Paris enjoys an almost unique reputation worldwide and is characterised by a vibrant city life, cultural diversity and a long, powerful history. Before the coronavirus pandemic, more than 38 million tourists travelled to the French capital every year. This makes Paris one of the most visited cities in the world. 

As a densely populated city – with a population density almost five times that of Berlin or Munich – well-connected and high-quality residential and usable areas are sought-after qualities. So what impact have the crises of recent years had on the office property market in Paris? 

Paris was hit hard by the coronavirus pandemic and had to deal with some of the longest and toughest lockdown measures in Europe. Life in the otherwise vibrant city came to a halt at times. However, with a population density of almost 20,000 inhabitants per square kilometre, such drastic measures seem hardly surprising. 

The pandemic sparked numerous discussions in the working world about new regulations such as working from home and other remote workplaces, which are accompanied by an increasing distance from traditional office structures. However, this also results in many new questions regarding cost savings, space reductions and location changes. 

So what role will office space still play in the long term? It is not easy to answer this question when it comes to Paris, because it is here that an ambivalent picture emerges between the high dynamics of the office market in the city centre and a weaker market situation in the Parisian suburbs, also known as banlieues. 

Astonishingly, office space in the centre of Paris remained in high demand despite the coronavirus crisis. Even in 2020, the first year of the pandemic, moderate rent increases were recorded in the central business district (CBD) of Paris. Although this growth slowed in the third quarter of 2021, top rents remained stable – both in the centre (930 euros per square metre and year) and in the high-rise district of La Défense (540 euros).  

Rental prices show a clear dividing line between the city centre and the banlieues, which also applies to the vacancy rates. While the city centre had a vacancy rate of only 4.2 percent, office spaces in the banlieues had to deal with much higher rates. 

These developments point to the increasing preference of companies to rent high-quality office space in top locations and reduce the use of space in less attractive locations. Despite the associated relocations and redundancies, new tenants could quickly be found for central, attractive office space – even during the pandemic. In some cases, such renegotiations even led to more rental agreements – and thus also to better protection in times of crisis. 

Despite the pandemic and the opportunity to switch to cheaper suburban locations, companies remained loyal to their central locations. This decision demonstrates the desire of many companies to maintain a strong image – and to invest in prestigious office locations at central sites. 

Instead of relocating, many companies reduced their floor space to save costs during the crisis. The question of the ideal design of office spaces also came up. In particular, modern multi-tenant buildings with spaces that can be flexibly designed provided optimal conditions for transferring the office concept into the future. 

Office buildings in less attractive locations with lower quality in terms of space and equipment cannot keep up. Expectations for the future are subdued in these areas, while the city centre of Paris remains highly sought-after by international investors. 

Even before the pandemic, Commerz Real had extensively modified its real estate strategy in France. The focus was primarily on central, valuable real estate in Paris, where high demand can be expected in the long term. The current portfolio thus consists of three office buildings in the best city centre location in Paris, an office building in a suburb of Paris and a hotel at the Charles de Gaulle airport. Two further properties in southern France complete the portfolio. 

However, the focus remains on high-quality usable areas in the centre of Paris. Here, the continued demand shows how strong the city’s attractiveness is and the importance of quality and location is – even in uncertain times. So, despite all the challenges, Paris remains a key player in the global real estate market. 

This opportunity makes Commerz Real usable for its investors in both institutional and private investment business. Valuable properties with high demand ensure a steady rental income – and thus also continuity and stable potential returns for investors.