When the Normandale Lake Office Park in Bloomington sold for about $265.2 million in 2012, it was the second-largest office property sale in the Twin Cities market’s history. But the price a MetLife-led contingent paid for the five-building property this week will surpass that — and set a new high water mark for the metro in the process.
New York-based MetLife, Allstate Insurance Co. and Allstate Life Insurance Co. this week acquired the five-building, 1.7-million-square-foot office complex on the southwest quadrant of Highway 100 and Interstate 494 in Bloomington, the partners confirmed in a statement.
The “real estate submarket here is very strong, thanks to a diverse economy and a strong corporate business base,” Betsy Clark, managing director of MetLife Real Estate Investors, said in a prepared statement. “MetLife invests in real estate with a long-term perspective, and Normandale Lake fits right into this strategy.”
The previous owner was Equity Group Investments, the Chicago-based firm founded by Sam Zell decades ago. Zell’s group paid about $156 per square foot for the suburban office park in 2012, Finance & Commerce reported at the time.
While the latest sales price for the park wasn’t disclosed this week, parties to the transaction openly called it the largest in Twin Cities history. The current record, according to data from New York-based Real Capital Analytics, is $277.9 million paid for the IDS Center in August 2006.
“The park really has its own brand that stands for the best in class,” said Tom O’Brien, executive director for Cushman & Wakefield/NorthMarq and part of the team that sold the building.
Hennepin County values Equity Group’s holdings on the 23-acre Normandale Lake property at just under $264 million, according to property tax records.
Several factors will have driven the price up since it was last sold in 2012, brokers and real estate analysts said Thursday. For one, the five buildings are now 93 percent leased, up from 83 percent when Zell’s group bought them.
Longtime tenants include Tata Consultancy Services, Prime Therapeutics and Oracle Corp. In the past year, tenants including the Larkin Hoffman Daly & Lindgren law firm, Emerson Process Management and HQ Global Workplaces have signed new leases, renewed or expanded existing ones.
Also helping raise the price is the fact that the local market is stronger now than it was two years ago.
“The appetite for assets in markets like Minneapolis has increased pretty dramatically,” O’Brien said in an interview. “The focus on suburban office is different than it was two years ago.”
Some of the biggest local office sales since 2012 have occurred in the suburbs, including the $123 million sale of Cargill’s Excelsior Crossing buildings in Hopkins and the $75 million sale of the 601 Tower at Carlson in Minnetonka. The largest office sale of 2014 occurred when a German group paid $164.5 million for the 50 South Tenth building in downtown Minneapolis.
Ben Thypin, Real Capital’s director of market analysis, said MetLife and Allstate are among several buyers looking to secondary markets rather than staying in competitive coastal markets.
“They’re getting priced out of these markets and they’re looking at others that have a compelling demographic story and a compelling economy, but they can get a higher yield for lower prices per square foot,” he said.
Read more: http://finance-commerce.com/2014/11/normandale-lake-sale-is-largest-in-metro-history/#ixzz3IQRjig7n
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.