Context

• The average size of ⁣commercial real estate projects has decreased ⁢nearly threefold in the past decade.
• Despite⁤ consistent construction authorizations,project starts are declining.
• Regulatory constraints, notably environmental regulations,‍ are intensifying.

Key Figures

376: The number of commercial real estate projects ⁢slated for completion in the next five years.

5,202 square meters: The average surface area of⁤ these projects.

Source: Procos

The number of commercial real estate projects is steadily decreasing. According to the⁢ Procos commercial real estate observatory,⁣ 376 projects are scheduled ⁤over the next five years, a decrease from 518 in 2018.Large-scale projects are becoming increasingly rare, with the average surface⁤ area around 5,000 square meters,⁤ compared⁤ to 14,000⁣ square meters⁢ a decade ⁢ago. A notable opening last year was the Neyrpic shopping center in Saint-Martin-d’Hères, near Grenoble, spanning over 50,000 square meters, including 24,000 ⁣square ⁣meters of retail space.

This year, the shopping⁢ center projects nearing completion are more modest, under 15,000 square meters. Even if the most numerous projects remain the Retail Parks⁣ and operations in the commercial area, their number decreases. Only the number of mixed projects is ⁢increasing, according to an industry‍ expert. ‍Approximately 180 projects are slated for completion in 2025, similar to last‍ year. Though, only 72 were completed in 2024, and projections suggest further cancellations in 2025.

Project realization is becoming increasingly challenging. In 2024,⁢ permits were granted for 3.9 million square‍ meters, ⁣but construction commenced on only 2.2 million square meters. although there are as many building permits delivered as before,the starts fall,an industry observer noted.

shifting Priorities

Public authorities are urging developers to minimize the environmental impact ⁤of projects, avoid artificial soil, and ⁤redevelop brownfield sites. In 2023,a government initiative aimed to transform commercial zones into mixed-use ⁤spaces with housing,offices,and green areas. However, subsequent changes⁤ in government have ‍seemingly deprioritized this initiative. The ⁢Federation of Trade ⁤Actors in ⁤the Territories (FACT) indicates that‍ projects requiring coordination between public and private entities are struggling to materialize.

The discussions are long and complex with, sometimes, programmatic expectations on the part of elected officials who are a little decorated‍ with the realities of the markets. In addition,there is still distrust between certain public and ⁣private actors,according to a FACT representative. The slowdown in new residential real estate has further⁢ dampened the momentum, as developers focus on existing projects‍ rather than initiating new ones.

Increased Risk

In⁤ late 2022, a financial institution and real estate‍ companies created a land vehicle with 200⁢ million euros dedicated to redeveloping⁢ commercial areas. The first project was planned for Montigny-lès-Cormeilles. However, the project was halted⁢ due to unforeseen circumstances. An ‍industry CEO expressed pessimism about the project’s future, noting the dedication of local leadership to the city’s transformation.

Restructuring city⁢ entrances is no longer‍ a top priority for property developers. We concentrate our energy⁤ and our capex to other subjects. If ⁢the public authorities had really given us what they had promised us, in particular ⁤in ⁢terms ⁣of simplification of the ⁢procedures and which would allow⁤ us to guarantee the duration of the process, we could take risks. Currently,when we start a project,we do not know if it will be done in three ⁣years or in fifteen. When the money did not‍ cost anything, it didn’t matter.Today,⁣ this is no longer the case. We cannot turn balance sheets on⁣ which we can bear ⁤the risk of the time ⁢limit for these projects.

Commercial areas vary⁤ substantially. Some ⁤are⁣ integrated into the city, while others remain isolated, posing challenges for residential development. Many areas are also ⁣performing ⁤well, making it difficult ⁣to persuade owners to undertake transformations. Vacancy rates are low in ‍the 60 largest commercial ‍areas in⁣ France, according to Procos.

The objective‍ of transformations⁣ must be ⁤to create real estate value, to motivate investors, but also for the actors already in ⁤place on these places, owners as operators, and this greatly complicates the subject, an industry ⁢expert stated.

The ⁤discussions‍ are⁣ long and complicated with, sometimes, programmatic expectations ‍on the⁤ part of elected officials who are a little decorated with the realities of the markets.

Representative of the Federation⁣ of Trade Actors in ⁢the Territories (FACT)

Federations also highlight conflicting regulations, such as Article 40 of a law promoting‍ renewable energy, which ⁤mandates photovoltaic panels⁤ on parking lots and buildings, hindering restructuring efforts. The commercial real estate sector faces numerous challenges⁤ in the coming years. ⁣Still, the market remains‍ resilient compared‍ to the ⁣housing and ⁢office ⁤sectors.

Major Projects of 2025

Among the projects identified,‍ several major operations are expected to be completed this year, primarily extensions and restructurings. The largest,the creation of the city center of Bobigny,has been delivered. Retailers are moving in,with openings including Footlocker,Fitness Park,a tobacco shop,and a pharmacy. A Market crossroads is scheduled to open in May.