Covid-19: are ghost offices our future homes?

The movement has been underway for a few years already but "the significant rise in teleworking encourages a change of scale", recently indicated the Minister of Housing Emmanuelle Wargon, who wants to accelerate the dynamics of the transformation of office buildings into housing for respond to the shortage and limit urban sprawl.

In a post-Covid scenario where 41% of companies would switch to two days of teleworking per week, the envisaged gain in surface area would be 27%, or 3,3 million m2 of offices in the next 10 years in Ile-de-France, estimates the Real Estate Savings Institute (IEIF) in a study published in January.

The office market, prized by investors because it is less restrictive to manage - especially in terms of tenant turnover or bad debts - was already in surplus before the crisis but successive confinements have further inflated the stock.

At the end of December, the rate of vacant offices in the Paris region was 6,6%, according to the IEIF.

Where will the pendulum stop?

"The transformation of offices into housing is a kind of sea serpent," Christian de Karangal, director general of the IEIF, told AFP.

Yet for the first time, he sees an "alignment of the planets right now" that could lead to more meaningful development.

While it is difficult to say today "where the pendulum will stop" as to the impact on office real estate of teleworking and the coronavirus crisis, Mr. de Karangal sees several factors pushing for the change: the obsolescence of certain buildings for office occupancy, the interest of institutional investors and the encouragement of public authorities.

But the transformation is not so obvious: "Not all buildings are transformable" and "only around 20% of the assets studied show a real potential for transformation", comments Sébastien Lorrain, residential director of the services and investment group. commercial real estate CBRE France.

One of the pitfalls is the contribution of light, the width of office buildings being much greater than that of apartment buildings, tells AFP Carlos Alvarez, project manager at the architecture firm Moatti-Rivière, winner. with Immobilière 3F in 2019 of the first prize for the transformation of offices into housing.

“Most of the time, it goes through demolitions,” Alvarez said.

Significant costs

In addition, buildings from the 70s - the most numerous for sale - sometimes have to undergo asbestos removal work which amounts to millions of euros.

For Norbert Fanchon, chairman of the management board of the social landlord Groupe Gambetta, the idea of ​​transforming offices into housing is "a fantasy as old as developers".

According to him, to create housing, the ball is in the court of the mayors who must issue building permits and the State which must make it possible to "remove the technical and administrative constraints" of a conversion whose costs " are particularly important ".

In any case, warns the IEIF, the "deflationary impact on the Ile-de-France office park will take time". Companies will first have to define a new work organization and then its real estate variations and take into account the possible exit dates of current leases, which can extend up to 9 years, or even more.

"There is a time of inertia in the markets" but "the flows will accelerate", confirms Alexandre Chirier, president of the Real Estate Property Investment Company of Action Logement, the joint organization of social and intermediate housing.

Created in 2020, La Foncière plans to invest 1,5 billion euros in 3 or 4 years to acquire buildings to transform and produce 20.000 homes.

But according to Mr. Chirier, care will have to be taken to "build a balance where accessibility, green spaces, breathing spaces and the quality of the use of housing make people feel good there".