The office industry has undergone a seismic shift over the last few years, and 2022 was no different. With most companies adopting remote work and hybrid schemes, the traditional office had to adjust to survive. Eager to see what changed, CommercialCafe examined last year’s biggest office transactions in the U.S.
Diversity Rules in the Top 10 Most Expensive Transactions
Usually, in rankings such as this, the top 10 is clustered around one or two particular areas, typically NYC and California. However, the list below is highly diverse, comprised of nine different markets spread across the country.
Only one top-10 sale took place in NYC, while the remaining transactions occurred across five additional states plus the District of Columbia. Not only does this highlight the great degree of diversity in markets that are attractive to investors in a post-pandemic world, but it also hints at the fact that traditional office powerhouses are no longer necessarily the place to be. Here are the top 10 most expensive U.S. office transactions of 2022:
1. 245 Park Avenue, NYC, NY
In pole position, New York’s 245 Park Avenue was the most expensive office building traded last year. Boasting a $1.77 billion price tag, it was sold by HNA Group to new owner SL Green, who has been managing the building since 2018. This single transaction accounted for almost half of New York’s $3.82 billion in total sales across the top 50 ranking, comprising seven transactions altogether.
The new owners have already set redesign plans for major improvements, spearheaded by Kohn Pedersen Fox. This redesign will be the second such collaboration after their successful work on One Vanderbilt.
As well as being the most expensive property on the list, 245 Park Avenue also took the crown as the largest. With more than 1.7 million square feet of premium Manhattan office space, it’s just one of four properties in the top 50 that exceed 1 million square feet.
2. Alexandria Center at Kendall Square – 100 Binney Street, Cambridge, MA
The biotech and life science hub of Cambridge, MA, was home to the second-largest office sale of 2022. Alexandria Center at Kendall Square was acquired by CBRE Investment Management from Alexandria Real Estate Equities for $1.02 billion, just one of two transactions to exceed the $1 billion mark. However, at just under 431,500 square feet in size, the price per square foot was more than double that of 245 Park Avenue.
This — alongside the fact that the Cambridge office market is the only market to take two spots in the top 10 — provides further proof that commercial real estate in this thriving hub is increasingly attractive to investors.
3. Madison Centre, Seattle, WA
In third place, Seattle’s Madison Centre was bought by Boston Properties for $730 million. It was sold by Schnitzer West, a major West Coast real estate investment, development and management firm, which completed the office complex in 2017. Boasting 750,000 square feet of Seattle office space, plus a seven-level underground car park, it enjoys a premium location in the heart of the city.
4. Crossman Avenue (Portfolio), Sunnyvale, CA
Crossman Avenue is the first of just two entries from California in this top 10 list. Occupied by Meta, the Sunnyvale office campus sold for $707 million in June 2022. It was purchased by CommonWealth Partners from Tishman Speyer for more than twice the amount they had invested in the space the previous year.
5. Kendall Center – 125 Broadway, Cambridge, MA
The second entry from Cambridge, MA, proves that biotech and life science spaces are particularly attractive for investors. It was sold by former owner Biogen to Boston Properties for $603 million. With a total size of 271,000 square feet, it has one of the highest price tags per square foot in the ranking.
6. Flatiron Park (Portfolio), Boulder, CO
Outside of the hottest biotech and life science hubs of Boston and Seattle, plenty more markets are emerging with a focus on this thriving sector. Boulder, CO, is one of them, highlighted by the sale of Flatiron Park last year.
The large business park boasts a variety of tenants in the life science and tech sectors and was bought by BioMed Realty for $594 million. At 931,552 square feet, the price per square foot is far lower than previous biotech and life science hubs on the list, making this an exciting new market for investors.
7. 601 Massachusetts Avenue NW, Washington, D.C.
Sold by Boston Properties to Mori Trust for $531 million in Q3 2022, 601 Massachusetts Avenue NW is the most expensive of the four Washington D.C. office spaces to make the top 50. Indeed, it makes up almost half of the region’s $1.3 billion total sales volume.
8. Esplanade (Portfolio), Phoenix, AZ
Phoenix, AZ, is another emerging life science hub, and the sale of the Esplanade complex for $504 million in Q3 2022 shows that investors are taking note. At 906,459 square feet, it’s among the largest properties in the top 10 and offered a good deal in terms of cost per square foot for LBA Realty, which purchased it from Monarch Alternative Capital/Tourmaline Capital Partners.
9. Bank of America Plaza, Atlanta, GA
At 1.3 million square feet, Bank of America Plaza was the second-largest Atlanta office space to be sold last year. The iconic 55-floor tower is perhaps the tallest building in the top 10 and was purchased by CP Group for $491 million.
10. One Culver, Culver City, CA
Closing the top 10, One Culver, a modern hub of coworking spaces, studios, traditional offices and retail zones, was the only LA office space to make the list. It sold for $473 million in Q1 2022 and was bought by EQ Office from LBA Realty.
