Increase in ILAT

Posted on January 30, 2025February 26, 2025 by Sixtine Epitalon

Increase in ILAT

a silent threat to tenant companies in the Paris Region

January 30, 2025

Quote or short catchphrase, short sentence or paragraph (> Always end sentences, even subheadings, with a period).

With the steady rise in the Service Sector Rent Index (ILAT), companies renting office space, particularly in the Paris region, are seeing their costs rise.

It may seem a technical subject, but it's one that CFOs need to focus on, because it has a direct impact on cash flow and budgets.

Analysis of a phenomenon and solutions for dealing with it.

Michael Kaplan

Associate

Vincent Ternynck

Real Estate Services Director

An increase that weighs heavily

Since 2018, ILAT has recorded an increase of 21.62%, rising from 112.74 inQ3ᵉ 2018 to 137.12 inQ3ᵉ 2024.

This index, which adjusts rents for tertiary activities, follows inflationary trends and reflects the cost of construction and economic growth.

Let's take a concrete example: a company signing a lease in 2018 for an annual rent of
300,000 €.

With the evolution of the ILAT, its rent for 2024 will reach 364,875€, i.e. an increase of +64,875€.

Why is ILAT rising so fast?

Historically, ILAT was supposed to be less volatile than ICC (Indice du Coût de la Construction), long used to index commercial leases.

ILAT is based on a mixed basket including inflation (Consumer Price Index), the cost of new construction and Gross Domestic Product (GDP) in value terms. This combination was intended to mitigate extreme variations, unlike the ICC, which is based solely on the cost of construction.

Currently, ILAT is particularly sensitive to economic fluctuations, due to the combined effect of several factors:

- Inflation, which remains high since 2021, fueled by rising energy and raw material prices.

- The cost of construction, impacted by rising materials prices and environmental constraints.

- Changes in GDP, which reflect an uneven economic recovery and influence.

This dynamic highlights a central issue for companies: how to absorb these increases while other operating expenses are also rising?

Major risks for tenant companies

The impact of the ILAT increase goes beyond rents. Several risks are looming for tenant companies:

- Increased financial pressure
Unanticipated rent increases can reduce companies' investment capacity and affect their cash flow.

- Unpredictable budget
ILAT's high volatility complicates budget planning, making financial projections less reliable.

- Reduced margins
Real estate often represents the second largest expense item for companies, just after salaries. In a tense economic environment, where cost control is essential, a 20% increase in an expense item as strategic as real estate can weigh heavily.

How to adapt?

To cope with this increase, it's in companies' best interests to adopt a proactive management approach. Here are a few avenues to explore:

- Anticipate in budget forecasts

CFOs need to incorporate expected ILAT increases into their budgets. With an average annual increase of 3-4%, planning ahead over 3 to 5 years becomes crucial.

- Negotiate leases

When signing or renewing a lease, negotiate more protective clauses, for example by capping indexation (e.g., at 2-3% per annum upwards or downwards).

- Optimize the use of office space

With the spread of telecommuting and hybrid ways of working, the question of leased space is essential. Reducing a €364,875 rent by 10% saves €36,487 a year in rent alone. Controlling floor space will also save on charges and taxes.

- Diversify locations

If business permits, explore locations outside the most expensive areas of the Paris region. Some locations offer more affordable rents, with lower indexations.

A challenge, but also an opportunity

The ILAT increase is a reality that all companies have to face.

While the risks are considerable, they can be transformed into opportunities. Optimizing space, renegotiating lease clauses, or even reinventing real estate organization are all levers that can be used to lighten this burden.

To remain competitive, companies need to adopt a proactive and strategic approach. Above all, they need to bear in mind that real estate, although costly, can be a lever for attractiveness and performance, if carefully managed.

IN BRIEF

- ILAT has increased by +21.62% since 2018.

- A company with an annual rent of €300,000 in 2018 could pay €64,875 more in 2024.

- Solutions lie in anticipation, negotiation and optimization of leased space.

Acting now is essential to limit future impacts and better control costs.

Interview Business Immo

Posted on June 12, 2024February 27, 2025 by Sixtine Epitalon

Interview Business Immo

June 12, 2024

"We are not subject to real estate market cycles.

Parella has placed the end-user at the heart of its business model.

Through its three divisions - Real Estate Services, Workspace and People & Transformation - the 200-strong company intends to pursue its international expansion over the coming years.

Michael Kaplan and Olivier Neuman, two of his associates, shed light on the subject.

Olivier Neuman

Associate

Michael Kaplan

Associate

"This positioning enables us to address most corporate real estate issues without any conflict of interest. Today, 70% of our customers are tenants, while the remaining 30% are owner-users. Over the years, we have built up our expertise in three main areas.

Michael Kaplan, Partner

What is Parella's current position?

Michael Kaplan /

We're celebrating our 15th anniversary this year, which is no mean feat. Since our creation, we have remained true to our credo: to advise only the end-user. This is what all our associates have in common. Even though we come from a variety of backgrounds (architect, broker, management consultant, ex-lawyer, etc.), what we have in common is that we have all worked for international brokers, and in the end, we have chosen our camp - that of the end-user.

This positioning enables us to address most corporate real estate issues without any conflict of interest. Today, 70% of our customers are tenants, while the remaining 30% are owner-users. Over the years, we have built up our expertise in three main areas.

Olivier Neuman /

To add real value to a real estate project, we need to have a 360° vision, so that our multi-disciplinary teams can work together. This is our priority.

Could you explain these 3 "business worlds" to us?

Michael Kaplan /

There's the Real Estate Services division, which provides real estate appraisal services, real estate strategy and support for real estate research and transactions: taking on leases, renegotiating leases, selling and buying real estate assets, CPI, Vefa and Befa.

Olivier Neuman /

In 2023, this real estate consultancy division had its best year since our creation! In the Île-de-France region, we are close to the 80,000 m² mark for our end-user customers.

While the macroeconomic context is not favorable...

Olivier Neuman /

We are not subject to real estate market cycles. Whether they are growing or not, our customers are always faced with real estate choices and challenges: renegotiating a lease, relocating, downsizing or upsizing, buying a site, selling it, upgrading technical equipment, adopting new ways of working... Parella Group provides solutions to a wide variety of issues.

Michael Kaplan /

Our business is not subject to the dynamics of any particular real estate sub-market. Whether our customers position themselves in La Défense or central Paris, it makes no difference to our teams, who are not geographically sectorized and do not engage in rental marketing.

Rising interest rates, which have a major impact on investment volumes, do not affect us, as we do not engage in capital marketing. On the other hand, as Olivier says, our end-user customers always have issues to deal with: an approaching lease expiry date, changes in headcount that impact surface requirements upwards or downwards, discussions on the sharing of individual workstations, etc.

What are your customers' expectations today?

Olivier Neuman /

Most of our customers are redefining their post-Covid real estate strategy to take account of the impact of teleworking. In particular, they are looking at the right mix of flex office options to be implemented, the steps to be taken to strengthen collaboration and team cohesion, the impact of digital on physical and digital workspaces, and their location and attractiveness.

Overall, they are therefore moving towards a reduction in floor space for the same number of employees. The creation of collaborative spaces is another strong trend. It's a case-by-case approach. We're very agile.

What are your other two "universes"?

Michael Kaplan /

There's the Workspace division, where you'll find an interior design studio, a technical design office for all trades, which we've beefed up enormously in recent years, and a project management team for construction and interior design projects. This division is often involved in the continuity of a project in the real estate division, but also in stand-alone assignments. Mainly for offices, but increasingly for retail and hotel-restaurant projects.

We can act as project manager, as in the case of Total Energies' The Link tower in La Défense, or as prime contractor or general contractor, in design & build, as in the case of Samsung's new headquarters in Saint-Ouen.

The People & Transformation division is the last of these, made up of consultants from management consultancies and the transformation departments of major groups.

Against a backdrop of projects that are increasingly focused on people and teamwork, this team supports change, facilitates social dialogue and deploys original, high-impact communication tools. Listening, co-creation, communication, onboarding, gamification, training and coaching hold no secrets for them.

How much of your business comes from the Paris region?

Michael Kaplan /

In France, we generate 70% of our business in the Île-de-France region and 30% in other regions. The proportion of regional business is growing steadily. Internationally, some ten years ago we created Exis Global, a worldwide network of partners sharing the same 100% user-dedicated positioning.

Since 2019, with the support of our financial partner (the Qualium Investissement investment fund), we have bought out a number of our European partners. As a result, we now have our own offices in Madrid, Milan, Berlin, Luxembourg, the Netherlands, London and Brussels.

How does Publicis' leasehold interest in Gecina's Mondo illustrate your business model?

Michael Kaplan /

Publicis was looking for a consultancy that was both expert and objective, able to mobilize in a short space of time and implement its recommendations.

Olivier Neuman /

Publicis' strategic thinking had already begun before we started working together. The company was planning to consolidate several sites, and was looking for a new building adapted to the deployment of new ways of working; a building that would be more central and more in line with its environmental strategy. We helped Publicis with a multi-dimensional analysis of different buildings, scenario modeling and negotiations. For Mondo, in the 17th arrondissement of Paris, we carried out spatial and technical analyses, studied the overall cost of the operation and negotiated all the rental conditions with Gecina. Today, we are continuing to work with Publicis on the Mondo development.

What are Parella Group's objectives for the coming years?

Michael Kaplan /

We want to continue our internationalization - which means strengthening our range of businesses in certain countries. We want to bring new associates on board. We want to continue to grow while remaining agile, listening to our customers' expectations and challenges, because that's the key to our business.

THE UNYCK HOUSE

Posted on May 24, 2024February 27, 2025 by Sixtine Epitalon

THE UNYCK HOUSE

New home for top executives

May 24, 2024

A few weeks ago, Maison Unyck opened its doors on rue du Faubourg Saint-Honoré to welcome its community of leaders.

On the 8th floor, with views over the rooftops of Paris, these spaces invite you to let go and get inspired.

Michael Kaplan

Associate

"Managers, never alone again".

Living spaces imagined, designed and built by Parella to embody Unyck's promise: "Managers, never alone again".

When you walk through the doors of Maison Unyck, you might think you were in an apartment. Yet this is where the most beautiful transformations take place. Because Unyck is not a traditional consulting firm, the company wanted to mark this break with the past in its premises.

To create an environment conducive to conversation and confidence, the layout has been designed to make customers feel right at home.

To achieve this, Maison Unyck has adopted the codes of "home from home". No offices as we know them, but an apartment full of warm, antique objects.

A dining table where you can discuss the most strategic subjects over tea, a library where everyone can help themselves, becoming a part of the place... Proximity is the key word. Customers feel at home at Unyck.

Conclusion

Creating the right conditions for successful support requires a place where change can take place. The Maison Unyck was designed with this in mind.

Active Design

Posted on May 6, 2024February 24, 2025 by Sixtine Epitalon

Active Design

Environment, health or pleasure : how does active design engage employees?

May 6, 2024

In the run-up to the Olympic Games, some of our customers are wondering about the benefits of Active Design in their workspaces, a method that encourages people to act naturally.

While this practice has been commonplace on our streets for some years now, as a way of combating sedentary lifestyles, it is now taking root on the premises of some companies.

Can it, beyond mobility, move the lines and instill new, more virtuous practices?

For the environment, health or just for fun, how can premises help to carry the environmental commitments, QWL or values of organizations, while taking care of their employees?

Eric Vermande, Image and Style Director and Diane Mendes, People & Transformation Manager, took an interest in the subject.

Éric Vermande

Image & Style Director

Diane Mendes

People & Transformation Manager

Active Design, the path to new uses (at full speed)

Who hasn't preferred to climb the stairs in the metro, rather than take the escalator, seduced by a fun, colorful or interactive challenge? These messages of calories burned, rewarding or educational, even if they make us smile, encourage us to take action.

Active Design will support companies' key messages on a day-to-day basis. It can help all organizations in their practices. CSR implementation, for example. Active Design can help in this respect.

Beyond this, we can imagine pathways contributing to well-being (QCVT), instilling values (employer branding), or new ways of working (flex-office).

Active Design is all about the natural adoption of practices, whatever they may be.

To combat sedentary lifestyles, Active Design has mainly developed around solutions encouraging sport. However, although athletics tracks are appearing in corridors, their role is to create routes, designed to activate employees in a natural way.

However, the aim is not to get them to run around in suits and arrive at meetings with wet shirts. Physical activity is one of the levers, but not the only one. Brain activity is just as important.

Induce to act, from path to experience, everything has to be created

The notion of a journey is important for creating an experience and initiating new habits.

It must be self-supporting and desirable.

Every user must be able to use it at any time of day, without explanation.
Everything is done to induce and create an incentive environment that will become part of everyday life. The message is positive, educational, consistent with values and rewarding for those who follow it.

Create a new playground where employees can play together

We start with values and semantics. We get away from counting calories to play with the employee, projecting him or her into a dynamic.

Graphic design is a real lever : explicit or implicit, it creates flows. Paths with active and directional phases... Beyond physical exertion, the important thing is to encourage contact with as many people as possible.

Posters, signage, frescoes, hijacking of objects, all avenues can be explored.

Follow a blue thread that guides you to activities, for example. Or rearranging objects so that you don't see the same message depending on your position (sitting, standing), to encourage open-mindedness.

It's also important to work on branding to create a sense of belonging.

While the use of color helps create a sense of discovery, the ideal is to create pathways that integrate naturally into the space.

Induce a perennial positioning as well as a more ephemeral perception of events.

Steps to long-term commitment

A habit is created after 21 days. In addition, studies carried out by cities show the importance of designing evolving routes, to avoid abandoning the practice once the discovery phase is over.

Step 1: Understanding the objectives and issues

The first step is to identify the objectives. You don't do active design for active design's sake. Are we creating one or more pathways? Are we going to act on CSR, values, QWL?

-Step 2: Analysis of uses and employee needs

It is necessary to adapt to the audience and the corporate culture in order to raise awareness.

This requires an understanding of what affects them. In the same way as for an employee journey, we're going to look at habits. As experts in space planning, the Parella Group teams analyze the sequencing of the day, needs and movements. This enables us to create active, directional phases. It's important to think through uses carefully, to avoid over-solicitation, which would be counter-productive.

But also perhaps to identify those that can be diverted and give meaning, by involving employees in dynamic, unifying and fun workshops.

Step 3: Usage phase and development

Experimentation could be a first step to understanding the maturity peak and seeing how employees react.

Depending on the issues and needs detected, managerial support will enable employees to allow themselves more playful moments. The course can also be punctuated with activities (sports coaching, for example).

It is also possible to bring the courses to life in line with important events for the company.

We can also imagine a change of color for Breast Cancer Week. Or a launch with the Olympic Games.

Scalable for lasting change

It must be easy and inexpensive to set up and take down courses, so as to be able to offer new experiences that adapt to the different maturity levels of users.

Relying on change management specialists enables us to create evolving courses that anchor change in the corporate world over the long term.

La Bonne Bulle® (The Good Bubble)

Posted on April 17, 2024February 18, 2025 by Sixtine Epitalon

La Bonne Bulle® (The Good Bubble)

a game for flexible workspaces

April 17, 2024

Playing music or taking a call at your workstation in a shared space: acceptable or not?

Beware: the melody of hybrid workspaces is not always the melody of happiness.

What if all it took was to co-construct and define, together, the rules of life in your workspaces?

La Bonne Bulle® session

Parella

Matthis Petrovick

Expert Parella Valuation

Discover "La Bonne Bulle®", a game designed and developed by Parella to provide companies with a playful way of learning about flexible workspaces and building new rules for living in them.

Gamification is a powerful lever for transformation. Co-constructing one's own rules of life in the workspace in a playful way with one's colleagues ensures a much greater sense of ownership.

"La Bonne Bulle" is a workshop offered as part of the Parella Academy® training catalog.

Discover the page dedicated to the game in the first edition of our Office Paper.

Author : Sixtine Epitalon

Increase in ILAT

Increase in ILAT

a silent threat to tenant companies in the Paris Region

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Interview Business Immo

Interview Business Immo

Interview Business Immo

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THE UNYCK HOUSE

THE UNYCK HOUSE

New home for top executives

Conclusion

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Active Design

Active Design

Environment, health or pleasure : how does active design engage employees?

Scalable for lasting change

You may also like...

La Bonne Bulle® (The Good Bubble)

La Bonne Bulle® (The Good Bubble)

a game for flexible workspaces

You may also like...

More than offices...

Address

Increase in ILAT

a silent threat to tenant companies in the Paris Region

You may also like...

Interview Business Immo

Interview Business Immo

You may also like...

THE UNYCK HOUSE

New home for top executives

Conclusion

You may also like...

Active Design

Environment, health or pleasure : how does active design engage employees?

Scalable for lasting change

You may also like...

La Bonne Bulle® (The Good Bubble)

a game for flexible workspaces

You may also like...

More than offices...

Address

OFFICE PAPERS