Can too many offices kill the office? The Grand Paris Office Crane Survey, produced by Deloitte in partnership with Explore, reveals that 2024 will equal the all-time record for office building deliveries in the Greater Paris Metropolis. Unsurprisingly, the focus is on the capital.
Inertia is one of the hallmarks of the real estate industry. The results of this 42nd edition of the survey, which lists new or restructured office projects of over 1,000 m² launched between April and September 2024 in Paris and the inner suburbs, are clear to see. And there are still plenty of them.
At a time when office space has almost become a dirty word among many real estate investors, more than 1.14 million square meters of office space were delivered in 2024 than ever before. Over the last six months studied (from April to the end of September 2024), 36 transactions were delivered, representing a total surface area of 418,000 m², a level still above the half-year average of the Deloitte study. The capital accounted for the bulk of these new transactions (24 deliveries in the last half-year), "reflecting Paris's enduring appeal as an economic and cultural center", as Deloitte's experts point out.
This dichotomy is also reflected in the level of work-in-progress. While the average level fell very slightly across the metropolitan area (-3% to 1.54 million m²), it rose in the capital (+237,000 m²) to reach its highest level ever. For the first time, Paris intra-muros accounts for the majority of the city's office production activity.
This is reflected in the activity dynamic. Of the 32 new projects launched in the last six months, 29 are located in Paris. Not a single project was launched in the north and east of the Paris metropolitan area, with the sole exception of Grandes-Serres de Pantin, an 80,000 m² mixed-use urban renewal program including 56,000 m² of office space developed by Osae Partners and Alios Développement.
Business hubs at a standstill
In the west, not much has changed. The major historical business hubs are posting significant declines in activity. Office space under construction in the western business sector and at La Défense fell by 43% and 38.5% respectively. Not a single new project has been launched in Europe's leading business district. In fact, there are still over 150,000 m² to be delivered by Q4 2025, of which almost 60% are still looking for tenants. In the Western business sector, almost three quarters of the space is vacant at the time of delivery, and the average absorption period is over... five years. five years.
"This reconsideration of the model for these districts also concerns the North and East of Paris, where activity seems to be slowing sharply after the craze of the late 2010s and the announcement of the Grand Paris Express", add the authors of the Grand Paris Office Crane Survey.
It seems that winter 2024 will close the page on an eight-year cycle of growth in office production that began in 2016, with the promise of a new dynamic for the Paris region thanks to the construction of a public transport network.
For the time being, the challenge will be to market these new square meters of office space. By the end of 2025, almost 1 million sq.m of new or restructured office space is scheduled for delivery, divided between 400,000 sq.m in western Paris, 370,000 sq.m in Paris and 200,000 sq.m on the city's northern and eastern outskirts. To date, around a quarter of this space has been pre-marketed. "Greenfield launches are becoming rarer. They are now limited to small areas located in central zones, or to projects benefiting from public partnerships, such as the Grandes-Serres in Pantin," the study points out.
Conversion in dribs and drabs
Despite marketing difficulties, office conversion projects are rare - very rare indeed. The Grand Paris Office Crane Survey lists 18 conversion projects currently underway in the metropolis, representing some 215,000 m2. These reconverted surfaces are mainly used for three types of asset: hotel accommodation (34%), public service activities (28%) and residential (20%). For those who believe in the conversion of office space into housing, the statistics give cause for despair. Only 25,000 m² are currently under construction. "This would represent between 325 and 375 housing units, or less than 1% of the housing requirement in Greater Paris between now and 2030 (6,129)", notes the study. And if we look in the rear-view mirror, nearly 9,000 housing units were created from business premises in Paris between 2013 and 2020. A drop in the bucket.
As far as conversion projects are concerned, it's clear that real estate players are giving priority to mixed use. For example, all sites that include housing will be mixed-use by the end of the project. In almost all conversion projects, developers add new floor space. This represents over 150,000 m² out of a total of 215,000 m². "These new constructions do not only concern new asset types, but also office space," explains Grand Paris Office Crane Survey. More than 56,000 m² over the period. Office space is hard at work.