BOSTON–The year 2021 brought not only a continuation of the trend toward investment in vast warehousing solutions and data centers, but also a sustained move toward life sciences real estate in the office market in the country, according to a CommercialEdge report.
Using data from CommercialEdge, the report reviewed all major transactions involving office buildings with at least 25,000 square feet, as well as mixed-use properties that were more than 50% office space.
Here are CommercialEdge’s key takeaways:
- $3.4 billion sale of University Park at MIT topped ranking, setting new record
- Deals in Cambridge, Mass.; Boston; and San Francisco outranked NYC
- Chicago’s 1K Fulton was the only Midwestern entry in top 50
- Charlotte top 50 entries totaled $1.25 billion — the highest sales volume in the South
- California landed the most portfolio sales in the top 50
- Major office buyers increase focus on life science facilities
- Check out the full list in the table below, and read on for more information on the top 50 U.S. office sales of 2021, as well as a roundup of the regional lists:
Read below more from the CommercialEdge report:
$3.4 Billion Portfolio Sale in Cambridge, Mass., Tops Office Ranking, Breaking Decade-Long Record
Office sales volume across the top 50 totaled $26.3 billion, with transactions in the Northeast contributing roughly $12 billion and deals for assets located in the West adding $9.31 billion.
More precisely, last year’s priciest office deal was the $3.4 billion sale of University Park at MIT in Cambridge, Mass. — a massive, 11-building deal totaling nearly 2.3 million square feet. That transaction broke the previous record held by the 2008 sale of the General Motors Building ($2.8 billion) — marking 2021 as an exceptional year in more ways than one.
For instance, only three transactions in New York City made the top 10, the highest of which was the $1 billion deal for Hudson Commons in fourth place. Otherwise, CalSTRS paid $860 million for the property at 1177 Avenue of the Americas in July to secure fifth place, while the $760 million sale of the CBS Building ranked 10th.
Besides University Park at MIT, three other entries also surpassed the $1 billion threshold in Boston, San Francisco and New York. This rebound in office market activity followed the cautious investment patterns of 2020 — when no office deals broke the $1 billion mark — and undoubtedly fulfilled a hope of many real estate professionals.
Deals in Cambridge, Boston & San Francisco Outrank NYC
Notably, 16 of the top 50 office transactions were located in the Northeast. Here, sales volume totaled approximately $12 billion, with New York City contributing roughly 36% of that number.
More precisely, seven Northeastern deals ranked within the top 10. Remarkably, Cambridge, Mass., and Boston not only managed to outshine New York City, but also dominated the entire top 10: In addition to occupying the first spot, Cambridge also landed two other entries — the $825 million sale of One Memorial in sixth place and the $775 million deal for the One & Two Charles Park in ninth.
Granted, investors had been diversifying their portfolios for a few years, making even bolder inroads into office markets outside of New York City. But, the effect of this trend has become increasingly visible in the makeup of the annual top 50.
For example, in 2018, New York City had no fewer than 19 office deals among the top 50. Then, just one year later, that number dropped to 11. And, although it ceded the first position to Google’s Sunnyvale portfolio purchase, most of its entries were in the top half of the ranking, with a strong presence in the top five. By 2020, the city had recaptured its leading position with the $900 million sale of 330 Madison Ave. But, in 2021, no deals in New York City cracked the top three.
Major Office Buyers Increase Focus on Life Science Facilities
Alexandria Real Estate also stood out as a major buyer of life science assets in the top 50, spending a total of roughly $2.2 billion on three deals. The largest of these was the $1.16 billion acquisition of 401 Park in Boston, the second-priciest office deal on the list. The Pasadena-based REIT took ownership of the 952,000-square-foot building in February and then promptly announced its plans to build it out as a life science hub. Its other two purchases involved portfolios in Cambridge and San Diego, both of which were life science and technology campuses.
Similarly, Beacon Capital, BioMed Realty, Brookfield Properties, Kilroy Realty, KKR and Monarch Alternative also had two transactions each within the top 50. In particular, Monarch Alternative — an investment firm that focuses on the debt of distressed and bankrupt companies — is an interesting new investor in the trophy asset landscape. With a view of capitalizing on the disruption in the office market, the company acquired the Citigroup Center office building located in downtown Miami, as well as One South at the Plaza in Charlotte, N.C.
To read the full report, please click here.
