Six office buildings in Mendota Heights sell for $40 million

MSP Real Estate, a St. Louis Park developer known for apartment and senior living housing, bought a group of six office buildings in Mendota Heights for $40 million, documents showed Friday.

The price was four times more than another buyer paid last month for the former headquarters of Northwest Airlines, which is just a short distance away and about the same size.

The six buildings, which are part of the American Corporate Center and Mendota Office Center, are located just north of Interstate 494 between Pilot Knob Road and Hwy. 55 on Northland Drive.

The deal for the 420,000-square-foot bundle of Class A office space marks the first commercial acquisition for MSP, which has residential properties throughout Minnesota, Wisconsin and Indiana.

"The investment provides diversification to our portfolio and great balance to the multifamily assets we manage," said Milo Pinkerton, chief executive of MSP Real Estate, in a statement.

The buildings were constructed between the late 1980s and early 2000s.

"The office properties are well-leased and well-located and the demand certainly indicates that suburban office properties remain an attractive investment for many organizations," said Scott Pollock, executive director for Cushman & Wakefield/NorthMarq (CWN), which brokered the deal for seller United Properties of Bloomington.

This is the second major office park sale this summer along the 494 corridor east of the Minnesota River. In June, Eden Prairie-based Excelsior Group bought the former Northwest headquarters, a 190-acre campus near Dodd Road, from successor owner Delta Air Lines for $10.4 million.

The buildings on that campus encompass 540,000 square feet of space, but they are unoccupied. Delta likely had to make a price concession since Excelsior will have to invest in the space and find tenants.

Meanwhile, the six buildings purchased by MSP Real Estate are at 90 percent occupancy, helping to account for the difference in sale price.

"One [property] has income and the other does not," Pollack said.