In addition to the cyclical downturn, the market is under pressure from three regulatory factors that are fundamentally changing the rules of underwriting. The first is the ZAN (zero artificial soil cover) program, which by 2050 completely prohibits new land development and forces investors to switch to building consolidation and redevelopment. The second is the Denormandie renovation program, extended until the end of 2026, which provides tax incentives for bringing buildings to strict energy efficiency standards. The third is Bill No. 2331, which limits the shifting of property taxes to tenants by fifty percent, which, if adopted, can seriously squeeze the net operating profit of owners of office and retail facilities.
The key factor for the return of liquidity will be the achievement of profitability of premium facilities at the level of 5.25%. Until this threshold is reached, buyers and sellers remain in standby mode, and transactions are delayed. Research by the GRI Institute shows that it is this figure that is able to unlock capital that is currently sitting on the sidelines.
Source: GRI Institute
