The commercial real estate market in France is undergoing a period of restructuring. While consumer spending is sending mixed signals and the economic backdrop is stabilising, leasing and financing indicators reveal a pronounced polarisation between the resilience of retail parks, the saturation of Paris’s luxury high streets, and the longstanding challenges facing the personal goods sector, according to data from specialist firm JLL.
JLL attributes this overall sectoral dynamic to the rationalisation of real estate portfolios and an increased focus on profitability in the face of recent pressures on interest rates. The consumer confidence index stood at 82 points in May, after reaching 89 points in January 2026, while the number of business bankruptcies continues to rise, up 4% in the first quarter of 2026 compared to the first quarter of 2025. The apparel sector, meanwhile, has faced uninterrupted structural difficulties since 2006, whereas health, beauty, and cosmetics dominate the market thanks to compact formats delivering high margins.
These sector-wide shifts are directly impacting vacancy rates nationwide. The average vacancy rate in city centres is now nearing 12%, a level significantly higher than that observed in 2020, while the rate for out-of-town retail parks is approaching 17%.
This increase can be attributed to the loss of momentum among certain historic growth drivers and to accelerated tenant turnover, which in turn lengthens letting periods for units. In contrast, major tourist corridors and areas of international significance are showing remarkable resilience, characterised by a scarcity of available space that keeps sustained pressure on commercial rental values.
Paris as a driving force
Paris, for its part, is reaffirming its role as the driving force behind France’s brick-and-mortar retail, largely supported by the recovery in international tourist traffic. Spending by foreign tourists rose by 5% in 2025, marking a second consecutive year of growth after a strong performance in 2024, while flight bookings are up 5% for the summer of 2026. This commercial momentum is concentrated primarily in the International Tourist Zones (ZTI), where retailers are benefiting from record tourist footfall.
Outside the International Tourist Zones, the average rental value in Zone A stands at 890 euros per square metre in Parisian residential neighbourhoods. On major shopping streets such as Rue de Rivoli or the Madeleine-Capucines area, rents range from 2,000 to 3,500 euros per square metre, while luxury thoroughfares such as Avenue Montaigne or Rue du Faubourg Saint-Honoré command rents of between 6,000 and 15,000 euros per square metre in Zone A, showing steady growth since the third quarter of 2022.
The capital’s overall vacancy rate fell to 5.4% in 2025-2026, returning to its pre-pandemic level after peaking at 18.4% in the Opéra district and 12.5% on Rue de Rivoli, while luxury shopping districts are almost fully let, with vacancy rates ranging from 0% to 3%, alongside a 10% rise in rents on the Champs-Élysées.
The trajectory of Parisian rental values reflects the renewed performance of the capital’s various shopping corridors, according to Benjamin Bocara, director of leasing for Paris at JLL. “The physical store remains the place where the highest profits are generated,” he said, adding that “a decline in vacancy rates for prime locations is creating supply pressure,” which in turn encourages demands for key money.
Shift in demand
The commercial real estate investment market as a whole appears to be moving into a phase of operational delivery after several half-years of observation. The appeal of existing assets is being bolstered by increasingly strict regulatory constraints in commercial urban planning. Permits for new retail space, governed by the Climate and Resilience Act and planning commissions, have fallen from 600,000 square metres per year before the health crisis to just 200,000 square metres annually post-Covid, focusing primarily on renovation projects.
In terms of transaction volumes, activity in 2026 remains below the historical 10-year average of 4.5 billion euros, after 2025 closed at 3.3 billion euros. During the first half of 2026, the cumulative volume totalled 1.6 billion euros, but a pipeline of pending transactions estimated at 1.3 billion euros suggests that the annual total will be close to 3 billion euros, with retail parks accounting for 7% of first-quarter transaction values.
JLL also notes that retail parks remain the most sought-after asset class among institutional funds due to attractive yield premia. This trend has recently been confirmed by various studies both in France and across the European market.
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