Developers Begin Projects to Turn Paris Office Blocks into Housing
As Fyltyr earlier reported, tax measures were recently passed to encourage private investors to convert vacant office blocks into residential property, as part of efforts to alleviate Paris’ housing shortage. Projects by both commercial and social housing developers are underway.
With Paris’ ever-growing population and wealth of vacant office space, a policy of converting them into residential property is both reasonable and realistic. Last November 2015, the French National Assembly passed a 5-year waiver on property taxes, to encourage developers to start such projects.
Property developer Eiffage Immobilier, in partnership with Constructa, is out of the gate, with a first project under way to convert a 1970s-era office block in the 14th arrondissement into 237 residences. Forty-seven of these will be bought up by the social housing association Toit et Joie; 100 will be leased to other social housing associations and institutions. The remaining 90 are being converted into high-end apartments, ranging from studios to 3 bedrooms.
The refurbishment work will cost around €40 million. Once complete, the company will propose the residential properties at €10,464/m2. The complex will have a shared vegetable garden of 1200m2 on the roof, with glass and greenery featuring prominently throughout the parcel.
However, despite the new tax incentives many commercial developers are finding it difficult to identify financially sound projects. There is no dearth of office blocks that could be converted: estimates on the amount of vacant space in the Ile de France region range from 3 to 5 million m2. Purchasing the property is only a small part of the total expense; the difficulty is in ensuring that the purchase and refurbishment costs do not go overboard.
At the moment, the biggest player in the field is social housing associations. 3F, one of the largest in France, recently began converting 9,500m2 of office space in Charenton-le-Pont, a suburb touching the south-east of Paris. The project will see 7000m2 become social housing space for students and the aged, with the remaining 2,500m2 to be refurbished and rented out as office space. Costs to renovate are estimated at 6.2 million euros, around €1,426/m2; the property itself was purchased for €16.3 million. According to 3F, these costs taken together are still dwarfed by the cost of building such a property from scratch.
The association has similar projects planned to convert office blocks in Pantin and Montreuil.
For now, social housing seems to be the main beneficiary of the tax incentives, but there will certainly be plenty of new opportunities for commercial investment in property in the future. From 2001 to 2012, almost 380,000 m2 of office space was converted, creating 5400 residences. Ile de France housing authorities hope that the tax incentive will speed up that process.
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