Paris may take the lion’s share of foreign real estate investment into France but the country’s second-largest metro area, Lyon, is steadily building its own reputation with the international business audience.
Investment into the greater Lyon area is gathering pace. It saw a record 98 commercial real estate transactions worth €983 million across all segments last year – comfortably beating the average of 71 over the last 10 years. And 2018 looks set to be even better with a predicted €1.2 billion plus in commercial real estate investment, according to JLL.
Office is by far the most popular asset class in the Lyon market, accounting for between 70 to 80 percent of total investment. Much of the activity is rooted in the Part-Dieu district, where growing numbers of co-working spaces vie for space with corporate headquarters, according to a joint JLL and Ernst Young report Why invest in Lyon. The area ranks second in the country by investment activity only to Paris’ La Defense business district.
“Lyon is one of the most popular Eurocities among corporates and international investors largely due to its transparency and stable rental values,” says Laurent Vallas, Head of JLL in Lyon. Vacancy rates are already among the lowest in Europe at 5.6 percent and demand for office space is steadily increasingly.
“We’re expecting office take-up of more than 320,000 square meters in 2018 – up 19 percent on 2017, which is comparable to, or even greater than, Barcelona, Milan or Amsterdam,” Vallas adds.
“We’re seeing a good supply pipeline both in terms of new deliveries but also refurbishments in line with corporate and investor expectations. It’s adding up to a virtuous circle of growth that’s helping Lyon become one of the most dynamic cities in Europe.”
The wider Auvergne-Rhône Alpes region also has a strong industrial past – and warehouses remain a key part of its economic landscape. Industrial real estate made up 16 percent of investments in 2017.
“Lyon remains a strong industrial city with an annual take-up around 700,000 square meters of light industrial and warehouses combined,” says Vallas. “Multinational corporations, particularly focussed on manufacturing, have invested significantly in expanding their existing facilities in the Lyon region due to the growth in their respective industries.”
Getting the best people for the job
One of the big draws for multinational investors is the easy access to a deep talent pool, attracted by the region’s job opportunities, cultural life and central location.
Lyon is strategically located in the heart of Europe with strong links both to the rest of France and international destination through the recently upgraded airport. “Strong infrastructure means that professionals can easily ‘work, live and play’ within the city. All of this adds up to having a quality of life that’s recognized as being among the best in Europe,” Vallas adds.
Lyon is also known for its education, boasting over 150,000 higher education students and providing a solid talent pipeline for the city’s developing business hub.
An eye on the future
Lyon has big ambitions for its urban environment as well as its human capital. In the coming years, plans are afoot for a major redevelopment to transform the Part-Dieu district into a mixed-use urban center with a new landmark skyscraper providing 65,000 square meters of office space, a four-star hotel and shops and services on the ground floor. Its train station is also in for a major revamp to almost double its capacity by 2030, along with improvements to the city’s public transport network. It’s not the only area undergoing redevelopment – new business districts are springing up in Lyon Confluence, Lyon Gerland and Carré de Soie.
Meanwhile, retail investors are keeping an eye on the city’s already thriving retail scene as the refurbishment of the Part-Dieu shopping centre gets under way. With 36 million visitors a year and more than 240 stores over 130,000 square meters, it’s already considered one of the top shopping centres in Europe and the revamp will add an extra 32,000 square meters of rental space alongside a new 18 screen cinema and sizeable areas of public space.
Running though all of Lyon’s major urban projects is its smart city strategy, which aims to bring together its dynamic economy with sustainable development, Vallas says: “Its up-and-coming business districts have become ‘life size’ areas of experimentation to imagine and develop new ways of living and working in the city.”
He believes the regeneration and its focus of technology position the city well for the future.
“At a time when technological, societal and behavioral changes will define the shape of the city of tomorrow, Lyon possesses all the necessary ingredients to continue its extraordinary development. The future looks bright for the city, which should continue to drive interest from investors, both national and international,” Vallas concludes.
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