If you are thinking of buying your dream home in Paris and finding office space in Paris, then the availability and cost of premises are likely to be considerations.
A recent report published by the French Chamber of Commerce in Great Britain reveals that Paris has a good stock of premises.
The city has 53 million square meters of office space, states author Samuel Duah, Head of Economics and Forecasting at BNP Paribas Real Estate. This is more than twice that of the next largest European city, London.
Availability of Paris office space
In the Paris metropolitan region, vacancy rates stand at 7.6% and have been stable across the past five years. The lowest vacancy rate is to be found in central Paris at 5% and the highest in the Western part of Paris at 15%.
Highest rents for office space are found within Paris city limits, with an approximate €705 per m2 per year recorded in the Central Business District (CBD) in 2015, dropping to €344 per m2 in the north of the city.
Commercial Paris has a diverse tenant base, ranging from financial and business services in the submarkets of Central Paris and in the Western part of Paris; media occupiers in the southern suburbs and technology companies in the business district of La Défense.
Industrial occupiers operate on the city’s outer rim. Most start-up tech firms in Paris tend to set up shop in Central Paris as their offices space requirements are for small floor areas.
Reasons to invest in Paris office space
In the French Chamber of Commerce in Great Britain’s report, Richard Holberton, Senior Director of EMEA Research at CBRE, cites the following reasons why now is a good time for overseas entrepreneurs to invest in commercial property in Paris:
- Strong recovery
- Large, diverse occupier base
- Strong investment market
- Market transparency
- Limited office supply
- Stable office rents
Routes to acquisition
Co-ownership (coproprieté) of office buildings is quite common in Paris – with occupiers buying a floor or part of a floor. This accounts for around 15% of the way that Paris offices are owned.
Most office space in Paris is secured with a commercial lease however.
The principles governing commercial leases in France are designed to give the lessee a strong security of tenure, so that if, for instance, the lessee successfully builds up a business, he does not have to worry unduly about being evicted.
The French Commercial Code has set the minimum term for a commercial lease at nine years. Parties cannot agree a term of less than nine years except in the case of short-term lease (bail dérogatoire) or precarious lease (bail précaire). The parties may agree, though, to a longer term than nine years.
The tenant has a right to terminate the lease once every three years subject to a prior notice period of six months, unless the parties agree upon different conditions. For example:
- A tenant can agree to waive his break option for the end of the first three-year period of the lease or for the end of both the first and second three-year periods of the lease so that the lease will then have a fixed-term of six or nine years
- A tenant may agree to pay the landlord compensation if he exercises his break option at the end of the first three-year period
Commercial leases for office space in Paris
The French Government has introduced measures recently to help protect small businesses from unexpected rent rises and service charges.
Following the loi Pinel legislation of June 2014, the cases where a tenant can waive the break option at the end of the first three-year period or at the end of both the first and second three-year periods of a commercial lease, in order to permit the lease to have a fixed-term of six or nine years, are now limited to:
- Lease agreements with a term of over nine years
- Lease agreements for premises that may only be used for a specific activity (locaux monovalents) such as premises for hotel or cinema use
- Lease agreements for premises used exclusively for office purposes
- Lease agreements for warehouses
Rents can be reviewed at the request of either party every three years.
In France, the main tax payable on the occupation of business premises is the business license tax (contribution écononomique territoriale), tenancy tax (contribution representative du droit de bail) and land tax (impôt foncière). Local tax (taxes de la ville) may also be payable.
If you would like further help and information on finding commercial property in Paris, you can contact 56Paris Real Estate here.