Three people, including a pregnant woman, were taken hostage however one managed to escape.
Police said Tuesday they could not confirm whether the man was armed.
There was no indication of a terrorist motive, police said.
Photos and videos from the scene showed numerous police vehicles and ambulances at Rue des Petites Ecuries in the 10th arrondissement of the French capital.
The man was described as "determined and violent" and claimed to have a handgun and a bomb according to police, The Guardian reported.
The hostages are being held in the internal courtyard of the building, which contains a mix of offices and residential apartments.
According to reports he had demanded to be put in contact with the Iranian ambassador in Paris and that he didn't want any police cars in the vicinity.
An armed police officer and a sniffer dog search the area.
Police officers of the BRI intervention squad prepare a shield on June 12, 2018 near the site of an ongoing hostage taking in central Paris.