Massive pension investors are betting big bucks that the office isn't dead in NYC and San Francisco. Here's why they're ignoring the narrative and going bargain hunting instead.
They're seeking discounts in markets that money managers think will eventually rebound.The market for office space in top-tier cities like San Francisco and New York has floundered during the pandemic — but pension funds and other large institutional investors are pouncing on the opportunity to scoop up bargains.
Prices have fallen as well. Last month, CBS sold its Sixth Avenue headquarters for $760 million, notably less than the $1 billion or more it was seeking for the tower before the pandemic. . That's the case with a handful of large pension funds investing in office space in major cities — either through investments in real-estate funds, investments with real-estate companies and other partners, or outright property acquisitions.
This summer, the California State Teachers' Retirement System, which was already the partial owner of a skyscraper in midtown Manhattan with Silverstein Properties, bought the remaining 50% stake in the building at 1177 Sixth Ave. from UBS Realty Investors, The Real Deal. The 47-story office tower was valued at $860 million, sources told the real-estate news outlet.
"There were no acquisitions in the first quarter," Bitner said, adding that acquisitions"really turned off" in the third quarter of 2020. Both CBRE and Cushman & Wakefield said that Class A office buildings — the newest and highest-quality buildings on the market — are a focus for institutional investors.
Institutional investors are searching for office properties at a discount and"realize that these prices are going to adjust on the office side, so this may be a good time to buy," Ani Vartanian, the cofounder and comanaging partner of Rubicon Point Partners, said in an interview. Hunting for bargains
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