Alex Ledsom

<p>A recent study highlighted nine million square meters of office space lies vacant across France. In some parts of Paris, this amount of space is at an all-time high, with over one million square meters in the Greater Paris region vacant for more than four years, which accounts for nearly 24% of immediate supply. Double that amount of space has been empty for over two years.&nbsp;</p><div class="paywall-selector"></div><div class="paywall">



<p>Most of the vacant office space in Paris is in the suburbs, a trend duplicated nationwide. It&#8217;s forcing property developers and elected professionals to rethink office space into something else.</p>



<h2 class="wp-block-heading">The end of a 60-year economic cycle</h2>



<p>There are many reasons why office space lies empty. As in other countries, there’s been a shift to <em>télétravail</em>, working from home, mainly since Covid (the average for many French businesses is two to three days per week). Simultaneously, companies are looking to downsize, mainly because office space is the most significant expense after people.</p>



<p>But it&#8217;s likely that something <a href="https://www.lemonde.fr/economie/article/2024/12/10/immobilier-de-bureau-plus-de-9-millions-de-metres-carres-sont-vides-en-france_6439762_3234.html">else</a> is going on, too. To the Institut de l’épargne immobilière et foncière (IEIF), an independent study and research center dedicated to real estate, it looks more like the end of a 60-year cycle of growth in the tertiary economy.</p>



<p>Since the 1960s, people have worked less in the primary and secondary sectors involving raw materials and manufacturing. There has been a shift to a service economy, where people needed offices for commerce, transport, and financial services, say.</p>



<p>The real estate industry kept building offices for these workers, leaning into construction throughout the 2010s when there was high liquidity and low interest rates. And now there’s an oversupply.</p>



<h2 class="wp-block-heading">The quality of office space is an issue</h2>



<p>But it’s also an issue of quality, not just quantity.&nbsp;</p>



<p>A report by <a href="https://www.gensler.com/blog/making-sense-french-workers-contradictory-office-attitudes#en">Gensler</a>, a design and architecture firm, shows that there was only €1 billion of investment in offices in France in the first half of 2024, the lowest level recorded in the first two quarters since 2009.</p>



<p>The lack of investment in new or existing office space in France means that there are two types of office space; those that companies want and those that they don&#8217;t.</p>



<figure class="wp-block-pullquote"><blockquote><p>There was only €1 billion of investment in offices in France in the first half of 2024, the lowest level recorded in the first two quarters since 2009.</p><cite>According to a report by <a href="https://www.gensler.com/blog/making-sense-french-workers-contradictory-office-attitudes#en">Gensler</a>.</cite></blockquote></figure>



<p>According to a report by the French Ministry for Ecological Transition, almost 80% of French office space is over 20 years old, and over 50% date from the pre-1980s. They don&#8217;t meet current thermal, acoustic, or air quality requirements. Owners must also reduce the energy consumption of buildings over 1000 square meters in line with recent regulatory changes, which is a complicated challenge for older building stock.</p>



<figure class="wp-block-pullquote"><blockquote><p>80% of French office space is over 20 years old, and over 50% date from the pre-1980s.</p><cite>According to a report by the French Ministry for Ecological Transition.</cite></blockquote></figure>



<p>Prestigious Fortune 500 companies, obliged to reduce carbon emissions, bag the modern, climate-controlled, eco-flexible-working offices that can attract a workforce back into the office, at least for some of the time.</p>



<p>The rest is left to run down. A low rate of renewal and upkeep has meant the vacant spaces are not just unattractive, they’re are sustainably unviable. With reducing demand and older stock, property owners have to offer considerable commercial incentives to tenants, such as lower rents and longer leases.</p>



<p>Studies show that poor office space doesn&#8217;t just deter hiring the best employees but also hampers workplace productivity. Plus, the quality of a workspace positively correlates with job satisfaction and company loyalty.</p>



<p>With this new study showing just how much office space lies empty across the country, elected officials can see the detail in their municipalities, and it might be a call to action. Owners would be happy for ideas as they still have to pay taxes on empty buildings.&nbsp;</p>



<p>But what could take its place?</p>



<h2 class="wp-block-heading">What will French &#8216;urban recycling&#8217; look like?</h2>



<p>One obvious response is housing. La Foncière de Transformation Immobilière, established in 2020, has fifty developments, where it transforms commercial real estate into affordable housing. Another example is Novaxia, an investment company that recently converted an art deco office into 37 housing units in the 20th arrondissement in Paris.&nbsp;</p>



<p>But it has to make economic sense. For this sort of &#8216;urban recycling&#8217; to occur, the property value must have fallen to the point where it&#8217;s profitable, and a building cannot have too many windows or thick walls. Multiple owners are also a complication. Commercial real estate is often designed for sizeable open-plan office space, making it unsuitable or difficult for re-development.</p>



<p>However, there is a similar <a href="https://www.ellenmacarthurfoundation.org/breathing-new-life-into-vacant-commercial-buildings-novaxia">trend</a> across other European cities where suitable office space has now been identified as viable for residential use. Over two million square meters in Madrid and Barcelona could create 28,000 new homes. In the Netherlands, 665,000 square meters could produce 11,500 homes, and in Frankfurt, the office-to-residential projects pipeline hopes to produce 16% of the new planned supply.</p>



<p>There’s also a move to turn large corporate parts of cities into &#8216;hybrid destinations&#8217; where vacant buildings and spaces <a href="https://www.bbc.com/worklife/article/20240509-corporate-real-estate-on-cliff-edge-to-rethink-communal-spaces">entice</a> visitors all week long with green spaces, amenities, and leisure options. Canary Wharf is one such example, where people are redeveloping primary office space to incorporate more options for multi-use spaces.</p>



<h2 class="wp-block-heading">Is the U.S. mall a good template?</h2>



<p>France could take its lead from the U.S., where empty shopping malls, once ghost towns are reviving communities <a href="https://www.nytimes.com/2024/12/21/style/what-do-we-want-from-the-mall.html">in different ways</a>. One is by changing what you might find inside. Service providers like nail salons, hairdressers, and fitness chains are replacing department and clothing stores. In Fort Worth, the Department of Motor Vehicles is in a mall. Many malls are adding experiences, too. American Dream in New Jersey has a water and ski park. And Westfield Garden State Plaza has a &#8216;Nerf Action Xperience.&#8217;</p>



<p>These places that were the depressing personification of the 1980s are now repackaged for family fun, more as amusement parks than as retail centers, one of the few places where people choose to congregate in person.</p>



<p>In other places across the U.S., malls are heading upmarket. Take Belmont Park Village, just a 15-minute drive from Kennedy Airport and 25 minutes from La Guardia. This village is a place for business execs and frequent flyers to hang out before their planes leave and do some tasteful, upscale shopping. It’s a space to rival major tourist landmarks rather than somewhere to do the weekly shopping.&nbsp;</p>



<p>The Paris Summer Olympics showed how far beloved but austere landmarks can be successfully repurposed to help tourism. And it&#8217;s now the seventh year running that the<a href="https://bonjourparis.com/lifestyle/grand-palais-des-glaces-the-worlds-largest-indoor-ice-rink/"> Grand Palais in Paris</a>, built in 1897, has housed the world&#8217;s largest indoor ice rink over the holidays. Rethinking its usefulness and purpose could also pay off for French office space.</p></div>

Vacant office space is forcing property developers and elected professionals to rethink office space into something else.

Nine million square meters of office space is vacant across France. Can 'urban recycling' make way for housing or leisure?

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Nine million square meters of office space is vacant across France. Can ‘urban recycling’ make way for housing or leisure?

Nine million square meters of office space is vacant across France. Can 'urban recycling' make way for housing or leisure? | Fortune Europe

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