France’s commercial real estate market has been thriving amidst a surge in interest from foreign buyers. France’s capital city of Paris was Europe’s top commercial real estate market in third-quarter 2019, taking over the No. 1 spot from London, according to Real Capital Analytics (RCA).
As for putting money in U.S. assets, however, French investors have held back. French companies acquired fewer than a dozen U.S. commercial properties individually valued at more than $2.5 million during the 12 months through this past September, RCA reported.
U.S. investments from France returned to the tepid pace of 2017 after an unusually big year in 2018. French investments totaled only $606.4 million in 10 U.S. property acquisitions during the year ending this past September, RCA reported. That ranked No. 16 in dollar volume among foreign sources, representing just 1% of the overall capital invested in the U.S. by foreign companies, RCA noted.
By contrast, the No. 1 foreign source, Canada, invested $25.7 billion during the same period.
France’s 12-month investment activity through September 2019 was consistent with its level during the same period ending in third-quarter 2017, when the country ranked No. 17 among foreign sources of capital in U.S. asset acquisitions. Compared to Canada, Germany and Singapore, France has tended to be a lesser player in the U.S. real estate market in recent years. In 2018, however, French investments in the U.S. ranked No. 2 behind only Canada. That sales volume was driven almost entirely by a single deal.
In June 2018, France’s Unibail-Rodamco, a commercial-property investor, finalized a deal first announced in 2017 with the Australian-based Westfield, which owned numerous highly valued malls in major U.S. cities. RCA reported that 35 U.S. properties valued at roughly $8 billion changed hands in that deal.
Typically, French companies have been single-asset buyers in the U.S. In 2017, the Paris-based investor AXA bought a 366,000-square-foot office tower in Bethesda, Maryland (in the Washington, D.C. market) for $140 million.
In 2016, AXA purchased a 49% share in a 425,000-square-foot office building along Wilshire Boulevard in the Miracle Mile neighborhood of Los Angeles. AXA also was involved in two of the biggest deals of recent years in Manhattan, selling a Seventh Avenue office tower for $1.9 billion and later selling a Sixth Avenue property for $1.65 billion.
In 2018, Paris-based LVMH purchased a two-story, 6,200-square-foot retail property on Rodeo Drive in Beverly Hills, California, for $110 million, the Los Angeles Business Journal reported. Also in the L.A. market, Chanel paid $152 million in late 2015 for its retail space on Rodeo Drive that the company had been leasing. Over the 2016-2017 period, French companies were the fourth-largest players among foreign-capital sources in L.A. commercial real estate with investments of $519 million, according to The Real Deal.
More recently, the French multinational media company Publicis Groupe made a splash in the Manhattan office market by signing a 20-year renewal lease for 680,000 square feet on Hudson Avenue that included a plan to expand into an additional 280,000 square feet.
