The health crisis of 2020 and the partial shutdown of the economy that it engendered had repercussions on the professional real estate market in France. However, according to the Banque de France, a drop in demand in this sector may influence that of residential real estate.
In 2018, 57% of the surfaces started corresponded to housing and 43% to professional premises.
As recalled in the post on real estate published by the Banque de France on June 18, 2021(new window), the coronavirus crisis was an economic shock affecting in particular the demand for professional real estate. According to this analysis, the health crisis initially resulted in an ” asymmetric ” shock on household and business income, the former having been less affected than the latter.
High correlation between residential and professional real estate markets
Traditionally, real estate has been divided into two categories. A distinction is made between residential real estate and professional real estate, which includes premises intended for professional use.
From a macroeconomic point of view, there is a high correlation between development and long-term price cycles in these two markets . The evolution of prices in these two markets is partly based on common factors:
- the price of land;
- the possibility of transforming housing into professional premises;
- or competition on the new home market.
This is referred to as a contagion effect between these two markets.
However, the health crisis raises the question of the evolution in the medium and long-term application of these real estate markets. Indeed, the total or partial stoppage of business activity and the deployment of teleworking explain the 0.4% drop in the price indices for professional real estate in 2020 . At the same time, however, residential prices continued to rise by 5.3%.
Demand for business premises could be affected in the long term
The historical lack of perspective of these data and the unprecedented nature of the coronavirus health crisis nevertheless call for caution, as the authors remind us. Thus, several indicators point to an even greater risk of a fall in prices for professional real estate .
In addition, the Federal Bank of Atlanta in the United States predicts a tripling of teleworking once the crisis is over, compared to the previous situation. Finally, according to an estimate from the Real Estate and Land Savings Institute (IEIF)(new window)The deployment of telework could justify a decrease of 12 to 36% of the surface area of offices necessary for businesses in Île-de-France . Based on the IEIF simulation(new window) favoring high recourse to teleworking in the post-crisis world (with an average of 2.2 days of teleworking per week), 54% of Ile-de-France companies could be affected, which would represent a reduction in the office park of 6 million meters squares in Île-de-France.