MAGAZINE: Milan attracts the smart set

In Milan, the earth is moving.

Italy’s fashion and business capital, still surfing a wave of gentrification after a successful makeover for the World Expo in 2015, has broken ground on more major projects than any other city in Italy in the last five years.

After catching the headlines with its emblematic Bosco Verticale (vertical forest) residential scheme, and cementing innovation in its ultra-wealthy Porta Nuova business district, both backed by global private real estate investor and developer Hines, Milan is now attracting further international investors keen to get in on the act.   

Geographically, the hinterland has become prime territory for logistics developers and funds due to its strategic corridor connecting western and central Europe, but the city’s urban areas are also attracting plenty of attention.

With investment volumes for the territory as a whole growing 14% by the end of 2021, according to CBRE Italy, Milan is enjoying the country’s wider recovery and attracting funds for a range of schemes that even foresee the return of retail development.

Territorially, the city is also developing outwards as it seeks to transform vacant plots and erase the last traces of its industrial past, particularly in the areas northeast and northwest of the city.

To the northeast, Hines and Prelios are two of the main partners in the MilanoSesto scheme, a brownfield regeneration which, upon completion, will be the largest private remediation initiative in Europe and one that has required a significant decontamination drive, both literally and metaphorically.

Former steel factory
The Sesto San Giovanni site, which was home to the Falck Steelworks for 90 years until it closed in 1996, has captured the imagination of many developers over the past two decades. Erstwhile owner, Luigi Zunino and Risanamento, became bogged down in allegations of financial irregularity; part-controlled by banks Intesa Sanpaolo, Unicredit and Banco Popolare, Davide Bizzi took over the plot in 2010, with a Renzo Piano masterplan already agreed. Dubai Limitless flirted with the idea of bailing it out, and then exited the scene.

A decade later, in 2019, Prelios and Hines signed up to take this on, with the blessing of Intesa Sanpaolo, the main financing partner of the project. Prelios, now 100% owner of the capital of newco Milanosesto Development, has been paired with Hines as strategic advisor and development manager, working on behalf of the bank.

More recently, Hines and Kuwaiti-backed Cale Street inked a deal for the acquisition and development of Unione Zero, the first parcel to be developed in MilanoSesto, to the tune of $590 mln (€500 mln). But with such a weight of expectation surrounding the scheme, how is Hines going to make sure that Sesto finally becomes the neighbourhood everyone has envisioned?  

‘We are going to take care of the project in stages,’ explains Carlo Valsecchi, vice president of project & construction at Hines, ‘with mixed-use elements in each land parcel. The former Renzo Piano masterplan has been replaced, in the light of new trends and the changing needs of the community.’ A new blueprint for Sesto, from the studio of Foster + Partners, has been described by Andy Bow as ‘the world’s first post-pandemic masterplan’.

While the Renzo Piano designs have been retained for the Sesto train station and its adjacent square, Piazza Primo Maggio, Foster’s new vision reflects the current primacy of residential units in urban planning, as well as adding food halls and life sciences, offices and even leaving space for last-mile logistics. With planning permission coming in stages, there is ample space to elaborate further elements over the next decade or so.  

‘The new plan is about creating vibrant, sustainable neighbourhoods,’ Valsecchi underlines. ‘Unione Zero includes affordable housing, student housing, offices and a hotel, as well as free-market housing.’ Excavation work began in February, with construction set to get under way by the end of the year. The estimated turnover for the project upon completion — scheduled for 2025 — is over €1 bn, foreseeing the creation of over 2,100 jobs.

World Expo site
Another major out-of-town site which is set to add a vibrant new district to Milan is the transformation of the former World Expo site to the northwest of the city, developed by Australian giant Lendlease. The €4.5 bn Milano Innovation District (Mind) is set to become a sustainable technological hub, also inspired by post-pandemic trends.

Encompassing a science campus with research labs and a start-up accelerator, the life sciences focus will be complemented with housing and office space for some 60,000 people, including 3,000 student units. Its green credentials are underlined with the reuse of the Expo pavilions and the recycling of up to 98% of its building materials. Meanwhile, a massive park, high-speed rail and car-free credentials reflect a commitment to renewable energy.

‘Milan had the properties of what we believe is a gateway city, where key business thrives,’ says Tony Lombardo, Lendlease CEO.

Lendlease is also working on another massive scheme to the southeast of Milan, the €2.5 bn Milano Santa Giulia, on a 110-hectare plot.

The northern part of this development will host a multi-functional 16,000-capacity indoor arena to be used as a venue during the Milano Cortina 2026 Winter Olympics, while to the south, the scheme will give rise to homes, offices, retail and entertainment venues, as well as housing students, new schools and a museum. Lendlease has established a long-term strategic partnership with Canadian pension investment manager PSP Investments to finance the scheme.

There’s also plenty happening in the centre of Milan, with themes including retail, offices and housing continuing to receive scrutiny from Hines, perhaps the investor which has believed in Milan’s potential the longest. In 2019, the firm acquired Torre Velasca, an architectural icon which will be converted into a mixed-use scheme thanks to a €200 mln investment that will also revive its ground-level piazza.

18th century palazzo
Meanwhile, at the pedestrianised Via della Spiga in the heart of Milan’s fashion district, Spiga 26 represents another dynamic regeneration transforming an historic 18th century palazzo into a mixed asset, but daringly removing upper floor residential units.

Acquired by a fund managed by Savills Investment Management and funded by a Hines and PGGM joint venture in 2019, the makeover of Palazzo Pertusati is creating office and retail space over 13,000 m2, nearly 80% of which has already been pre-let.

The site has two entrances: at Spiga 26, where it features three floors above ground and one below, plus Via Senato 19, where it rises to seven floors above ground plus two below. In between, an internal court of 180 m2 has been earmarked for F&B occupancy. The scheme aims to obtain LEED Gold certification, and Italian fashion houses Moschino and Sergio Rossi have already signed up to move their flagships here.

Luxury group Kering has inked a deal for all of the office space spread over seven levels facing Via Senato, which host more than 800 m2 of outdoor terraces with 360-degree views of the city.

‘The rebirth of Spiga 26, with Moschino and Sergio Rossi moving in soon, demonstrates that retail in Italy is very much alive and kicking, along with Hines’s ability to attract world-renowned international brands,’ says Mario Abbadessa, senior managing director and country head of Italy. ‘Furthermore, there are advanced negotiations taking place with a number of high-profile retailers interested in the remaining space.’

He adds: ‘We are very proud that Spiga 26 has been chosen as the Milanese headquarters of the global luxury group Kering. With this agreement we have fully leased the office space.’

Hines’ inspiration for Spiga 26 follows a number of elegant retail-led redevelopments the firm has already achieved at sites including Piazza Cordusio.

Student housing gap
Meanwhile, another theme the firm is pursuing in the city is student residences, through its aparto brand. Purpose-built student accommodation is still a rarity in Italy, and Hines sees this as a strategic opportunity for growth and to meet the ever-increasing demand for beds.

In January of this year, its first project, aparto Milan Giovenale, opened to residents. Representing a joint venture between Hines and Blue Noble, the scheme is located close to Bocconi University as well as other higher-education institutions. Next year, the arrival of aparto Milan Ripamonti will double the offer with another 700 student beds and high-quality, amenity-rich living.

Finally, as the city looks to the return of capacity leisure events after Italian pandemic restrictions are fully lifted on 1 May, it has also recently greenlit the redevelopment of the San Siro football stadium, which will become a 60,000-seat venue for both its top-flight clubs, dubbed the Cathedral. Designed by Populous, the rectangular structure with vertical fins that recall Milan’s duomo will house both AC Milan and Inter, and anchor a wider, car-free sports and leisure neighbourhood featuring an extensive park.

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