PRELIMINARY RESPONSES TO THE DECRET TERTIAIRE IN FRENCH COMMERCIAL REAL ESTATE INVESTMENT

Abstract

The French government established the Décret Tertiaire (tertiary decree) in 2019, which will require steep energy reductions in commercial properties by 2050 with interim targets in 2030 and 2040. For many buildings, the later targets will require expensive, deep retrofits, in many cases more costly than the non-compliance penalty of €7500 per year. This research provides a glimpse into the early responses of real estate asset managers operating in France via interviews with representatives from four firms. Although there is clear evidence that the industry is preparing to meet the requirements, questions remain about how it will practically be achieved, at what cost, and what portion of buildings may slip through the cracks and become stranded assets.