Union Investment Real Estate has renewed its interest in the US office market for the first time in two years buying the headquarters of car manufacturer Volkswagen. The open-ended fund manager, based in Hamburg, Germany, paid approximately $100 million (€64 million) for the Woodland Pointe office building in Herndon, Virginia.
Michael Montebaur, part of Union's management board, told PERE the US office market had been “too expensive in the past two years” adding that property pricing had looked “a bit insane to us.” Union completed its last major deal in the US at the end of 2005 when it acquired the 111 South Wacker office building in Chicago. Prices were at “a premium” a year ago, said Montebaur, but have since “re-adjusted to a reasonable level.”
The Woodland Pointe property, which was developed by New York-based Tishman Speyer, comprises approximately 17,200 square meters of office space as well as a 640-unit parking facility. It is located close to Washington Dulles International Airport, within the Woodland Park business park in Northern Virginia, an area featuring Class A office space, luxury apartments, restaurants and hotel. The six-story, Class A building is rented out to Volkswagen on a 15-year lease. The German car manufacturer moved its US headquarters from Michigan to the Baltimore-Washington metropolitan area earlier this year.
According to Montebaur, the Washington DC area is a region the German real estate investment firm feels “extremely comfortable” in, having made many previous investments in the area. Herndon's close proximity to the Washington Dulles International Airport hub also makes it a very attractive area. “It's a nice entry back into the market,” said Montebaur.
For Union, which currently has €14 billion in assets under management, the US real estate market was its first investment outside Germany. “Be assured that we will strike again in the US this year,” said Montebaur.