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1In January 2016, the Prefect of the Paris region, Jean-François Carenco, welcomed the “altogether extraordinary recovery” [1] of the regional business property market. [2] Through the voice of its representative, the state thus asserted the importance of the ‘capital region’ attracting investment in its commercial real estate, in order to maintain its rank in the inter-urban competition. However, most of these investments have been carried out by asset managers, whose capital now permeates the built environment of cities. Partaking in the process of financial re-intermediation (Froud et al. 2002), these managers collect the savings of households and institutions and allocate them to the production and management of elements that make up the urban built environment. [3] For a fee, these intermediaries are tasked with remunerating the capital of their investor clients by capturing the ground rent generated by regular rental income and capital gains on sales. They thereby contribute to the transformation of tradable goods into financial securities that produce regular income in the future (Leyshon and Thrift 2007), and are a driving force behind the integration of market finance and urban spaces.

2Such integration has socio-spatial effects, which the academic literature in France has begun to highlight, by showing how the rise of real estate asset managers has an impact on the geography of non-residential real estate, deepening both standardization and polarization trends, as documented in previous real estate cycles (Chappoz 1984; Crouzet 1999). The “financialization” of real estate—understood here as the circulation of the representations, techniques, and practices of market finance—may then contribute to a process of spatial dualization between areas that are championed by investors, and blind spots (Malézieux 1995; Crouzet 2003; Halbert 2010).

3The aims of this article are twofold. Firstly, it seeks to contribute to the empirical study of the socio-spatial rearrangements associated with a circuit of capital supported by financial markets. The issue is significant as it concerns nearly one third of the private non-residential real estate stock, [4] and primarily metropolitan areas, where investments are concentrated. Indeed, either in terms of large development projects or buildings in the existing urban fabric, the main office districts in central and peri-central areas are almost invariably owned by asset managers. The same goes for warehouses of key logistics centers (Raimbault 2016), and some shopping areas. The issue also applies to the residential sector since, following the sale of most of their housing portfolio in the 2000s, the state is now attempting to get managers back on the investment market, by funding so-called affordable housing (Bigorgne 2017).

4The second aim of the article is analytical. We show how these differentiated geographies are the result of the power acquired by asset managers in urban production. As buyers of buildings, facilities or infrastructure, asset managers are a client base whose requirements are communicated, via real estate developers or infrastructure operators, with public, and particularly local, authorities (Ashton et al. 2016; Theurillat 2011). This intermediation, arising from changes in the division of labor, reflects the establishment of a real “asset assembly line” (Weber 2015). We will show that in the French case, this is at the service of asset managers, who hold property rights on behalf of their investment clientele. We hypothesize that the production systems of the real estate sectors in which these managers invest are undergoing processes of alignment and convergence: because traditional planning and real estate actors (local authorities, planners, developers, real estate consultancies, etc.) are inclined to follow their investment criteria, asset managers are able to influence urban, particularly metropolitan, socio-spatial rearrangements.

5The article is based on long-term research conducted since 2005, [5] using two complementary perspectives. On the one hand, an industry-based approach, focused on the actors of the buy-to-let investment and development sector. As such, a quantitative analysis using a database provided by IPD France has helped to characterize the assets held by asset managers between 2004 and 2011. A significant number of semi-structured interviews with asset managers, developers, real estate consultancies, and planners have also served to understand the industry’s operation and the changes it has undergone. On the other hand, case studies of large-scale regeneration projects launched in the mid-2000s in two cities (the Docks in Saint-Ouen in the Paris region, and the Carré de Soie in Greater Lyon), allowed us to establish a link between these actors and the dynamics observed in urban development policies implemented by local authorities (Guironnet 2017). These two types of approach were complemented by attending professional events, such as real estate fairs (MIPIM and SIMI) or various conferences. Based on the data thus collected, this article summarizes our main findings, which allow us to examine the rearrangement of investment and development sector strategies and practices in the financialized rental property market over the last decade.

The rise and consolidation of a real estate asset management industry

6The financing of real estate by financial markets is not new. Insurance companies, listed real estate firms, and bank-related real estate firms have owned housing stock in major French cities since as far back as the nineteenth century (Lescure 1982). Similarly, the withdrawal of the state from housing funding at the start of the 1950s led to the creation of investment vehicles specializing in real estate construction and management (Chappoz 1984).

7Constituting, along with insurers and mutual funds, the so-called institutional rental investment sector, these vehicles (as with SICOMI, i.e., real estate investment trusts, created in 1967, and SCPI, i.e., real estate investment funds dedicated to retail investors, dating back to 1970) contributed to the development of the real estate investment market until the mid-1990s. In the wake of the arrival of British real estate firms in Paris around the beginning of the 1970s, French developers started to build real estate for institutional investors seeking to protect their capital from inflation. Hoping to profit from a context of massive support for real estate by banking groups (Topalov 1974; Combes and Latapie 1973) and central planning policies, these developers built generic, characterless buildings, often without any intended end users, concentrated in the booming service-sector districts of major French cities (Chappoz 1984; Crouzet 1999; Nappi-Choulet 2009). The inflow of bank loans and the liberalization of construction with the building approval reform in 1985 brought about an overproduction crisis, particularly in the Paris region (Nappi-Choulet 1997). This led to the bankruptcy of many developers, bankers, and development projects that had sought to take advantage of these dynamics.

8Starting in 1996–1997, the arrival of North American speculative funds prompted both the recovery of the real estate market and the transformation of investment practices that pointed to their financialization. This is explained by three key changes. Firstly, available investment capital increased due to the redirection of the household savings of some countries within so-called developed economies towards financial markets (for instance, pension funds). The financial liberalization of the 1980s and the rise of securitization techniques also facilitated the flow of capital across borders and increased its volume (Nappi-Choulet 2009). Secondly, governments increased the non-residential rental property component of the market by granting tax breaks to companies that sold their facilities. The state thereby supported the expectations expressed both by a part of the financial community, requiring listed firms to refocus their activities on their “core business” by getting rid of their real estate holdings, and by representatives of large real estate corporations and financial lobbies in the Paris market seeking to increase the volume of real estate assets under management (Marty 2016). Thirdly, the state multiplied initiatives to appeal to private and institutional investors: by increasing the liquidity of real estate securities in over-the-counter and equity markets [6] on the one hand, and on the other, by exempting specific real estate vehicles from corporate tax and capital gains tax, in opposition to legal obligations relating to the distribution of dividends (Boisnier 2015).

9The combination of increasing capital inflows and rising rental demand resulted in the consolidation of an industry specializing in acquiring property rights on behalf of institutional and retail investors. As a result, real estate investment funds proliferated and the application of asset management techniques spread. The time when institutional investors used to invest to hedge against inflation has passed; the aim is now to optimize “value creation” through a relentless policy of acquisition, reinvestment (to improve rental income), and “arbitrage” (to pocket the capital gains on resales). Still in its infancy in the late 1990s and subsequently reserved for a professional “elite” of the world of finance in the early 2000s, asset management has spread among all investors in the Paris market, including within the real estate departments of major institutional investors (Derote 2009).

Seeing real estate like an asset manager

10Of course, there is a relative diversity of organizations involved in this business, including in terms of status. Some of these are firms specializing in third-party management, i.e., independent firms (Atream, Corum, Perial) or the real estate departments of asset management firms belonging to major financial groups (Axa, Amundi, Aviva), which create funds intended for institutional investors or retail clients. As with Unibail-Rodamco, Klépierre, Gécina, Foncière des Régions, or Icade, real estate investment trusts that are often listed on the stock market also manage property portfolios, whose profits are paid back to shareholders in the form of dividends. Lastly, insurance firms, mutual funds, pension funds and, sovereign wealth funds sometimes manage their real estate investments internally (representing 4 to 8 percent of their total assets under management).

11Beyond the apparent diversity however, these organizations share the same business, namely the design and implementation of real estate investments for their investor clients. From this point of view, the practices involved are relatively homogeneous. The strategy is based on the definition of an investment profile that reflects the categories of market finance: each profile combines a level of return and a risk exposure level, ranging from “core” investments that are considered low-risk, “value-added” at the intermediate level, and “opportunistic” for the riskiest and potentially most profitable (see for example Nappi-Choulet 2013, 110). This financial strategy framework specifies the amount of capital required, the threshold of single investments, the target debt level, and a time horizon, whether contractually set in the case of funds with a limited duration (eight years, for example), or through the development of medium-term strategic plans in the case of listed real estate firms. This financial strategy translates into a real estate policy that is subservient to it. Asset managers thus apply their financial categories to real estate types (“segments,” such as offices, businesses, logistics facilities), inter and intra-urban locations (the Paris region market versus “regional” markets; city centers versus peripheries, etc.), or types of intervention (rental, renovation, construction, land development).

12This iterative translation work involves reducing the multidimensional nature of real estate in line with a matrix based on the risk-return criterion. It therefore brings about a financial reordering of socio-technical heterogeneity (of building materials, energy and material flows, geographical locations, uses, and users). While this activity is carried out on an individual basis by each asset manager, it nevertheless relies on a set of shared representations within their professional community, i.e., on an investment convention that facilitates coordination among financial market players (Orléan 1999; Tadjeddine 2006).

13A number of factors contribute to cementing this convention within the real estate asset management industry, starting with the use of shared instruments, such as asset valuation methods based on cash flow calculation and risk measurement techniques (capitalization rates, net present value; see Crosby and Henneberry 2016). The same applies to the use of benchmarking, by which peer investments are tracked and emulated. Secondly, there is a cognitive and informational infrastructure, which has contributed to the stabilization of investment criteria since the beginning of the 2000s. It is based on the growth of initial and continuous training focused on dealing with real estate as a financial asset (as suggested in specialized textbooks). It also relies on the proliferation of market research by investment brokers, on the publication of “investor” indexes (“IPD Index” by MSCI and Crédit Foncier immobilier), as well as on organized events that bring together the small world of asset managers, or even the coverage provided by the specialized press, such as Business Immo. Thirdly, labor mobility feeds into the circulation of investment criteria at all levels of the professional hierarchy. In 2008, the headhunting of the former director of the European real estate department at a North American investment bank by a major insurance firm went hand in hand with importing a similar strategy of disengaging from the residential “segment.” Fourthly, echoing the work on territorialized milieus (for example, Crevoisier 2010), the geographical proximity afforded by the location of the main asset management firms in the heart of the Paris business district facilitates constant interaction. Since they contribute to the crystallization of a consensus on the investments to be favored, these different elements lead to the convergence of the concrete forms these investments—made by asset managers—take in the built environment.

The socio-spatial hyper-selectivity of investments: The financial, market, and territorial rationales of asset management

14Our findings show a significant socio-spatial selectivity of investments, starting with privileged sector types. Office space, retail space, logistics, or hotels make up the bulk of portfolios, while industrial premises are abandoned and the residential segment is “arbitraged,” i.e., sold, with the exception of certain niche products, such as student residences or health facilities. The trajectory of ANF Immobilier is a case in point. For the past ten years, this listed real estate investment trust has been restructuring a residential portfolio inherited from the Haussmann period, located in Lyon and Marseille, in France. The capital generated from the increase in rents and the capital gains on sales are in turn reinvested to form a portfolio focused on offices, stores, and hotels, located in the regional metropolises. [7]

15This selectivity is also expressed in the location of investments. Assets are over-concentrated in those markets considered most important for each of the “segments.” In the case of logistics, this corresponds to the Lille-Lyon-Marseille corridor, with a specific center around an enlarged Paris region. In terms of office space, while the Paris region accounts for about a quarter of the nation’s jobs, three quarters of assets under management (in terms of surface area) are concentrated there, with the remainder shared out among a handful of regional metropolises. Spatial polarization is also apparent at the sub-metropolitan scale. In the case of retail space, two types of location coexist: on the one hand, downtown stores (the high street); on the other, large shopping complexes on ring roads. Similarly, office space investments include central business districts, in particular close to TGV (high-speed rail) stations (La Part-Dieu in Lyon, Euralille in Lille, Euroméditerranée in Marseille), as well as peri-central hubs that have been subject to urban regeneration projects (Gerland and Vaise in the case of Lyon), and sometimes more peripheral complexes, such as that of Villeneuve-d’Ascq. The Paris region is in itself a case with a very large concentration in the western districts of Paris, coupled with a peri-central overspill supported by La Défense and the neighboring municipalities (Boulogne-Billancourt and Issy-les-Moulineaux), and finally by a string of buildings along the ring road and in the municipalities near Paris (Gentilly, Montreuil, Aubervilliers, Saint-Denis, Saint-Ouen). There are few hubs of any significance located in the periphery: Vélizy-Villacoublay, Roissy, and hardly some older new towns on the borderline (Saint-Quentin, Cergy, and Marne-la-Vallée).

16This spatial selectivity is accompanied by a marked standardization of assets, which are also the largest in size. Warehouses and logistics parks offer large volumes and numerous loading docks. Offices, which are often the largest in a given market (more than 30,000 square meters in the Paris region, and 10,000 square meters elsewhere in regional markets) meet technical standardization criteria in terms of open floorspace depth, ceiling height, usable floor area ratio, and “green” certifications (HQE, LEED or BREEAM). Buildings are moreover expected to be “flexible,” “divisible,” and “separable,” in order to be more easily leased in sections. Typological specialization and technical standards also translate into very strong reluctance to a diversity of building uses. Few asset managers are willing to open up office building ground floors to other uses—in some cases, a few street-level shopping facilities may benefit, but not the local or craft activities that some local authorities want to support. Similarly, mixed residential-office space is systematically thwarted by managers’ refusal to interact with households, and their desire to spatially concentrate office buildings in order to achieve a “critical mass” that is supposed to guarantee the “liquidity” of these assets at the expense of fine-grained diversity in land-use.

17The typologies favored by managers, very often legitimized as the expression of their tenants’ expectations, also affect the uses of these places. Such is the case with the trend for incorporating green spaces (patios, gardens), restaurants, “well-being” (gyms) or customer convenience services (concierge) within a building, reserved exclusively for use by employees of tenants, with access control and video surveillance devices. This is not without contributing to the material and functional isolation of these citadel buildings from neighboring areas.

18The control of uses by asset managers is but one element of a broader strategy to control the tenant mix of properties. However, as they apply stringent selection processes to tenants, the conditions of equitable access to urban spaces come to be redefined. Generally-speaking, preference is given to large corporations, with a long track record and significant financial strength, capable of entering into fixed medium-term leases (nine years). As a result, newly created firms, such as start-ups, those operating in sectors viewed unfavorably (small-scale industries, low-skilled services, third sector), or that do not have financial guarantees deemed adequate, are excluded. As a reflection of their own territorial roots in the business district of the Paris metropolitan area, the sectors and players most favored by asset managers often reflect a truncated version of the metropolitan economy, chiefly dominated by leading national and multinational corporations, leaders in their respective industries, which thus contributes to neglecting, if not excluding, sectors and actors of the “ordinary metropolitan economy” (Loisel et al. 2016; Halbert 2010).

Table 1

Real estate “segments”Offices, retail, logistics, hotels, residential, industrial premises, etc.Concentration in non-residential real estate
Building benefitsSize, depth and ceiling height, usable floor area ratio,* security and surveillance devices, parking lots, energy consumptionLarge single-use buildings, flexibility of plots and floorspace, internalized services (including private car parks), “green” certifications (HQE, BREEAM, LEED)
Tenant typeLifetime, financial strength, size of floorspace leased, lease term, industry“Key accounts” capable of committing to large surface areas and fixed long-term leases (nine years), leaders in their industries
Inter and intra-urban locationAccessibility (roads and public transport), number of transactions, density of comparable nearby buildingsConcentration in a few metropolises and polarization within urban spaces (business districts, shopping or logistics centers)

Table 1

* In the case of logistics, these features relate to the number and size of loading docks.

19Asset managers thus favor a set of self-defined standards, which denote socio-spatial hyper-selectivity for every investment criterion they share (see Table 1 above). These standards arise from the rationales underlying their investment strategies and practices, and may be summed up as three key dimensions, which tend to overlap in practice: financial, market, and territorial.

20Asset management is primarily an activity that pertains to financial markets, from which it draws not just the instruments and categories, but also a rationale that involves optimizing risk-adjusted returns on capital, acting on behalf of investor clients. The spatial polarization of investments, the appetite for standardized assets, the preference for leases that bind tenants for the long term, the deferral of variable costs (charges, local taxes, major works) to tenants in the context of a so-called investor lease, are validated by the precepts of financial economics. The analysis in terms of “liquidity,” a central category of market finance (Orléan 1999), constantly raised by our respondents to describe real estate products and interpret their choices, is also significant in this regard. This explains why the characteristics of today’s investments reproduce trends seen in previous cycles, when developers were constructing speculative buildings on behalf of institutional investors who already had an aversion to risk (Chappoz 1984; Crouzet 1999).

21Secondly, there is a market dimension to investment standards: asset managers operate in a competitive industry, where the competition to capture the resources of financial markets only allows them to remunerate their equity by controlling management costs, starting with labor costs as the topmost item of expenditure. This results in a reduction in the number of assets under management in portfolios, both in terms of the number of properties held and the tenants who occupy them. Hence the preference for very large assets and “key account” tenants who use large surface areas. Similarly, cost-efficiency calls for control of transport times and expenditure. This constraint encourages managers to prioritize the concentration of assets in places that are most readily accessible from their own offices, whether in the Paris region or in metropolitan areas connected by the TGV, and at least, to concentrate their assets in a limited number of clusters to minimize transport needs.

22Finally, the spatial rootedness of the asset management community has implications for their perception of the types of activity and spaces to be favored. This professional community is part of a unique business ecosystem, as it works for large multinational and national groups, and is located in the business district of one of Europe’s two largest cities, Paris. This spatial embeddedness is likely to contribute to naturalizing the priority given to certain activities and locations considered “metropolitan,” namely large commercial or industrial firms; business districts and peri-central office parks, or corridors and logistics centers, with a national or European scope.

23However, although defined within the asset manager community, the stabilization of investment criteria and their materialization are only possible if they are spread to other actors involved in urban production. It is the modalities and mechanisms of such a spread that we now turn to, by analyzing the “socio-technical mediations” linking capital raised on financial markets with the production and use of the urban built environment (Guironnet et al. 2016).

Planning the city for asset managers

24The rise of asset managers since the mid-1990s has led to the restructuring of the real estate industry, but also of planning. Three types of actors are thus inclined to align themselves with the investment criteria of asset managers, because of a combination of factors arising from market discipline, the sector’s organizational and professional integration, as well as changes in the regional development agendas of local authorities.

25First of all, there are real estate consultants. Traditionally involved in the brokerage business, they have diversified their operations, in order to adapt to the expectations of a client base of multinational tenants and international investors. This diversification has been accompanied by a dual process of concentration and internationalization (Ball 2007), firstly at the European scale in the 1980s, then globally, to the point of resulting in an oligopolistic situation in France. Indeed, real estate consultancy remains dominated by some major players, which like CBRE, DTZ, JLL, or BNP Paribas Real Estate, assist asset managers and “key tenant accounts.” Consultancies play a key role for asset managers, by providing them with services that contribute to the “assetization” (Adisson 2015) of properties. Firstly, their brokerage role is essential to maintaining liquidity (rental and resale), which itself lies at the heart of “value creation” strategies. Encouraged as they are by their transaction-based fee model, brokers thus busy themselves with tenants’ mobility, ensuring regular rent generation and asset valuation, even if this implies feeding into a game of musical chairs among tenant firms (Weber 2015).

26Secondly, their expertise in real estate markets allows them to valuate portfolios on behalf of asset managers. In the absence of continuous listing, [8] through their appraisal-valuation departments, consultancies prepare the regular estimates required by the Autorité des marchés financiers (AMF) for regulated funds, or desired by their investor clients more generally. For this purpose, they employ comparison with other properties considered similar, while using formulas derived from current techniques in financial markets (at net present value, for example), which ultimately contributes to treating real estate as financial assets (Santilli 2015).

27Thirdly, consultancies help to objectify and cement the investment convention among asset managers by producing market representations. By aggregating the scattered data they collect from their transaction teams, the handful of major players with research departments come up with cognitive categories that order the diversity of real estate goods in keeping with the financial metric. They thereby reduce the idiosyncratic nature of properties by applying classifications (for example, “Class A” buildings) to match the risk profiles sought by managers. Likewise, they organize urban areas into markets that are considered homogeneous under these same financial criteria (such as “mature” and “emerging” markets). This objectification of the multitude of market transactions has spill-over effects on asset managers’ strategies: the greater the number of investments, the more consultancies record information and increase the market’s “transparency” (geographically and sector-based), in turn encouraging asset managers to focus their investments in said market, due to their risk aversion. As magnifying mirrors of the business that they monitor, consultancies thus contribute to highlighting—or not—specific agglomerations, specific sectors of business, and types of property owners, thereby fueling the processes of centralization and standardization (Crosby and Henneberry 2016).

28This phenomenon gives rise to a cascade of effects, since market representations produced by consultancies are widely propagated among local development stakeholders. This applies to the programming of large development projects, where the absorption capacity of the local market, the profiling of properties likely to attract tenants, and expected valuation prices, are established based on market data that they produce (Devisme et al. 2007). In addition, given their knowledge of local markets, they are important for developers, technical departments, and elected officials of local authorities, with whom they have regular exchanges, for instance through regional commercial real estate observatories. From the “basis of [their] business,” which is “market knowledge,” and thanks to its “diffusion,” they see themselves as responsible for circulating the “specifications” toward all of these actors (interview with a real estate consultant, April 2014).

29Developers also contribute to this spread, due to their position as intermediaries in the buy-to-let commercial property sector. They are now expected to meet the requirements of a client base of investors seeking to acquire real estate assets, i.e., products that yield returns while offering prospects for capital gains at the time of sale. Such an alignment is not casual: the financing circuit on which developers rely guarantees a demand which, albeit subject to jolts due to the vicissitudes of financial markets, remains significant in terms of volume and compatible with industrial routines, due to the stability of investors’ standards.

30Two convergent processes contribute to aligning developers with the requirements of asset managers. Firstly, the integration of the development and investment industry when it comes to commercial property. These professionals have attended the same masters courses in real estate, they take part in the same business-to-business events and exhibitions (SIMI, MIPIM) and move from one organization to the other—like this engineer, trained in a French “grande école,” [9] who then went on to work for the real estate department of an audit firm, a listed real estate investment trust, a German investment bank, a UK investment fund, and eventually a North American developer (interview with a developer, June 2007). Secondly, developers’ alignment is based on market discipline. Asset managers remain very alert as to the technical characteristics of the properties they acquire, even if this means cutting into developers’ margin by prescribing the construction of sometimes less profitable premises for the latter, but in keeping with their own requirements (interview with a developer, January 2014). Asset managers thus frequently distinguish between “good” developers and “bad” ones, who implicitly did not anticipate their investment criteria during the design phases and who it is important to “keep a close eye on” (interview with an asset manager, September 2012). However, direct confrontations are rare: due to the competition between them, the twenty-or-so developers operating in France and capable of supporting asset managers have internalized their requirements. As one of our respondents put it, “the investor makes the market, and conditions the reflexes of the world of property development and how it works” (interview with an asset manager, February 2007). This is why developers often act as the spearheads of asset managers vis-à-vis landowners, tenants, planners, and local authorities, with whom they negotiate the construction of developments that meet asset managers’ standards (Guironnet 2017).

31Finally, having taken into account the role of asset managers in the production of commercial real estate, economic development and planning actors also contribute to the circulation of their investment criteria. Since their investments are seen as a measure of a locality’s attractiveness by firms seeking low-cost rental property suited to changing productive uses, asset managers have become prime targets of territorial marketing. With the help of real estate consultancies, specialists in this type of marketing (economic development agencies, consulting firms) encourage local authorities to participate in major real estate fairs, initially intended for professionals in the field. This property-oriented turn of economic development policies, albeit not entirely new, thus contributes to strengthening the circulation of asset managers’ investment criteria to urban governments. In the city of Lyon, for instance, attendance at real estate fairs has contributed to converting some economic development technicians and the mayor to these investment standards (Guironnet 2016).

32We see a similar process at work in the case of urban planning, starting with development corporations that have traditionally been involved in this sector on behalf of public authorities. [10] But this also applies to real estate groups that undertake land redevelopment activities at a neighborhood scale, in order to strengthen their property development business, such as Nexity at Saint-Ouen’s Docks in the Paris region. In the case of these two types of respectively quasi-public and private land developers, our research shows a familiarity with, or even an outright conversion to asset managers’ requirements. The financialized investment sector appears to them as a means to bring complex redevelopment projects to fruition. [11] First of all, such a financing circuit is capable of supporting the costs of urban renewal, which is characterized by large land tracts and the presence of previous uses (requiring expropriation, decontamination, etc.). It also allows for the financing of commercial real estate, and therefore contributes to economic development goals, as well as mixed use and density, albeit with conditions and contradictions attached, as we have seen. Finally, this circuit contributes to balancing development budgets through the sale of building rights, and indirectly, to financing public facilities. This reliance on asset manager resources is reflected in their over-representation among buyers of new commercial space built as part of major development projects. This may then encourage urban planners to internalize the investment criteria, or even educate local technical departments and elected officials to them. Such is the case of a chief executive at a local development corporation, involved in one of the largest urban regeneration projects in France, and who explained to us her role as a go-between with elected officials, whom she made aware of asset managers’ “investment model,” for example in terms of building size, or the non-presence of shops on the ground floor (interview, May 2016).

33While they are needed by asset managers, because of the cognitive, technical, or regulatory resources they have, real estate consultants, developers, and local development actors, are in turn encouraged to align themselves with the investment criteria of asset managers, who have grown to command a dominant position. And this applies in situations that are so diverse from a political and institutional point of view that this dominance appears to prevail despite territorial specificities. On the one hand, it is exercised in certain parts of the “red belt” suburbs, which like Saint-Ouen are committed to implementing a more politically progressive metropolitanization. Consequently, the municipality is caught in a tension between its goal of maintaining the diversity of the economic fabric, and capturing a financial windfall that is supposed to curb the post-industrial decline of the municipality, thanks to the funding for the establishment of large firms, and for urban development (Guironnet et al. 2016). On the other hand, in the most entrepreneurial cases, such as Greater Lyon, not only are projects indexed to investment standards, but so is the wider metropolitan development strategy (Guironnet 2016).


34The adoption of asset management techniques imported from financial economics by “institutional” real estate investment professionals has impacts on the socio-spatial and political dynamics of the urban spaces on which they capitalize. On the strength of an investment convention that they are collectively developing, institutional investors, listed real estate investment trusts, and third-party management firms, altogether make up a Parisian milieu of asset managers that has found support among traditional players in urban production. Real estate developers, consultants, and local development specialists, have thus helped to stabilize their investment convention, while circulating and adopting it, in a way that is now shaping cityscapes.

35Our work firstly confirms the extent to which these changes contribute to the increasing standardization of the urban built environment. Subscribing to shared representations about what constitutes a “good” building, a “good” location, or a “good” tenant—in terms of financial liquidity and perceived risk and returns—contributes to the standardization of urban forms and uses, in line with the criteria of asset managers. Our research also highlights the role of these managers in deepening metropolitanization processes. The transformation of the urban built environment of large city-regions represents an opportunity for the deployment of a financing circuit backed by financial markets, in search of new, seemingly secure, assets. Asset managers thus concentrate significant investments (between twenty and thirty billion euros a year, which is equivalent to the total estimated cost of the planned Grand Paris Express transport network) in a limited number of urban areas, and in order to accommodate handpicked “metropolitan” tenants.

36More broadly, our research points to how, once asset managers’ capital is mobilized to finance large urban development schemes, or the refurbishment of existing office stock, the political economy of metropolitan regions—whether established, or aspiring to be—is transformed. Since planning and economic development policies are increasingly tied to the operations of the real estate investment market, they encourage these transformations. As a result, the distribution of urban power within local governance is reconfigured: despite the relative discretion they favor, asset managers have emerged as dominant players in determining urban forms, the geographies of economic activity, and the uses, as well as the users, of urban spaces.


  • [1]
    Translator’s note: Unless otherwise stated, all translations of cited foreign language material in this article are our own.
  • [2]
    Estelle Santous, “2016, ‘une grande année pour l’immobilier,’ selon le préfet Carenco,” Business Immo, accessed January 18, 2017,
  • [3]
    Offices, shopping malls, logistics parks, serviced residences, public buildings, such as hospitals, ministries, schools, as well as major facilities or infrastructure (see Nappi-Choulet 2009; Lorrain 2011; Raimbault 2016)
  • [4]
    The only publicly available information on the weight of this circuit of capital is provided by industry representatives. They relate to the value of assets held in institutional investors’ portfolios, which was estimated at 300 billion euros for 2014. Source: Institut de l’épargne immobilière et foncière (IEIF), “Le patrimoine immobilier des grands investisseurs,” accessed 23 January 2017,
  • [5]
    Research projects: “Résistances” (2011-2014) for PUCA; “Capital(e) durable” (2011-2013) for the Île-de-France regional council; “MIPIM” with Reed-Midem (2013); “Géographie de l’investissement” with IPD France (2010-2012) ; doctoral research of A. Guironnet (2012–2017). In addition to the authors, K. Attuyer, P. Bouché, E. Decoster, N. Maisetti, and R. Yver have taken part in this work, as well as the following students: A. Auvray, R. Costantino, M. Guillaumé, F. Hervé, G. Karakouzian, M. Morel, E. Pagès, F. de Sainte-Marie, V. Santilli, E. Simon, E. Sévrin.
  • [6]
    Transactions on the secondary market for SCPI securities were facilitated in 2001. New regulated real estate investment vehicles were created in 2003 (Sociétés d’investissement immobilier cotées—SIIC, i.e., listed real estate investment trusts, REITs), and then in 2007 (Organismes de placement collectif en immobilier—OPCI, i.e., real estate collective investment funds).
  • [7]
    In Marseille, this “upgrade” strategy has not gone without triggering grassroot action against tenant evictions (Borja et al. 2010).
  • [8]
    The market value of real property and rents is known only at the time of their sale and when they are leased out again.
  • [9]
    The Grandes écoles are very selective higher education establishments in France.
  • [10]
    Établissements publics d’aménagement (EPA), i.e., central state-backed development corporations; Sociétés d’économie mixte (SEM), i.e. quasi-public corporations; but also Sociétés publiques locales d’aménagement (SPLA), i.e., local public development corporations.
  • [11]
    Current changes to local taxation and the reduction of overall operating allocations from central government may increase this sensitivity to capital provided by asset managers.

The increased involvement of market finance in real estate development is underpinned by asset managers operating on behalf of retail and institutional investor clients. This paper examines how the investment criteria established within their professional community have a bearing on urban spaces due to the enrollment of long-standing real estate and planning actors. On account of market discipline, the growing integration of the investment and rental property development sectors, as well as the entrepreneurial turn in regional development agendas, the latter are compelled to align themselves with asset managers, spreading their investment criteria to urban governments. The ongoing financialization of real estate thus supports the dynamics of metropolitanization. It leads to the unfolding of geographically and socially hyper-selective investment patterns promoted by asset managers, whether in terms of which locations have access to capital, urban form, or types of uses and users.

  • financialization
  • property
  • asset managers
  • metropolitan dynamics
  • France

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Antoine Guironnet
Laboratoire Techniques, territoires et sociétés, Université Paris-Est, France
Ludovic Halbert
Laboratoire Techniques, territoires et sociétés, Université Paris-Est, France
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