the Shrinking Landscape of Commercial Advancement

The commercial real estate sector is experiencing a noticeable contraction in project volume. Data from the Procos commercial real estate observatory indicates a significant drop, with onyl 376 projects slated for completion within the next five years. This contrasts sharply with the 518 projects planned in 2018, highlighting a concerning trend. Furthermore, the scale of these projects is diminishing, with the average surface area now hovering around 5,000 square meters, a considerable reduction from the 14,000 square meters observed a decade ago.

The average size of commercial real estate projects has decreased by nearly threefold in the last ten years.

While large-scale openings still occur, such as the Neyrpic shopping center in Saint-Martin-d’Hères, Grenoble, boasting 50,000 square meters (including 24,000 square meters of retail space), these are becoming increasingly rare exceptions. This year’s anticipated shopping center projects are substantially smaller, generally under 15,000 square meters.

key Statistics Shaping the market

understanding the current state of commercial real estate requires a look at the key figures influencing the market:

• 376: The number of commercial real estate projects currently planned for the next five years.
• 5,202 m2: The average surface area of these projects.

These figures, sourced from Procos, paint a clear picture of a market undergoing significant change.

the rise of Mixed-Use developments

According to Emmanuel Le Roch, general delegate of Procos, 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. this shift suggests a move towards developments that integrate retail, residential, and office spaces, reflecting evolving consumer preferences and urban planning strategies.

Implementation Challenges and Project Cancellations

Despite a similar number of projects listed for finalization in 2025 (around 180) compared to the previous year, the actual completion rate is a cause for concern. In 2024, only 72 projects were successfully finalized, and Procos anticipates even more cancellations in 2025.This difficulty in translating plans into reality is further underscored by the discrepancy between building permits granted (3.9 million square meters in 2024) and actual construction starts (2.2 million square meters).

Although there are as many building permits delivered as before the COVID, the starts fall.

Shifting priorities and Regulatory Roadblocks

Public authorities are increasingly prioritizing environmentally conscious development, encouraging promoters to minimize their ecological footprint, avoid artificial soil usage, and repurpose brownfield sites.While the government launched a plan in 2023 to transform commercial zones into vibrant mixed-use spaces, subsequent administrations have seemingly deprioritized this initiative. The federation of Trade Actors in the Territories (FACT) highlights the challenges in coordinating public and private stakeholders, leading to project delays and complications.

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

Christophe Noël, general delegate of FACT

Furthermore, the sluggishness in new residential real estate development has dampened the momentum for these transformative projects. developers, struggling to manage existing operations, are hesitant to invest time and resources in future ventures.

Risk Aversion and Economic Realities

The restructuring of city entrances is no longer a primary focus for property developers. As one CEO stated, 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 wich would allow us to guarantee the duration of the process,we coudl 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. The uncertainty surrounding project timelines and the increasing cost of capital are making developers more risk-averse.

The Complexity of Transformation

Each commercial area presents unique challenges. While some have been integrated into the urban fabric, others remain isolated, making residential integration difficult. Moreover,many commercial areas are currently thriving,making it challenging to persuade owners to undertake transformative projects.According to Procos, vacancy rates are exceptionally low in the 60 largest commercial areas in France.

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.

Federations also point to conflicting regulations, such as Article 40 of the APER law (acceleration of the production of renewable energies), which mandates the installation of photovoltaic panels on parking lots and buildings, potentially hindering restructuring efforts.

Looking Ahead: Resilience Amidst Challenges

Despite the numerous challenges facing the commercial real estate sector, the market demonstrates resilience compared to the struggles in the housing and office sectors. while the path forward is complex,the industry’s ability to adapt and innovate will be crucial for navigating the evolving landscape.

Major Projects of 2025

Among the projects identified by Procos, here are five major operations which must succeed this year. The majority are extensions and restructuring. The largest, the creation of the heart of the city of Bobigny was delivered by Altarea. The shops are settling in. Footlocker and fitness Park opened and also a tobacco and a pharmacy. A Market crossroads will be inaugurated in May.