JPMorgan’s cut-price suburban Paris office sale collapses again

[PARIS] A cut-price deal to sell a suburban office in Paris that is co-owned by JPMorgan Chase & Co’s asset management unit has collapsed, ending the latest attempt to offload the property five years after it was first offered for sale. 

Talks to sell the Magnetik office building on the south side of Paris’ peripherique for about half its initial asking price to Signal Capital Partners and Balzac REIM are no longer progressing, people with knowledge of the process said.

The venture secured an exclusivity period to negotiate a deal to buy the property for about 140 million euros (S$209 million) in the final quarter of last year, the people said, asking not to be identified as the negotiation is private. 

JPMorgan Asset Management and LaSalle Investment Management first offered the property for sale in 2020 seeking about 300 million euros, Green Street News reported at the time. It was not immediately possible to establish why the deal is no longer going ahead or how the vendors will now proceed. 

Representatives for JPMorgan, LaSalle and Signal declined to comment. Balzac did not respond to requests for comment. 

The end of the low-interest-rate era, shifting demand for office space post-pandemic and increasing environmental regulation have reshaped suburban office markets across Europe. Demand has concentrated on city centres, pushing central Paris’ vacancy rates to historic lows even as outlying suburbs are awash with empty buildings. Higher rates have compounded the hit to valuations as buyers demand better returns. 

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Still, the rush to the centre has forced rents higher, a phenomenon that is now encouraging some businesses to reconsider suburban locations, which are in turn starting to benefit. New rental highs were reached in the suburbs of Issy-les-Moulineaux, Vanves and Nanterre in the third quarter of last year, according to data compiled by broker CBRE Group. BLOOMBERG