Investor Demand Stimulates Trophy Office Building Spree


GM Building

A string of recent large office building sales reflects increased investor hunger for safe, long-term bets, amid a post-recession environment characterized by lower commercial mortgage delinquencies, higher confidence and streaming lines of credit.

Published reports show that on Friday two foreign investors bought a 40 percent stake in the General Motors Building, valued at $3.4 billion; Crown Acquisitions and Highgate Holdings reached a deal to pay $1.3 billion for 650 Madison Avenue; and last week Boston Properties (BXP) and its partners sold 125 West 55th Street, which The Wall Street Journal noted was increasing competition for such buildings among investors hungry for yield and stable, long-term tenants, adding that Google (GOOGL)’s headquarters at 111 Eighth Avenue in Manhattan was the only large, full building sale of note between late 2008 and late 2012.

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In addition, Time Warner is marketing its headquarters, one of the two towers at the Time Warner Center in Manhattan; and the trend is apparently bi-coastal, with Brookfield (BN) Office Properties agreeing to buy MPG Office Trust, giving it control of four Los Angeles towers that make up “a large chunk of the downtown skyline.”