced recovery. Monetary easing is a positive signal, but fundamentals remain fragile. Investors are favoring resilient, well-located, and durable assets in a market that is still far from a widespread recovery.

For Nicolas Brosseaud, Managing Director of Catella Valuation: "In a still-constrained environment, the completion of several major transactions this quarter is a positive signal. Despite a drop in indexations linked to the fall in inflation, the increase in registration fees, and the lasting effects of Covid on rental demand, the market is showing an ability to adjust. This first quarter clearly illustrates a necessary repositioning phase, which is allowing valuations to gradually realign with the new market conditions."

Illustrative image of the article via Depositphotos.com.