LaSalle Investment Management is launching European Ventures Fund III to acquire up to €5 billion ($7.9 billion) of real estate in the belief that the overall economic outlook is positive for Continental Europe.
Despite fears over weakening occupational markets, the firm said stable interest rates and an improving labour market, which have resulted in unemployment being at the lowest rate for 25 years across the Eurozone, should help.
It said the European office sector was benefiting from improving vacancy rates and low supply levels for grade A space and positive rental growth forecast over the next three years. It expected solid tenant demand in the best shopping centres and retail parks across Continental Europe as major retailers look to expand their networks. Likewise, the logistics market is expected to witness strong demand across Western, Central and Eastern Europe. Growth rates for Central and Eastern European hotels, particularly in the capital cities, will remain strong, driven by growing demand from business travellers, it argued.
Simon Marrison, co-head of Europe, said in a statement: “We believe risk-pricing has returned to the market and that the strong take-up of top quality properties in Continental Europe will continue to drive good levels of rental growth. In addition to developing high quality office space and repositioning existing poorer stock, we see considerable demand for sustainable buildings. We also see growing demand in the hospitality sector, particularly across Central and Eastern Europe.”
He continued: “There are also investment opportunities to capitalize on the trend towards sale-and-leasebacks across the Continent, particularly as corporate occupiers seek to finance their expansion.”
Though reports suggest London could be vulnerable to rising vacancy rates owing to widespread job losses in the banking sector, LaSalle has been buoyed by what it said in March was the largest letting in the financial centre so far this year. The firm said it pre-let around 72,000 square feet at 65 Crutched Friars to international law firm Holman Fenwick and Willan. LaSalle is refurbishing the building with New Century Reversions.
LaSalle, which has been operating since 1999 when Jones Lang Wooton Fund Management merged with La Salle Advisors Capital Management, is also in the market with Asia Opportunity Fund III targeting $3 billion of commitments and a smaller vehicle targeting Mexico.