The largest — and most expensive — office complex in Minnesota has a new owner.
A partnership led by MetLife paid an undisclosed sum for the Normandale Lake Office Park, a 1.7-million-square-foot complex in Bloomington, from an entity led by Chicago developer Sam Zell.
The sprawling, skyway-connected network of five shimmering glass office buildings exceeds the size of the tallest building in downtown Minneapolis, the 57-story IDS Center.
The deal is the largest real estate transaction in Twin Cities history, participants said, beating the previous record set by Zell’s $270 million purchase of the same property in 2012. Though the parties declined to discuss specifics of the latest transaction, the details will become public when county records are updated.
“For a lot of reasons this was very attractive to us,” said Betsy Clark, managing director of MetLife Real Estate Investors in Chicago.
Clark said the quality of the building, abundance of amenities and the reputation of its tenants made the property worth pursuing. She said MetLife was familiar with property because it also owns the nearby Northland Plaza, a 300,000-square-foot office tower.
The partnership, which includes units of Allstate Corp., was one of several bidders for the property when Zell made it available late this summer. The group has no plans to make major changes, and expects it “to be a long-term hold,” said Clark.
The complex, which was developed in stages over several years during the 1980s, has more than 90 high-profile tenants, including Tata Consultancy Services and Oracle Corp.
Its occupancy rate of 93 percent has outperformed the market, according to Tom Tracy, executive director of brokerage services for Cushman & Wakefield/NorthMarq, which brokered the deal and will continue to manage and lease the property. Metrowide, the occupancy rate for such buildings is about 83 percent.
With two fine dining restaurants, a 2,500-acre regional park on its doorstep and the kind of on-site services, including day care and hair salons, that you’d typically find in a more urban area, the property has managed to attract high-profile tenants who are willing to pay top dollar for their space.
“It’s created this image of success that’s attracted dynamic companies,” Tracy said.
The deal is among several high-profile property sales that have happened this year in the Twin Cities, including the Graves Hotel, 50 South Tenth and Washington Square, all in downtown Minneapolis.
With its diverse economy and 19 Fortune 500 companies, the Twin Cities has become a particularly attractive market for domestic and foreign investors on the hunt for commercial and industrial prospects, and the sale of this property is symbolic of the region’s strength, said Tom O’Brien, executive director of capital markets for Cushman & Wakefield/NorthMarq.
“This demonstrates the liquidity in our market and that there’s a tremendous amount of capital flowing into this market, and we’re seeing it on a number of transactions,” O’Brien said. “If you’re looking at assets in the Midwest, Minneapolis is definitely on the radar.”