Q&A with Icade of France

In February, Icade announced two preliminary sales agreements for more than €320 mln. 

The French property company, which specialises in the office and healthcare sectors, agreed to sell the 29,000 m2 Millénaire 1 building in the 19th district of Paris to Brookfield Asset Management. The transaction completes at the end of April. It also agreed terms to sell the 20,000 m2 Loire building in Villejuif, Val-de-Marne, to an insurance group.

In this brief Q&A, head of commercial property, Emmanuelle Baboulin, explains how the listed property company with €14.7 bn of assets sees the market.

PropertyEU: How is the leasing market?
Baboulin: We noted a very sharp downturn of over 40% in take-up in 2020 and new leases will most likely remain at that level in 2021.

PropertyEU: When will tenants feel more confident so that activity resumes to more normal levels?
Baboulin: Many companies are putting off their real estate projects, not wanting to rush into any decisions, not until they have a full picture of the impact of teleworking policies on their needs in terms of space and layout. They are also waiting to know the exact impact of the health crisis on their economy.

PropertyEU: Is it fair to say there are less tenants interested in taking up office space?
Baboulin: Yes, there are fewer tenants looking for space on the market, with the exception of large groups that are able to project more than 3 or 4 years down the road and to plan for future locations long in advance.

PropertyEU: How are companies approaching working from home practices?
Baboulin: As the crisis is still with us today, companies are considering implementing teleworking policies on a permanent basis, probably one or two days a week, and changing the layout of their office buildings. Employees should be happy to return to the office where they will have all the space they need to work together, concentrate, interact and exchange ideas with their colleagues.

PropertyEU: Will this trend have a big impact?
Baboulin: I do not believe that teleworking will have a real impact on the need for space, but certainly on its layout and on the quality of the spaces and amenities provided to employees.

PropertyEU: How is the investment market?
Baboulin: Investors are still investing, and good-sized transactions are being made on core and core plus assets, leased on good terms to high-quality tenants capable of paying their rent. Yields have remained stable on these quality assets and the amount of available liquidity makes it possible to expect a satisfactory level of investment in 2021. Icade has already signed two preliminary sales agreements for over €320 mln at the beginning of the year and will maintain the pace of its sales.

PropertyEU: What would you say is the single biggest issue facing companies such as yours?
Baboulin: The desire to adapt office space to the post-Covid world, that is as I was saying, to find the best layout for hybrid remote and office working. Organising the spaces so that employees can work in all kinds of different ways, whether with others or alone, on brainstorming or team building activities... with excellent connectivity and a wide range of services... everything they do not have at home. Workers need an environment that is safe, caring, efficient and connected—that is what “Office as a Service” is about.

Also of great concern is the environment, even more so today than in the past, energy performance and carbon footprint; a desire for everyone to be more responsible, a real awareness on the part of all players to fight against climate change.

PropertyEU: What should we expect from the company this year?
Baboulin: The integration of our "Purpose" and the implementation of our low-carbon strategy, with ambitious goals being set for and in collaboration with our customers. Also, ongoing sales, investments in our development pipeline, with three completions scheduled for this year, and one already completed.


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