French office SCPI funds: the cost of empty space

SCPI: measuring risk, part 4 of 6. Research cut-off: 13 September 2026.

Ten new lettings, seven departures. A count of lease movements might suggest that Primopierre was gaining ground. Floor space tells a different story: in the second quarter of 2026, the French property fund reported 6,999 square metres newly let and 30,372 square metres vacated. Large departures outweighed smaller deals. Praemia, Q2 2026 bulletin, p. 4

Subtracting those flows does not establish the precise increase in vacant space. Disposals, refurbishment and lease commencement dates also matter. It does, however, point to the right questions. How much space does a new lease replace? What did the landlord offer to secure it? When does rent actually start arriving?

This fourth instalment moves from withdrawal queues, resale prices and dividend payments to the buildings themselves. An SCPI is a French property investment vehicle that owns real estate on behalf of its unit holders. Assessing its capacity to support distributions means following a letting through to cash flow, rather than stopping at the announcement that space has been leased.

Plenty of available space, uneven signs of recovery

ImmoStat recorded 6.571 million square metres of immediately available office space in the Paris region at 30 June 2026, up 10% from a year earlier. First-half take-up was 750,000 square metres, down 5% year on year. Yet the second quarter alone was up 8%. A recent improvement can coexist with a weak half-year and substantial availability. ImmoStat, 6 July 2026 release

Take-up counts qualifying new lettings and purchases by occupiers. Lease renegotiations are excluded. It is not net absorption: a business moving into one building may vacate another. Dividing available space by annual take-up will therefore not tell us how many years it takes to clear the market. ImmoStat definitions

A separate set of figures points to pressure within the funds. ASPIM and IEIF report that the financial occupancy rate for office SCPI funds fell from 91.2% in 2023 to 88.8% in 2025, a decline of 2.4 percentage points. That annual industry aggregate covers a different population and period from the Paris-region figures for the first half of 2026. The observations are compatible; they are not interchangeable points in a single data series. ASPIM–IEIF, 15 May 2026

What financial occupancy includes

The French financial occupancy rate, usually abbreviated to TOF, relates billed rent and certain rental values recognised under industry conventions to the portfolio’s potential rental income. It is weighted by rent, not simply by square metres. The methodology includes space under rent-free arrangements, space made available to a future tenant, vacant premises under a sale agreement and certain qualifying major refurbishment projects. ASPIM methodology, October 2025, pp. 2–4

A rent-free period is a contractual concession, not an unpaid bill. A lease can be binding and a tenant can be in the building while no rent is yet due. Similarly, premises being sold may contribute to the indicator without generating current rent. Even an ordinary “occupied” classification does not certify that every invoice has been paid.

Primopierre’s published breakdown makes the distinction visible.

The first three categories contribute to its 81.7% TOF. That does not mean 81.7% of potential rent was collected. Nor can the first category’s 73.3% be treated as a collection rate. These are components of a rent-based indicator, not shares of physical floor area or a reconciliation of bank receipts. Primopierre occupancy breakdown

The methodology also specifies the reporting period. The quarterly calculation aggregates flows during the quarter; half-year and annual calculations combine the relevant numerators and denominators. A snapshot of floor space and an annual financial occupancy ratio answer different questions. ASPIM methodology

The practical implication is straightforward: occupancy can recover before cash flow does. To assess the gap, investors need the expiry dates of rent-free arrangements and the schedule of first rent payments.

A lease price extends beyond the headline rent

Headline rent is the amount written into the lease. A landlord may preserve that figure while offering free months, fit-out contributions, stepped rent or early access to the premises. ImmoStat measures these incentives against the theoretical headline rent over the firm lease term, the period during which the tenant is committed to stay. ImmoStat methodology

The measure published for the second quarter of 2026 is 30.6% for the Paris region, with large differences between submarkets. Its timing matters: it is recalculated quarterly using the preceding twelve months, not just leases signed in April, May and June. The release reports coverage of 79% of take-up recorded on lettings above 1,000 square metres over that window. This is a share of transactions, not of the office stock. 17 July 2026 release Methodology

This is not a 30.6% reduction in every SCPI’s rental income. It describes a sample of large lettings, whose terms may differ considerably from those of existing leases. Nor should the percentage automatically be added to a refurbishment budget: a landlord’s contribution to tenant works may already be included in the incentive measure.

The exposure emerges as leases are renewed or replaced. An older contract may continue to deliver its existing rent, while the next contract requires a substantial concession. Applying a market average to an entire portfolio, without its lease-expiry schedule, removes time from a problem in which timing is crucial.

Lease workshop: three readings of a €300 rent

The following example is entirely fictional. It is neither an actual SCPI lease nor an estimate of market conditions. Its purpose is to separate the contractual price, concessions and the period spent without a tenant.

Assume 1,000 square metres, headline rent of €300 per square metre per year and a six-year firm lease. All amounts exclude tax, indexation and discounting. Other operating costs, fees and financing are also excluded. The result is neither net profit nor a property valuation.

1. A lease with no free rent or fit-out contribution

Over 72 months, theoretical rent is 1,000 × €300 × 6 = €1,800,000. Dividing by floor area and duration gives the original €300 per square metre per year. This assumes that all rent due is paid.

2. Twelve free months and a €150,000 fit-out allowance

The free year sits inside the six-year lease. Five rent-paying years produce €1,500,000. A landlord contribution of €150 per square metre, paid at lease commencement, subtracts €150,000. The balance of the cash flows included in the example is €1,350,000.

Spread over the six leased years, that equals €225 per square metre per year. The fictional incentive package costs 25% of cumulative headline rent. The lease can still state €300; the calculation simply spreads the concessions over its term.

3. Six vacant months before the same lease starts

Now add six months without a tenant before lease commencement. They do not shorten the 72 contractual months: the full period is 78 months, or 6.5 years. The same €1,350,000 balance becomes €207.69 per square metre per year across that longer cycle.

Under these assumptions, rent starts arriving only after six vacant months followed by twelve rent-free months. Occupancy returns first. Costs borne during vacancy would reduce the balance further; none are estimated here.

The last figure is not a universal “true rent” for the building. It answers a different question: how much do the cash flows considered contribute, on average, from the old tenant’s departure to the end of the new lease? Changing the measurement period changes the result. So would omitting the void period or charging the same fit-out expense twice.

Good collection can coexist with a shrinking rent base

Élysées Pierre reports €51.3 million of rent billed in the first half of 2026, against €57.0 million a year earlier, a 10% decline calculated from the rounded amounts. Its second-quarter collection rate was nevertheless 97.98%. That measure covers billed rent and service charges, according to the monitoring presented in its bulletin. HSBC REIM, H1 2026 bulletin, p. 3

There is no contradiction. A landlord can collect almost everything it invoices while having less rent to invoice. But multiplying €51.3 million by 97.98% would not reconstruct cash receipts: the figures cover different periods and different items.

The published decline is not a like-for-like portfolio comparison either. Disposals, tenant departures, rent-free arrangements and billing schedules can all affect the total. The bulletin does not justify attributing the entire 10% fall to a single cause. The missing bridge is between rent on retained properties, acquisitions and disposals, concessions, and actual collections.

For a unit holder, that distinction matters as much as the distribution yield examined in the previous instalment. Strong invoice collection cannot repair a smaller billing base. Conversely, scheduled rent-free periods ending can restore receipts without another increase in occupancy.

The cost and potential value of refurbishment

Reletting may require adapting the building. A commercial contribution to a tenant’s fit-out, routine maintenance and a major redevelopment are not the same expenditure. Adding them together without examining their accounting treatment does not give a reliable measure of earnings or funding needs.

Primopierre reports €61.53 million of works carried out in 2025, across all categories. €45.80 million related to Praxagora, approximately 74.4% of the exact published total. That concentration makes it inappropriate to treat the amount as an ordinary annual run rate. The total is neither a single expense line nor exclusively capital expenditure. 2025 annual report, p. 27; l0g calculation

A project may preserve rental capacity or produce a more valuable building. Spending is not inherently a loss. Assessing it requires comparing the full cost and schedule with the additional or preserved income, allowing for construction delays and letting risk. Expected rent after completion does not pay bills during the works.

Energy requirements add another consideration, not a ready-made cost estimate. France’s Éco Énergie Tertiaire framework applies, among other covered configurations, to combined tertiary-use areas reaching 1,000 square metres. One route requires a 40% reduction in final energy consumption by 2030, relative to a reference year between 2010 and 2019, or the first full reported year of operation in the specified cases. An alternative route uses an absolute consumption target appropriate to the activity. Adjustments are allowed under defined conditions. Entreprendre Service Public, guidance verified on 9 September 2025

Reducing energy use by 40% does not mean spending 40% of the building’s value. The appropriate measures, the owner’s and occupier’s respective obligations, and any permitted adjustments require property-specific assessment. We have not established a reliable national estimate of the outstanding works bill for office SCPI funds.

Where rental income is still growing

Rental income is not falling everywhere. Gecina reports a 1.2% like-for-like increase in gross office rental income for the first half of 2026. It is a listed property company, not an SCPI. Its presentation also allocates an Engie indemnity between the two half-years, although the indemnity was received entirely in the first half, according to the group’s note. The figure therefore does not measure cash receipts alone. It cannot be used to rank Gecina directly against Élysées Pierre’s invoicing total, which is not adjusted for portfolio changes. Gecina, 22 July 2026 release, p. 2 and note 1

There is a local-market counterpoint too. JLL reports that first-half 2026 take-up at La Défense rose 52% year on year, while immediately available space fell 12% year on year. Recovering activity can coexist with sizeable incentives. That does not prove the incentives caused the recovery. JLL is an ImmoStat member, so its figures are not independent statistical corroboration. JLL, 6 July 2026

Concessions can be rational. Securing several years of rent may be preferable to extending an expensive void. A more troubling pattern would be repeated, increasingly costly concessions that fail to restore sustainable income, or investment in a building with insufficient demand once it is completed. Those scenarios have to be tested property by property, not inferred from a regional average.

The missing document is a rental calendar expressed in euros

To assess an office SCPI’s exposure, we would first reconstruct the sequence: rental income subject to possible tenant breaks, space actually vacated, new lease commencement dates and the expiry of free-rent periods. Outstanding works payments need to be placed on the same timeline. A count of lease signatures is not enough.

Three reconciliations help prevent premature conclusions: like-for-like rent to isolate the performance of retained buildings; billing and collection to separate a smaller rental business from non-payment; and works commitments against available cash to measure the interval before rent resumes. No single ratio captures all three calendars.

The documents reviewed establish rental pressure in some vehicles. They do not show that every office SCPI will follow the same path, or that a distribution problem automatically becomes a banking crisis. In its report published on 24 June 2026, the Banque de France still assessed commercial-property credit risk as contained. That dated assessment is neither an individual fund guarantee nor a September update. Banque de France

The risk to track is the gap between an announced letting and sustainable available income. When vacancy persists, concessions defer rent and works absorb cash, the owner must finance the interval. The next instalment examines the debt side: which obligations fall due during that gap, and what resources are available to meet them?

Sources and method

Research cut-off: 13 September 2026. Regional market data are not extrapolated to all SCPI portfolios, which may have a wider geographic reach. Annual, half-year and quarterly measures retain their own reference periods. Managers’ publications and Gecina’s results are interested primary sources; we have not inspected the underlying individual leases, invoices or bank receipts. This is not personalised investment advice.

The occupancy definition follows ASPIM’s detailed methodology, accessed through a public copy hosted by PierrePapier. ImmoStat figures are read alongside the producer’s methodology, including the twelve-month window. The workshop contains fictional, reproducible calculations. Where the precise online publication dates of bulletins and the annual report could not be confirmed, they remain unknown: no date is inferred from a filename or URL parameter.

Twelve sources and their scope

1. Praemia REIM France: Primopierre : Bulletin du deuxième trimestre 2026. Q2 2026, p. 4. Online publication date unconfirmed.
2. ASPIM / IEIF: Collecte et performance au premier trimestre 2026 et principaux indicateurs des SCPI en 2025. 15 May 2026. Annual occupancy of office SCPI funds, 2023 and 2025.
3. ASPIM: Modalités de calcul et de publication des données financières par les SCPI : octobre 2025. October 2025, pp. 2–4. ASPIM document, public copy hosted by PierrePapier.
4. GIE ImmoStat: Résultats ImmoStat pour le T2 2026. 6 July 2026, p. 1. Paris-region market, H1 and Q2 2026.
5. GIE ImmoStat: Infos marchés : définitions des indicateurs. Undated methodology, accessed 13 September 2026.
6. GIE ImmoStat: Mesures d’accompagnement : T2 2026. 17 July 2026, p. 1. Q2 reading on a trailing twelve-month basis.
7. HSBC REIM: Élysées Pierre : Bulletin semestriel d’information, premier semestre 2026. H1 2026, p. 3. Rent billed and collection of rent and service charges. Online publication date unconfirmed.
8. Praemia REIM France: Primopierre : Rapport annuel 2025. Financial year 2025, p. 27. All works and the Praxagora project. Online publication date unconfirmed.
9. Direction de l’information légale et administrative / Entreprendre Service Public: Réduction de la consommation d’énergie dans les bâtiments à usage tertiaire. Guidance verified 9 September 2025, accessed 13 September 2026.
10. Gecina: Résultats au 30 juin 2026 : communiqué de presse. 22 July 2026, p. 2 and note 1. Like-for-like office rental income and Engie indemnity.
11. JLL France: Marché locatif des bureaux en Île-de-France au premier semestre 2026. 6 July 2026. La Défense, H1 2026. JLL belongs to ImmoStat.
12. Banque de France: Rapport sur la stabilité financière : juin 2026. Published 24 June 2026; webpage updated 3 July 2026. Commercial-property credit risk.