I wrote recently about how French ground floor retail holds its position. A nine-year minimum lease, an eviction indemnity running to hundreds of thousands of euro, rent that tracks an index rather than the market, and planning rules that restrict change of use. Together they keep independent shops in locations where in London or New York they would be priced out.
That protection only works if there is a business worth protecting. A commercial lease is an asset when the tenant can make a profit, and that depends on there being a population and passing trade to sustain the business. Where those have gone, the protections have nothing left to protect.
Vacancy in French town centres has risen more or less continuously for over a decade, driven by falling populations in provincial towns, car-based mobility, and four decades of growth in out-of-town large-format retail. Lease law addresses none of those.
What the numbers show
Across all retail formats, national vacancy rose from 9.3 percent in 2022 to 11.6 percent in 2025, according to figures from the property data firm Codata.
The increase was not evenly distributed. Ground floor unit vacancy in town centres reached 11.7 percent in 2025. Retail parks fared better, rising from 6.9 percent to 8.4 percent from 2022 to 2025. Shopping centres show both the highest rate and the steepest deterioration, going from 13.9 to 16.8 percent vacancy over the same period.
Regionally, the pattern inverts between formats. For ground floor retail, the Paris region of Île-de-France had the lowest vacancy in 2025 at 8.6 percent. For shopping centres the same region had the highest, at 20.1 percent.
Normandy, Pays de la Loire and Brittany also sat below the national average for ground floor retail vacancy. Occitanie, the southernmost region bordering Spain and the Mediterranean, had the highest at 16.4 percent.
What the government has tried
France has not left this to the market. In 2018 the state launched Action Coeur de Ville (Town Centre Action), a programme covering more than 240 mid-sized towns, with the aim of revitalising centres, improving quality of life and supporting balanced economic development.
Public funding was substantial: 6 billion euros between 2018 and 2022, and a further 5 billion euros to the end of 2026. The programme now sits within a wider family of interventions, including Petites villes de demain (Small Towns of Tomorrow) from 2020 and Villages d’avenir (Villages of the Future) from 2023.
Action Coeur de Ville has delivered. Housing has been renovated at scale, derelict buildings brought back into use, and public space improved.
Retail has proved harder. The 240-odd towns in the programme hold close to a quarter of France’s population, so this is not a marginal intervention. But the National Assembly’s evaluation committee reported in June 2025 that it has been markedly more effective at residential revitalisation than at sustaining local retail. Commercial vacancy in the towns covered stood at 13.4 percent in 2024, against 4.7 percent for housing.
Why vacancy keeps rising
Part of the answer is where the money went. France’s national housing agency, the Agence nationale de l’habitat (Anah), committed 1.2 billion euros to the programme, funding pre-operational studies, local project manager salaries and works grants. Some of that money paid for acquiring non-residential premises and converting them into housing. Anah’s main delivery vehicle is a housing instrument by design: the urban renewal and housing improvement operation (opération programmée d’amélioration de l’habitat, renouvellement urbain, or OPAH-RU).
The tax architecture points the same way. An individual letting unfurnished property in France is taxed on rent after actual costs, with no allowance for the building losing value. The 2026 finance law changed that for housing alone. Under the dispositif Jeanbrun, in force since February 2026 and successor to the Pinel scheme that ended in 2024, a private landlord can write down part of a let dwelling's value against rental income. The same landlord letting a shop cannot.
So an investor looking at a vacant shop in a provincial town centre faces a straightforward comparison. Reletting it as retail carries commercial risk and no tax relief. Converting it to a flat carries a state-backed tax incentive and a larger tenant pool.
The one fiscal instrument aimed squarely at vacant retail has been weak. The commercial dereliction tax (taxe sur les friches commerciales) applies to premises unused for at least two years. The tax is levied at 10 percent of cadastral rental value in the first year, 15 percent in the second and 20 percent thereafter. (Cadastral rental value is the notional annual rent the tax authorities attribute to the property.)
The commercial dereliction tax is optional for local authorities, and in 2025 only 480 communes and 68 groupings of communes had adopted it, out of around 35,000 communes nationally. It is not due where the owner can show the vacancy is outside their control, which is not hard to demonstrate.
The 2026 finance law loosened one constraint. Until then, an authority adopting the tax had to apply it across its whole territory. Authorities can now apply the tax to a targeted perimeter, such as a single town centre. A council that passes the necessary resolution before October 2026 can charge it from 2027.
Beyond tax, the structural causes of commercial vacancy are harder to solve. Rebuilding a town centre catchment means addressing access, parking, public transport and the location of public services. Those are multi-authority, multi-year commitments, and they cannot be delivered through a grant scheme aimed at individual buildings.
What stakeholders are recommending
In May 2025 the government commissioned a review of the future of local retail. It was prompted less by town centre decline as such than by the competitive pressure from online platforms. The review was carried out by Dominique Schelcher of Coopérative U, Antoine Saintoyant of the Banque des Territoires, and Frédérique Macarez, mayor of Saint-Quentin. They made thirty recommendations and the government took up nine of them in November 2025. Among them was the renewal of the 100 foncières programme. Under that scheme the Banque des Territoires has financed more than ninety local property vehicles that buy, refurbish and relet vacant units. A further 100 million euros was committed from 2026.
In June 2026, the National Retail Council (Conseil national du commerce, CNC) reported on commercial vacancy in French town centres, making forty proposals. According to the report, vacancy is not solely a retail problem, and treating it as one has not worked. Mobility and the liveability of town centres sit upstream of individual shop viability. The CNC argues that town centre and out-of-town retail are complementary, not competing formats, and policy must take account of new and emerging shopping formats and consumer preferences.
The most useful recommendation for anyone designing a programme elsewhere is what the CNC advises against: measures that focus on reletting vacant premises without addressing the viability problem underneath. A subsidised tenant in a unit with no catchment is a vacancy deferred, not a vacancy solved.
The transferable lesson
The transferable lesson is not that the French approach failed. On the residential side it plainly worked, and few countries have committed 11 billion euros over eight years to mid-sized towns. But commercial vacancy rose throughout. Understanding why is what other countries can take from this. Here are two reasons.
The first is that incentives decide outcomes more reliably than objectives do. France protects retail tenants through commercial lease law and planning controls. But it also has a funding and tax architecture that rewarded converting shops into housing. Both policies are defensible. One protects shop owners from sharp rent increases. The other addresses a real need for housing. Together they produce a town centre where the shop that survives is protected and the shop that fails becomes a flat.
The second is that a vacant shop is a symptom rather than the condition. Renovating premises improves the town at the level of individual buildings. Causes of vacancy are broader: residents moving out, public services relocating, and the comparative ease of driving to a suburban retail park. A programme focused on individual buildings will not address those broader issues comprehensively.
Neither point argues against intervention. France’s housing delivery shows what public money can do when the instruments match the goal. The lesson when designing an urban renewal programme is to check what the tax code supports the programme objectives.
The next question
Lease protection and urban renewal funding that targets commerce can together help maintain diverse, independent ground floor retail. But that only works where the retail space exists. In newly developed districts that is not a given, and ground floor retail competes for street frontage with car park ramps, bin stores and residential lobbies. That will be the subject of the next article.