Transforming shopping centers into offices or housing, possible but not easy

The supermarket giant Carrefour and the developer Nexity promised in July to “revalorize” several dozen sites. While the time is less for land artificialization, transforming commercial space into housing seems promising, but the challenges are numerous.

The “Climate and Resilience” law of 2021 aims for “zero net artificialization of soils” (ZAN) in 2050, to fight against the concreteization of land, destructive of biodiversity and a factor in global warming.

However, this objective could well “have a positive impact on the general value of our assets”: Marie Cheval, CEO of the Carmila property company, also president of the Federation of Territorial Commerce Actors (FACT), summarized the thinking of numerous professionals in Cannes where the Mapic trade fair dedicated to commercial real estate is being held until Thursday.

Because the construction of new shopping centers is at the same time becoming rarer.

“A few years ago, we saw large real estate projects with models all over the show,” recalls Emmanuel Le Roch, general delegate of the Federation for the Promotion of Specialized Trade (Procos). “This world is a little behind us, we are in France more in renovation than in creation”.

And in a context of strong demand for housing, the temptation is also to transform commercial spaces or the parking lots surrounding them for other uses.

Carrefour, which is the largest shareholder of Carmila, also made this bet by creating "Villes et commerces", a "land holding vehicle" with the objective of "revalorizing" dozens of sites owned by the supermarket giant, in partnership with the leading French promoter, Nexity.

Announced in July, this project plans to “carry out urban diversity operations” on 76 sites across France. Stated objective: “to develop mixed programs” welcoming housing, service residences, businesses, offices or hotels. The creation of this carrier vehicle was made official on Thursday by Nexity.

Complexities and constraints

In detail, forty sites in the heart of the city must be “completely rehabilitated, with the reintegration of a food retail area”. The other 36, “at the entrance to towns or commercial areas, concern existing parking spaces, which will be reallocated to urban projects”.

All of these sites, which represent an area of approximately 800.000 m2, should ultimately allow the creation of 12.000 homes, 120.000 m2 of shops, but another 10.000 m2 of offices and activities and 17.000 m2 of hotels.

Having to deal with only one land owner is a real asset, Marie Cheval commented to AFP on Wednesday. “In this type of operation, we do not start from a wasteland, but generally from an area where there are already businesses, and where the multitude of owners can complicate” the equation.

This type of program is “feasible, yes, but easily, no”, also says Emmanuel Le Roch, of Procos, which brings together businesses of all types and sizes. “For me, transforming a shopping center into housing would be very difficult if not impossible given very complex legislation. And from a real estate point of view, a shopping center is not like much else.”

“Densifying an area by adding housing seems more possible, but not simple because you have to be able to combine functions, and this cannot be done everywhere,” he continues, judging the possibility greater “in large metropolises where the city has caught up with peripheral areas.

This would also have an impact on the performance of stores already present in the area, for example by increasing traffic density at certain times.