Retail MarketBeat is a brief summary of the Retail sector in key cities, providing comment on recent trends as well as market data and analysis of the impact on commercial real estate.

1. ECONOMY
After a series of poor results in Q1,
consumer spending is expected to
increase moderately in Q2 (+0.5%) due
to a very low rate of inflation and a small
increase in salaries (+0.3%). These
factors will continue to support retail
sales in the coming months, especially
since French confidence is on the rise,
indicating households are more willing to
spend. Willingness to restore precautionary savings may
nevertheless hamper spending as long as unemployment does not
drop significantly between now and the end of 2015.
OCCUPIER MARKET
Secondary sites and schemes located in small catchment areas are
still the most impacted by retailers’ cautionary approach. Market
segments theoretically less affected by the slowdown are also
struggling, such as a few major city centres across France that are
negatively affected by consumers’ choices, suburban retail
developments and renovations of existing regional shopping
centres.
In addition to the strong start of new retail developments (Les
Terrasses du Port in Marseille), the biggest existing shopping
centres continue to reinforce their attractiveness through new
openings, taking advantage of renovations and refurbishments (Cap
3000 near Nice) but also lettings of large floor areas vacated by
major retailers (Nike and Cultura in Les 4 Temps, replacing Virgin).
These assignments also provide the opportunity for several players
to develop on the high street, particularly in Paris, for example
historical brands (Jules in the former Esprit on rue de Rennes,
Longchamp in the former MCS on the Champs Elysées, H&M in the
former FNAC on boulevard Saint-Germain) and directly-operated
stores (Asics in the former Game on rue d’Amsterdam).
Other similar projects will help to boost high-streets in the coming
months (former Virgin store on avenue Jean Médecin in Nice, etc.).
However, if the difficulties, arbitrations and relocations of brands
continue to fuel the flow of lease assignments, opportunities for
well-located large properties will be relatively limited, considering
their quick take-up by large groups who tend to focus on the
opening of megastores. Overall, the mismatch between brands’
search criteria and the quality of available stock on the market
impacts the dynamism of the best locations, explaining the upward
pressure exerted on prime rents on the most sought after streets
and the trend of major luxury brands securing their network via
acquisitions of stores.
ECONOMIC INDICATORS – CHANGE IN %
FRANCE 2012 2013 2014F
GDP Growth 0.0 0.3 0.7
Consumer Price Index 2.0 0.9 1.1
Unemployment Rate¹ 9.8 9.8 9.8
Purchasing power² -0.9 0.3 0.7
Households’ opinion³ 91 80 86
Household consumer spending -0.4 0.3 0.3
Sources: INSEE/Crédit Agricole/F: Forecast
¹Mainland France/²Purchasing power of gross disposable income/³Summary indicator end of June each year
PRIME RENTAL VALUES – €/M²/YEAR
HIGH STREETS (ZONE A) Q2 2013 Q2 2014 TREND
Paris / Avenue des Champs-Élysées 18,000 18,000 ►
Paris / Rue du Faubourg Saint-Honoré 10,000 12,000 ▲
Paris / Boulevard Saint-Germain 6,000 6,000 ►
Paris / Boulevard Haussmann 6,000 8,000 ▲
Paris / Rue de Rivoli 4,500 4,500 ►
Bordeaux / Rue Sainte-Catherine 2,200 2,200 ►
Cannes / Croisette 6,500 8,000 ▲
Lille / Rue Neuve 2,200 2,000 ▼
Lyon / Rue de la République 2,200 2,200 ►
Nice / Avenue Jean Médecin 2,200 2,200 ►
Strasbourg / Rue des Grandes Arcades 2,000 2,000 ►
Toulouse / Avenue Alsace-Lorraine 2,200 2,200 ►
Marseille / Rue Saint-Ferréol 2,000 2,000 ►
REGIONAL SHOPPING CENTRES
Ile-de-France 2,000 2,000 ►
Provinces 1,400 1,400 ►
RETAIL PARKS
Ile-de-France 180 180 ►
Provinces 170 170 ►
Source: Cushman & Wakefield
KEY LETTING TRANSACTIONS
BRAND ADDRESS AREA M²
Tommy Hilfiger 43 boulevard des Capucines / Paris 75002 1,377
Blue Box Promenade Sainte-Catherine / Bordeaux 986
Superdry 83 rue de Rivoli / Paris 75001 577
Longchamp 77 avenue des Champs-Elysées / Paris 75008 542
Miu Miu 1 rue du Faubourg Saint-Honoré / Paris 75008 300
Q2 2014
FRANCE
RETAIL SNAPSHOT
MARKETBEAT
A Cushman & Wakefield Research Publication

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INVESTMENT MARKET
At €4.2bn, investment in retail increased 133% year on year. This
figure is even higher than annual results recorded since 2008 due to
3 very large transactions: sales of the Klépierre portfolio, the
Beaugrenelle shopping centre and the mixed-use Risanamento
portfolio. Other transactions demonstrated the attraction of shops
located on the most prestigious streets in France (Chanel at 51
avenue Montaigne). Investors are also active in segments with more
abundant supply, fuelled by shopping centre and retail park projects
and sales by property companies looking to refocus on their core
business, for example Corio’s sale to KKR/Seefar of a portfolio
consisting of 4 shopping centres. Some large transactions are still to
be completed by the end of the year, which could break the 2007
record of €4.8bn and see volumes surpass the €5bn mark.
FRENCH RETAIL PARK
Qwartz, close to Paris, Les Terrasses du Port in Marseille and Le
Grand Moun in the Landes all opened in Q2 and together account
for 170,000 m² and 40% of the overall volume of new shopping
centres due in 2014. Although on a smaller scale than the large
shopping centres opened in spring, Vill’Up counts as one of the most
significant openings to come in H2. This Paris opening will follow on
from the two flagship projects in 2012 and 2013: Saint-Lazare and
Beaugrenelle. It will also precede several other openings due in the
longer term in Paris, from the redevelopment of Le Forum des
Halles shopping centre (recently chosen by Rituals for their flagship
store in France) to the development of retail space at Gare
Montparnasse as well as the refurbishment of La Samaritaine
department store. These numerous projects demonstrate the
revival of major Paris retail facilities.
POLITICAL AND LEGAL ENVIRONMENT
The Pinel Law, which focuses on retail and small businesses, was
introduced by Parliament and published in the Journal Officiel on
19th June 2014. This legislation intends to change different aspects of
commercial leases (short-term lease length, capping of rental values,
choice of index for rental indexation, etc.) and contains important
provisions related to commercial town planning (simplification of the
process of contesting retail permits [CDAC] for projects larger than
≥ 20,000 m², etc.) The Pinel Law also marks an end to floating sales,
a scheme that has been widely criticised since its initiation by the
LME in 2008, and as of January next year will extend the duration of
traditional sales from 5 to 6 weeks.
L. Fabius, Minister of Foreign Affairs and International Development,
recently expressed his wish to introduce Sunday opening hours for
shops in the Paris neighbourhoods most visited by tourists. This
contentious issue has been under the spotlight for many months and
it is unlikely to advance rapidly. The Paris City Council voted last
June for a Commission to submit a report on the subject by the end
of the year…
ILC/ICC INDEX – ANNUAL GROWTH %
Source: INSEE/Index of retail rents (ILC) and construction cost index (ICC).
RETAIL INVESTMENT VOLUMES IN FRANCE
Source: Cushman & Wakefield
KEY INVESTMENT TRANSACTIONS
ADDRESS/BUILDING BUYER PRICE MN€
Klépierre Portfolio / France¹ Carrefour 2,100
Beaugrenelle SC / Paris 75015 Apsys / Private investors² 668
51 avenue Montaigne / Paris 75008 Chanel 140
Domus SC / Rosny-sous-Bois Orion Capital Managers 70
¹Amount including Carrefour’s contribution of 45 sites/²Madar Group and Financière Saint-James.
KEY OPENINGS PLANNED FOR 2014
PROJECT CITY M² OPENING
Qwartz (SC) Villeneuve-la-Garenne (92) 63,000 Q2
Les Terrasses du Port (SC) Marseille (13) 61,000 Q2
Le Grand Moun¹ (SC) Saint-Pierre-du-Mont (40) 45,000 Q2
Waves Grand Sud (RP) Moulins-lès-Metz (57) 38,500 Q4
Parc Saint-Paul² (RP) Saint-Paul-lès-Romans (26) 27,500 Q4
Vill’Up (SC) Paris (75019) 24,000 Q4
Grand Cap² (SC) Le Havre (76) 19,000 Q1
White Parc (RP) Villennes-sur-Seine (78) 11,600 Q2
Avaricum (SC) Bourges (18) 11,100 Q4
Mérignac Soleil² (SC) Mérignac (33) 8,330 Q2
¹Transfer-Extension/²Extension/Projects already opened since the beginning of 2014 marked in dark blue.
Discover our studies and overview of the retail real-estate market on:
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q2
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Retail investments (Bn€) % of sums invested in retail in France