The Greater real estate newsletter Economic trend memo > 6th edition, 2012

Tertiary market In a dull European economic context and with very weak economic growth in , as much as looking at consumer spending, the industrial production index or the financial solidity of the private sector, the real estate market in Lyon has been able to resist these trends. The strength of Lyon’s business real estate market lies in the diversity of the regional industrial fabric, oriented towards new markets, in particular biotech and cleantech. Despite an economic shortage in the supply of new construction, the market remains healthy and attractive thanks to a continuation of medium-sized transactions and large investments (+ 27% compared to 2011).

Take-up: small and medium-sized businesses carry the market The take-up dropped by 28.9 % in 2012 The market is strongly established in Key indicators compared to 2011 and represents medium-sized transactions, between 500 184 418 m2. This downturn is measurable and 2 000 m2, answering the needs of the by the number of transactions: 468, against economical fabric of small and medium- The weight of 480 in 2011 (with only one above 10 000 m2). sized businesses. the Part-Dieu area: In a slow economic context, this result is Note that when including important 17.8 % explained by the lack of new construction transactions that are being finalised, the and postponing of decisions by businesses. take-up would have remained at a level Prime rent in the Part-Dieu area: similar to 2011. 260 € ex VAT ex SC / m2 / year (320 € ex VAT ex SC for high rise)

Evolution of tertiary Construction cost index: take-up (in m2) Source: CECIM + 1.5 % over on year 259 445 at 1648

184 418 2011

144 135

115 310 2012 89 887 94 531 2011 2011 2012 2012

st nd Year 1 half 2 half Take-up variation: new / existing Source: CECIM

Existing property profits from the lack 50 % of new construction Trend reversal compared to 2011 between Part-Dieu area is symbolic for the reduction new construction and existing buildings: in new construction. Moreover, in certain

new construction transactions account areas vacancy is very low; as an example 45 % 55 % 53 % 47 % for 45 % of all transactions, at 83 541 m2 the vacancy rate in Part-Dieu is 3 %. (53 % in 2011). The lack of availability in the 2012 2011

2012 1 Rental / Sales: Indication of the territories’ identities As in 2011, renting represents 82 % of the market’s transactions, however Take-up breakdown - rental / sale there is a huge variation when looking at the different sectors: almost 93 % of transactions in the Part-Dieu area, 60 % ■ Rental in Gerland, but only 38 % in Northeast Greater Lyon are rental. This distribution 82 % 82 % ■ Sale is indicative of Lyon’s economic fabric: companies located in its business areas are looking for a more flexible real estate Source: CECIM solution, while small and medium-sized 18 % 18 % businesses in the Northeast are reasoning from a patrimonial standpoint and are thus firmly anchored in their areas. 2012 2011

Geographical breakdown: variations per sector

As always in the lead, with 32 895 m2, the (11 % of the take-up). The dynamics of this Two sectors are in decline in 2012: Part-Dieu area registers a 41 % decline in area are undeniable, showcased by several Presqu’île / Confluence with - 49 % (from take-up compared to 2011, caused by the very successful real estate transactions. 17 788 m2 in 2011 to 9 230 m2 in 2012) absence of availability in new construction, and the Northwest with – 64.2 % (from 54 still representing 18 % of the total take-up. As a sign of the strength of the industrial 966 m2 to 19 703 m2). This decline is to fabric and of the small and medium-sized be put into perspective by the exceptional As a major tertiary hub of the businesses, the take-up in the Gerland character of the year 2011. agglomeration, / Carré and East Greater Lyon sectors remains de Soie realises an increase of 21 % stable (around 20 000 m2 / year each). compared to 2011 with 20 902 m2

Take-up breakdown 2011 and 2012 per sector 2012 2011

17 % 2 % 11 % 3 % 9 % 5 % 7 % 6 % 12 % 21 % 4 % 8 % 7 % 5 % 10 % 11 % 10 % 22 % 18 % 12 % Source: CECIM

East Greater Lyon Vaise / Fourvière Lyon 7e / Gerland Northwest Greater Lyon Lyon Part-Dieu Presqu’île / Confluence Villeurbanne / Carré de soie Outside Greater Lyon Lyon 6e / Préfecture Greater Lyon – other sectors

2 2012 Main transactions

Lessee Sector Surface in m2 net floor area

Veolia Carré de Soie 11 300

Atos Worldline Villeurbanne 5 444

Orange Part-Dieu 4 158

Grand Lyon Part-Dieu 3 737

ADP Northwest 3 620

Opteven Tonkin / Saint Clair 3 245

Alstom Grid East Greater Lyon - St. Priest 3 227

Segula Technologies East Greater Lyon - St. Priest 3 085

FIDAL Vaise / Fourvière 3 018

Pages Jaunes Villeurbanne 2 716

2013 prospects

• In the first few months of 2013 the tertiary real estate market remains cautious, and the global economic context will be of influence for the entire year. As in 2012, restraint financing for businesses and uncertain economic outlook will slow the market and could lead to further postponed decisions. Even so, the effect of the expected economic recovery in a still very active market, allows envisioning a consolidation of the positive factors of stability as found this year. The economic upturn will be based on solid foundations.

• Postponements can turn positive, as big transactions (for example Alstom in Villeurbanne for 36 000 m2) should materialize in 2013.

Investments: increase and diversification

• With an investment estimated at over 845 M€ (some marketers report results up to 925 M€) 2012 is a very good year (667 M€ in 2011). With this 27 % increase Lyon fortifies its position as an attractive city for internationally operating investors. • Beyond the numbers, the type of investors and investments also supports this: Grosvenor, together with QIA, invests 309 M€ in a real estate complex (shops, offices and housing) on the Presqu’île, and AEW’s purchase of the Oxygène tower. • Third major indicator is asset diversification: only 60 % of the investments (against 85 % in 2011) have been placed in office spaces.

2012 3 Commercial real estate 2012 was satisfying: the decrease in the number of transactions in the first half of the year was compensated by an increase in the second half, and thus the take-up remains stable compared to 2011 with 310 149 m2 (+ 0,1 %).

Take-up evolution: growth in Greater Lyon With a take up of 209 482 m2 net floor area half of 2012 (-6 % compared to the first are still the majority and are even on the in 2012 the commercial real estate market half of 2011). A revival began in the second rise (63 % in 2012 against 55 % in 2011). shows a decent growth in the Greater half of 2012 with a 6 % increase in take- Availability of the supply in rental space and Lyon territory (195 748 m2 in 2011), while up in the Lyon region, in particular thanks a greater difficulty for companies to gain the outskirts report a slight decline. to a positive 3rd quarter (27 % increase access to financing explain this increase in The decrease in take-up in the commercial compared to the 3rd quarter of 2011). rental transactions. real estate market that was noticed in the The trend towards rental started in 2011 second half of 2011 continued into the first continued in 2012: rental transactions With 227 transactions in existing property (51 for new construction), the take-up in that sector is still predominant. Transactions in new construction decreased to 11 % +0,1 % Evolution of take-up of commercial in 2012 from 15 % in 2011. Even so, real estate (in m2) Source: CECIM the Lyon market has several new real estate projects available for businesses:

2011 Urban’East, ZAC des Gaulnes, Aktiland. -6 % +6,2 % But market conditions are subject economic uncertainty and reluctance. 2012 2011 2011 2012 2012

Year 1st half 2nd half

Breakdown by geographical sector: East Lyon consolidates Source : CECIM The Greater Lyon territory accounts for The take-up outside Greater Lyon shows a 2/3 of the entire take-up. East Greater decline of 5 points. The sectors “East Lyon” 2011 8 % 1 % Lyon is the most attractive territory with and “La Cotière” are the most dynamic and 6 % over half of the take-up (156 090 m2), account for 19 % of the take-up. The East with a 36 % increase compared to 2011 territory offers both existing (ZI Mi-Plaine) 11 % (115 178 m2). The five main transactions and new real estate opportunities (airport). 38 % of 2012 are situated in that geographical 14 % sector as well. 12 % 7 % 2 % 3 % 2 % 7 % Main transactions of commercial real estate 33 % 18 % Surface in m2 Lessee Sector net floor area Agra Northeast Greater Lyon - 18 000 20 %

Groupe Gami Southeast Greater Lyon - 9 654 12 % 3 % Exadis/Laurent Père et Fils East Greater Lyon - St Priest 7 857 Lyon 3 % Stemcor East Greater Lyon - St Priest 6 880 Plateau Nord 2012 Vallée de Saône Medical Group East Greater Lyon - St Priest 6 200 Northeast Greater Lyon East Greater Lyon Southeast Greater Lyon Southwest Greater Lyon Northwest Greater Lyont Outside Greater Lyon

4 2012 Logistics n the context of national decline, the logistics market in Lyon books very good results. The 34 % downturn of the national market for logistics (take-up of 1.8 million per m2 in 2012 of which 73 % on the French North-South axis) is explained by the wait-and-see approach and cautionary attitude. Unlike the Ile-de-France and Marseille, which are particularly affected, take-up in Lyon registers an enviable result of + 26 % compared to 2011.

Take-up evolution (in m2) The 26 % increase registered by the greater Lyon territory (take-up of 377 321 m2 in 2012 versus 300 319 m2 in 2011) continues the +26 % trend of 2011: rental space accounts for 89 % of the take-up in 2012. Transactions

are mainly closed in existing property 2012 (29 % in m2 taken up in new construction +30 %

in 2012 compared to 65 % in 2011), which 2011 allowed reducing the vacancy rate while +20 %

maintaining price levels (between 40 and 2012 2

46 € ex VAT ex SC/m /year). 2011

2012 Source: CECIM 2011

Year 1st half 2nd half

Breakdown by geographical sector: 63 % in North Isère and East Lyon

In 2012, North Isère and East Lyon, which agglomeration’s East. These represent provide the logistics market with large 61 896 m2 (a good score considering the surface properties and availability, took take-up of 35 000 m2 in 2011) and put the 63 % of the take-up (51 % in 2011). Lyon agglomeration before the territories of La Cotière and the Plaine de l’Ain, which At the scale of the Greater Lyon area, total no more than 9 % of the take-up. all transactions were closed in the

2011 and 2012 take-up breakdown by sector 2011 2012

39 % 42 %

20 % 21 % 12 % 9 % 17 % 12 % 16 % Greater Lyon 12 % East Lyon North Isère Cotière + PIPA Exterior territories

Source: CECIM

2012 5 Commerce Greater Lyon key indicators 2012

Commerce turnover in Greater Lyon: 7.2 billion €

Household consumption budget 7 billion € in 2012

Commercial estate: 850 000 m² of sales area in super- and hypermarkets More than 16 000 commercial and service businesses (of which cafés and restaurants)

Turnover of Internet sales: 340 millions d’€

2012 national report: from quantitative to qualitative Production dropped almost 25 % in 2012, In 2012, the number of projects also 2012 economic climate with 2.5 million new m2, against 3.3 million declined by 25 % compared to 2011, with The commercial development report in 2011. These numbers can be explained 5.7 million m2 forecast for the coming presented by Procos suggests that we are by both a decline in the number of projects 5 years. The volume for commercial entering a transitional phase, less based and by a weakening of the permit / investments went from 3.3 billion € in 2011 on volume and more on quality. clearance rate. to 2.6 billion € in 2012, keeping its market share of 20 % of business real estate Turnover rates are in decline across all engagements. The average yields on a segments: -0.7 % for shops, -1.3 % for national level were reduced once more by super- and hypermarkets and -0.2 % for 5.84 %, following 5.95 % in 2011. shopping malls (source: CNCC report 2012).

Close-up look at local level: survey by the Lyon Chamber of Commerce and Industry The monthly survey by the Lyon Chamber 1.7 % compared to the same period a 22 000 m² sales area cleared for super- and of Commerce among a panel of year earlier, the 2nd quarter, disrupted hypermarkets (+ 1000 m2) were authorised independent retailers with under 400 m2 in by a long election campaign and various in the Greater Lyon area. the Lyon region confirms trends in national other calendar effects, ended at -7 %. consumption: • The observed slow improvement of • The first half of 2012 showed a 2.8 % commercial activity since august 2012 decline compared to the first half of 2011. was cut short in November with a decline • After a 1st quarter with an increase of of 2.2 % compared to November 2011.

2012 important events • April 2012: opening of the Confluence shopping and recreation centre: 53 000 m2 GLA with approximately a hundred shops, of which a few “firsts” for the Lyon region (Bose, Muji, …) a Carrefour hypermarket, a UCG 14-theater multiplex cinema, and recreational commerce (Azium, Ludopole, Fitness Park, …). • About a dozen openings of drives-ins in the Greater Lyon territory, a booming format in France. • The closing of 2 BHV branches in Saint Genis-Laval and Limonest.. • Game France and Virgin going into bankruptcy protection, and sale of FNAC. • New record for the Pathé cinema complex at Carré de Soie with 1 227 035 admissions in 2012 (most-visited cinema in the Rhône-Alpes region). • Official release of the results of the 9th survey on consumer buying behaviour in the Rhône (department), in November 2012. For more information on this market research: http://www.business.greaterlyon.com • Grosvenor’s acquisition of close to forty buildings in the Rue de la République for just over 300 million € from ANF.

6 2012 Hotel industry 2012 economic climate: growth of hotel demand in a sluggish context adsorbed by a significant expansion in supply. 2012 will be a memorable year for the by an increase in the average price level There is a big contrast in development per Greater Lyon hotel industry, which had an (+ 1.7 %) minimising the RevPAR’s decline of sector and category with, in particular, strong unprecedented growth of supply: +7 % or 1.3 points. dynamics in the East of Greater Lyon. 1 007 hotel and apartment hotel rooms, in addition to the 294 rooms (net) delivered at The significant addition of new hotels would It should be noted that the results of apartment the end of 2011. That is more than over the initially have impacted its own supply as, hotels are subject to a further increase past 7 years together. However, 2012 was a when looking at the 2011 supply, the latter in capacity in serviced accomodations good tourist year, adding 125 000 additional loses only 2.8 % of occupancy rate and (+ 10.3 %); the AP (with an increase of + 3.8 %) nights compared to 2011, preventing dilution 1.6 % of RevPAR. The new establishments’ again helps stabilizing the RevPAR (+ 2.9 %). caused by the growth in supply – correlated progressive rise in activity is expected to Given the general context and the increase in to a recessive economic context – the total automatically weigh on the overall results of supply (+ 7 %), the rise in sold rooms (+3.9 %) performance lost a 1.5 points in OR. This Greater Lyon. and in the Greater Lyon lodging turnover moderate contraction was compensated (3.5 %) compared to 2011 remains strong.

Key indicators Hotel industry Tourism st Supply level on January 1 , 2013 Stable air traffic with 8.4 millions passengers (+ 0.2 % compared to 2011). 195 hotels, 12 746 rooms 2 % increase of international connections. 37 apartment hotels, 3 070 rooms

Performance assessment of the hotel industry in 2012*

Budget Economy Midscale Upscale / Luxury Overall Sector 2012 N-1 2012 N-1 2012 N-1 2012 N-1 2012 N-1 TO 60.6 % - 2.7 % 53.2 % - 5 % 59.5 % - 3 % North- PM 57.0 % + 4.2 % 98.1 % + 1.2 % 64.4 + 3 % west RevPAR 34.5 % + 1.2 % 52.2 % - 3.7 % 38.3 - 0.1 % TO 68.4 % - 3.1 % 61.1 % -0 % * ND *ND * ND *ND 66.2 % - 1.4 % East PM 43.2 + 2.6 % 70.9 - 1.5 % * ND *ND * ND *ND 72.3 + 0.5 % RevPAR 29.5 - 0.7 % 43.3 - 1.6 % * ND *ND * ND *ND 47.9 - 0.9 % TO 71.2 % - 5.7 % 49.4 % - 6.3 % * ND * ND - - 63.1 % - 8.0 % South PM 42.6 + 4.9 % 70.7 + 0.7 % * ND *ND - - 50.8 + 6.9 % RevPAR 30.3 - 1.3 % 34.9 - 5.7 % * ND *ND - - 32.0 - 1.7 % TO 74.6 % - 5.7 % 69.7 % - 2 % 63.9 % - 4.5 % 61.7 % - 2.7 % 65.2 % - 3.4 % Centre PM 57.8 + 8.2 % 81.9 + 2.6 % 104.7 - 0.2 % 148.6 - 2.2 % 101.1 + 1.9 % RevPAR 43.1 + 2.1 % 57.1 + 0.5 % 66.8 - 4.7 % 91.7 - 4.8 % 65.9 - 1.6 %

Total TO 69.8 % - 4.7 % 63.4 % - 2.2 % 61.8 % - 5.1 % 63.8 % - 1.6 % 64.8 % - 3.4 % Greater PM 47.8 + 5.8 % 76.5 + 1.6 % 103.8 - 0.1 % 142.0 - 1.6 % 88.1 + 1.7 % Lyon RevPAR 33.4 + 0.9 % 48.5 - 0.7 % 64.2 - 5.2 % 90.5 - 3.2 % 57.1 - 1.8 % Source: MKG Hospitality database (114 establishments – 10 312 rooms) OR: Occupancy Rate, AP: Average Price, RevPAR: Revenue Per Available Room Northwest: insufficient data to cover all categories.

* Results calculated based on a progressive sample from late 2011 (including 6 new establishments).

2012 7 Summary hotel industry 2012: a year impacted by new projects In a generally dull economic environment, Ibis / Mercure complex in Part-Dieu) led to concentration of project completions of the the delivery of 1 007 new rooms on the an overall decline of 1.5 points in occupancy SDHT 2011-2015 (Tourist Accommodation market in 2012 in addition to those at the in the Greater Lyon hotel industry. This Development Plan). end of 2011 (in particular the new Etap / is a moderate decline considering the

Solid performance Due to a 7 % increase in the supply of increase in average price level (+ 1.7 %) growth of the Saint-Exupéry airport are rooms in 2012 compared to the previous represents the main compensation factor the driving forces behind the growth of the year, the underlying development of sold of the RevPAR: - 1.8 % compared to 2011. hotel market in East Lyon. rooms and of lodging turnover in Greater Lyon remains positive, with an increase of The sector East and the budget category The budget category, after dropping its + 3.5 % compared to the previous year, register the most impressive results with prices in 2011, registered a net upsurge which is a strong result in the overall a respective RevPAR of – 0.9 % and + 0.9 % of its average price (+ 5.8 %), leading to context. between 2011 and 2012. a growth of its RevPAR. In contrast, the The strong dynamics of the urban RevPAR of the midscale category declined For existing hotels, which in 2012 show development, the increase in the number because of several openings in 2012 and a an overall decline occupancy rate, the of people visiting Eurexpo and the traffic restraint increase of the average price.

Tourist accommodation supply: 1 007 rooms In 2012, the supply increase was 1 014 keys (net)

• Campanile 3*: 123 rooms, sector South • Kyriad Prestige Lyon Est (Saint-Priest) 4*: 145 rooms, sector East • Apartment Hotel Lyon Métropole: 54 rooms, Lyon city centre • Novotel Lyon Confluence 4*: 150 rooms, Lyon 2nd • Apartment Hotel Comfort Suites Lyon Eurexpo 2*: 100 rooms, sector East • Ouest Hôtel 3*: 100 rooms, Lyon city centre • Quality Suites Lyon 2 Confluence: 103 rooms, Lyon nd2 • Charme & Business Hotel 3*: 16 rooms, sector Northwest • Best Western Plus 3*: 86 rooms, sector East • Apartment hotel Lagrange Montplaisir 4*: 130 rooms, Lyon 3rd (Monplaisir)

In 2013, the hotel industry continues to expand. In January, the Ibis Budget Greater Lyon hotel at the Saint-Exupéry airport (1137 rooms, budget category, Sector East) opened its doors. Further openings scheduled for 2013 include: and its partners will be present

• Apartment hotel Park & Suites Elegance 3*: 158 rooms, Caluire at MIPIM 2013 • Apartment hotel Mama Shelter 3*: 154 rooms, Lyon 7th (Jean Macé) Meet all the OnlyLyon partners • Quality Inn 3*: 100 rooms, Lyon city centre at the MIPIM trade show in Cannes, • Comfort Meyzieu 2*: 70 rooms, sector East • Ace Hotel: 87 rooms, sector East March 12 – 15, 2013 at stand • Kyriad 3*: 80 rooms, sector East R31-02, Riviera Room. • Lyon Canabae 4*: 16 rooms, Lyon city centre www.mipim.com

For more information, contact Subscribe to the newsletter: www.economie.grandlyon.com Greater Lyon CECIM Business Services department 61, rue de la République 20, rue du Lac - 69003 Lyon - France 69002 Lyon - France Phone (+ 33) 4 26 99 39 29 Phone: (+ 33) 4 78 92 93 96 Email: [email protected] Email: [email protected]