German fund manager Union Investment Real Estate has confirmed the acquisition of the speculative Grand Central development project at Saint-Lazare railway station in the centre of Paris from The Carlyle Group.
The project comprises a new business centre on Rue de Londres and Rue d'Amsterdam with rental space of around 23,600 m2. The target for practical completion is mid-2019.
Union Investment acquired the property on behalf of its open-ended real estate fund UniImmo: Deutschland, which invests throughout Europe. The investment volume was not disclosed.
Union Investment has invested around €2.3 bn in acquiring development projects since 2014, with the past year accounting for more than 1.2 bn. However, as a core investor, the fund manager has until now invested in projects that have strong pre-leasing levels and are near completion.
The Saint-Lazare project, in contrast, does not have leasing contracts in place. 'Grand Central will be one of the most modern business centres in Paris. Additionally, it benefits from a location that is unsurpassed in terms of transport links. Due to the excellent letting prospects and our confidence in the project, we decided on a speculative acquisition without pre-letting and rent guarantees,' said Tania Bontemps, president of Union Investment Real Estate France.
She added that Union Investment aims to maximise the tenant mix to take full advantage of the compelling features of the new complex. The acquisition will boost the portfolio of open-ended real estate fund UniImmo: Deutschland, which invests throughout Europe.
The project has been under development by The Carlyle Group since 2013. In addition to some 20,100 m2 of office and retail space, the complex will include three entrance lobbies, two restaurants, a bar and a publicly accessible auditorium.
The office units will offer the flexibility to create co-working areas. Special features of the project, designed by Jacques Ferrier Architecture, include a public promenade, several terraces comprising a total of 2,000 m2 and a green roof that can be used for agricultural purposes. The property will be constructed to achieve an HQE (Haute Qualité Environnementale) Excellent rating and a BREEAM Very Good certification.
With more than 100 million passengers a year, Saint-Lazare station – the site of Grand Central – is the second biggest railway station in Europe, served by five subway lines and numerous bus routes. The station itself plays a key role in the 'Grand Paris' project. This ambitious project includes upgrading suburban rail line A, extending subway line 14 as far as Saint Denis, and incorporating the new suburban rail line E into the city's transport network.
Union Investment was advised on the legal aspects of the deal by C&C Notaires, Gide and Fidal. The vendor was advised by Notaires Associés de Meudon, Clifford Chance, Fairway and Herbert Smith Freehills.
Philip La Pierre, head of Investment Management Europe at Union Investment Real Estate GmbH, commented on the deal: 'Investment opportunities in the Paris real estate market are currently rather rare. Grand Central is one of the few commercial new build projects in the city. This development project is our first acquisition in the Île-de-France since 2012, so we are finally able to continue our success story.'
Union Investment is one of the largest European portfolio managers of commercial property in the Paris region, currently holding 13 properties worth around €2 bn.
Union Investment already owns two business centres in Paris which resemble the Grand Central project in terms of their diverse structure. The Centre d'Affaires Paris Victoire, acquired in 2002, comprises around 33,000 m2 of rental space, while the Centre d'Affaires Paris Trocadéro offers 41,000 m2 of space. Union Investment's most recent transactions in France include the acquisition of the Ekla Business office development in Lille. The building comprises some 15,000 m2 and is scheduled for completion in summer 2018.
