Beacon shines light on Paris office market with purchase of Axa Tower

Beacon Capital Partners, the Boston-based real estate investment firm, has agreed to co-develop and then buy the Axa Tower in the Parisian office district of La Defense.

Beacon Capital Partners has formed a 50/50 joint venture with Axa Real Estate Investment Managers to co-develop and subsequently purchase the Axa Tower in Paris.

In a statement issued by Axa, the insurer said the development, located in La Defense to the west of the city, would be completed in the fourth quarter of 2010.

The Axa Tower was originally built in 1974 by UAP insurance company, but Axa is about to start work on a complete redevelopment of it with the addition of more storeys. At 650 feet high, it is expected to be the highest office tower in La Defense.

The joint venture is being invested out of Beacon’s fifth fund, which is expected to close at the end of the month. The $4 billion vehicle has made a number of acquisitions including London’s Citypoint near Moorgate Station for £650 million. Beacon Capital Strategic Partners V is twice the size of its predecessor fund, which only closed last year.

The deals is a further sign of investor confidence in the strengthening office rental market of Paris.
The same confidence is being displayed in London where Morgan Stanley recently revealed plans to co-develop the 300,000 square foot Drapers Gardens office in London’s financial district. It is also progressing plans to develop an even larger scheme next to Waterloo station on the south side of the River Thames.

In London, Quinlan Private, the real estate investor led by former Irish tax inspector Derek Quinlan, has just agreed to buy Citigroup’s European headquarters in London with investor Propinvest Holdings for £1 billion (€1.4 billion; $2 billion). New York-based Westbrook Partners is close to completing the acquisition of art deco building Shell-Mex House on the Strand for a reported £490 million (€725 million; $988 million).

Large transactions in London have helped boost acquisition volumes in the UK in the first half of the year to more than £27 billion (€40 billion; $54 billion).

Jones Lang LaSalle, the global property services firm, said today that investment volume in the UK has been propped up by large deals, but added that a slowdown of inflows into UK retail funds and an increase in borrowing rates were likely to lead to a slight slowdown of volumes in the second half of the year.