Norges Bank Pays $977M for Office Portfolio

December 24, 2024

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The asset collection includes buildings in Boston, San Francisco and Washington, D.C.

exterior shot of 501 Boylston Street — Nuveen Real Estate purchased 501 Boylston St. from Broadway Partners for $370.5 million back in 2007, according to CommercialEdge. *Image courtesy of CommercialEdge*

Norges Bank Investment Management has taken full ownership of a 3.7 million-square foot office portfolio, paying $976.8 million for the remaining 50.1 percent interest in the properties. TIAA subsidiaries sold the assets.

The transaction, which values the portfolio at $1.95 billion, closed through NBIM’s $1.7 trillion sovereign wealth fund.

Nuveen Real Estate, a subsidiary of TIAA and a long-time partner of NBIM, represented the sellers and will continue to manage the properties.

The portfolio includes eight office buildings in Boston, San Francisco and Washington, D.C. The properties are:

501 Boylston St., Boston—subject to an existing debt of $194.9 million
33 Arch St., Boston
Foundry Square 2 at 405 Howard St., San Francisco
888 Brannan St., San Francisco
800 17th St., Washington, D.C.
Evening Star at 1101 Pennsylvania Ave., Washington, D.C.
Franklin Square, 1300 I St., Washington, D.C.
25 Massachusetts Ave., Washington, D.C.

Given the significant disruptions in the office sector, this moment still presents a prime opportunity for investment, NBIM’s Global Co-Head of Unlisted Real Estate Per Løken said in company statement.

In October, Norges Bank Investment Management made another investment in the U.S. office market by acquiring the majority stake in a two-building, 133,449-square-foot office campus in Menlo Park, Calif. The company paid $217 million for a 97.7 percent ownership interest in 2882-2884 Sand Hill Road, situated along one of the most expensive streets for office space in the nation. The transaction valued the property at $222 million.

Boston’s healthy office sector

Boston’s office sector continued to shine, topping the nation for development pipeline and completions. With the influx of new properties, the market’s vacancy rate rose by 650 basis points year-over-year as of October, reaching 16.8 percent, according to a recent CommercialEdge report.

Sales in the metro in the first 10 months of the year accounted for $1.1 billion. Boston’s office assets traded for $187 per square foot on average, slightly above the $177 national average. The market ranked sixth nationally for office investment volume, CommercialEdge data shows.