The revival of the office market in Bordeaux

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With the deconfinement, the office market in Bordeaux and the rest of the country could well experience a revival. Indeed, following successive events in recent months, the way we approach the workspace has changed rapidly. Faced with containment, government guidelines for social distancing, and then the very relative recovery of economic activity, corporate real estate is one of the sectors that are currently moving blindly. If activity was slowed down between March and June, there seems to be no real way to know what awaits the market for offices, shops and warehouses.

Taking the subject in hindsight, it is clear that changes in the management of the workspace have already been underway in recent years. In search of flexibility, companies are looking for offers tailored to their needs, their location… Telework was also becoming increasingly important and regularly entered into negotiations with employers. The Covid-19 crisis will therefore have been an accelerator of trend. It will have pushed the companies confined and then deconfined to integrate it fully into the working methods.

Evolution of the relationship to work, the end of corporate real estate?

During containment, applications for corporate real estate fell by nearly 40%. At the same time, at the national level, there has been an increase in the supply of real estate for commercial and office space. This first observation could be explained by the fact that this period proved particularly difficult for businesses. Which therefore free up commercial space.

As for the office, Sophie Desmazières, the president of Local Offices,is dampening the enthusiasm of some experts who announce the end of the office. If telework is gradually entering the norm by force of things, there is no indication at this time that companies are ready to separate themselves from their premises and the social, human dimension that accompanies them.

Less confident on the value of corporate real estate, however, she joins some specialists who anticipate a drop in prices. This drop in rates is estimated at less than 10% for offices. As far as shops are concerned, experts are more cautious but fear a dimension of more than 10%. Only warehouses enjoy a certain stability, driven by the success of e-commerce.

However, these findings do not apply to all cities. Today’s France tends to decentralize. As a result, companies are more likely to leave the capital to set up shop in medium-sized cities. This is the case, for example, of Tours, which easily and quickly joins Paris by train. The office market in Bordeaux could also benefit from another reading of the situation. Thus, Bordeaux Metropole is a geographical area where the development of the offer in corporate real estate is very dynamic. In this sense, the Covid-19 crisis does not seem to be able to reverse the trend in a sustainable way.

Corporate real estate on Bordeaux, a matter of context

Development of the office and warehouse market in Bordeaux, a dynamic that continues

For warehouses and business premises, for example, already growing in 2019, transactions still grew by more than a third in the first quarter of 2020. Among the nice contracts at the beginning of the year are Geodis Calberson with nearly 6,000 m2 in Bassens or Cash Poolweb in Blanquefort (5,445 m2). Benefiting from rare products, well localized and at attractive prices, the offer on the Metropole attracts every year many companies.

Simon de Marchi, president of the Bordeaux MetropoleEnterprise Real Estate Observatory(OIEB),explains that professionals are currently in a “waiting phase to see how the market will react”. As in the rest of France, office transactions in Bordeaux fell by almost 40% in the first quarter of 2020, compared to the previous year. However, he invites us to take this figure in hindsight. Indeed, 2019 had been a record year for offices, and many applications had been met before the end of the year, leaving few projects to close in 2020. “The blackout of March” most likely accentuates this trend but has no explanation for it.

Simon de Marchi warns that at present it is impossible to rule on thefuture of the office market. In reality, it is difficult to imagine how companies and employees could do without exchanging, communicating, creating synergy. The company is a social place and telework hasquickly reach its limits.

Individual offices, open space, coworking, generalized home office… “Today, we cannot say that the office will not be the same, nor that it will not remain the same. In reality, we are more likely to become a mix of all these solutions.”

SMEs, large companies, advanced industries, a stable territorial network

Contrary to the national estimates of corporate real estate specialists who predict a possible fall in prices, Simon de Marchi would be more optimistic for the Bordeaux market. If the local economic ecosystem is indeed going to experience bankruptcies and building resales, this should not make it a generalization.

“The fabric of SMEs in the Bordeaux region is relatively stable and activity will resume soon.” The big unknown is when. According to a study by Local Offices, 57% of real estate agents expect a recovery after confinement and 29% do not expect it until September/October. 6% are even very pessimistic when they expect a recovery by 2021.

In Bordeaux Metropole, SMEs and TPEs determine the structural evolution of the office market in particular. Thus, in the first quarter, almost 90% of the new contracts concerned areas of less than 500 m2, even more than in 2019. Half of them were on areas of less than 200 square metres. The market remains very dynamic despite the shutdown in March. In addition, Simon de Marchi explains that the office market in Bordeaux has barely a year of stock, making it a tense market. In this sense, he does not believe that the Covid-19 crisis can have a significant impact on prices in the first place. “We are in a market with bullish values. It is possible to consider a stabilisation eventually, it all depends on how the recovery is carried out.”

Decentralisation and attractiveness of the region, good point for corporate real estate in Bordeaux?

“We are lucky in the metropolis, we have a diverse territory both on the offer it offers, the jobs… It is made up of SMEs, large companies in aeronautics, healthcare, research, e-commerce… In fact, this crisis could even prove to be an asset for the territory because we still have space, projects to come and robust programming that would accommodate entities from the Paris region where there is a strong intensification. This reinforces theattractiveness of the Bordeaux territory.”

Anyway, in the corporate real estate market in Bordeaux, as in everyday life, many things need to be rethought…

Sources:

BFM Business and Local Offices, Corporate Real Estate, what balance sheet can be drawn up after the deconfine?

Local offices, offices, shops, Warehouses: what impacts of the Covid?

OIEB, First Quarter 2020 Report

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