Some of the biggest office property owners in the world are increasing their bets despite recent talks of softening in the sector. Office absorption dropped to a five-year low in Q1 on a year-over-year basis, with experts projecting suburban markets to outperform central business districts this year.
Looking past this mild slowdown to the potential long-term growth of the sector, owners are investing in amenities and smart building tech to make properties more attractive to tenants. From Blackstone Group to Brookfield Properties, these are the top office real estate owners in the world, their trophy holdings and some of the strategies they are using to profit in today's office environment.
1. Blackstone Group
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Headquarters: New York City
Portfolio Size: 158M SF
Blackstone Group is by far the largest office owner in the country. As of March 31, the world's largest asset manager owned and held a stake in 158M SF of office real estate. Among its latest purchases was the $1.3B acquisition of the second-tallest office building in the U.S., trophy property Willis Tower in downtown Chicago. The 110-story iconic tower is roughly 3.8M SF and features the popular tourist attraction SkyDeck/Ledge. The firm has plans to renovate the mixed-use facility in a $500M capital improvement project, and has finalized a $1B refinancing of the loan.
2. Brookfield Properties
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Headquarters: New York City
Portfolio Size: 125M SF
Of the billions Brookfield has spent investing in iconic office properties all over the country, the firm is particularly partial to New York. In March Brookfield Office Properties took over 1100 Sixth Ave., home to television network HBO. Brookfield partnered with The Swig Co. to purchase the ground lease of the 350K SF, 11-story property.
In another big move Brookfield sold its 49% stake in Manhattan's 245 Park Ave. to HNA Group for the highest price ever paid for a New York skyscraper. Brookfield and New York State's retirement system sold the skyscraper for $2.21B. The company is also spearheading the trend to boost office amenities in a bid to attract and retain tenants, and is renovating the ground floor of its Los Angeles office buildings to make room for art installations to host cultural events.
3. Tishman Speyer
Headquarters: New York City
Portfolio Size: 64.7M SF
The masterminds behind New York's iconic Rockefeller Center, Tishman Speyer ranked No. 3 on the list for the size of its office portolio. The firm is in the process of building a luxury office tower in one of the largest urban developments in the country, having unveiled plans last February to erect a $3.8B luxury office tower called the Spiral in NYC's Hudson Yards district. The company wants the building to cater to a new generation of workers who demand workspaces that foster creativity, connectivity and collaboration. Tishman Speyer is also boosting office amenities by launching its "Zo" program at Rockefeller Center this February. The program offers tenants comprehensive perks like on-site yoga, emergency child care and on-demand meal and beauty services.
4. LaSalle Investment Management
Headquarters: Chicago
Portfolio Size: 47.6M SF
An independent subsidiary of JLL, LaSalle Investment Management is a large player in the commercial real estate industry, with $59B worth of assets under management. This February the firm completed its $147M acquisition of Chicago's 123 North Wacker office tower — a high-profile casualty of the 2008 real estate collapse. Now LaSalle is redesigning the building, boosting amenities and adding rooftop decks to boost the building's 57% occupancy rate. In March the company acquired 1149 Chess Drive in the San Francisco Bay Area and has since leased the space to a robotics company.
5. Hines
Headquarters: Houston
Portfolio Size: 44.4M SF
Hines, headquartered in one of the most economically stagnant markets in the country due to the current oil glut, recently announced plans to build a 500K SF office complex in Atlantic Center, the first property to be erected on that site in nearly a decade. The project, called Atlantic Yards, will be all brick and is expected to break ground in 2018.
The fifth-largest office owner in the country recently liquidated the assets of one of its three public non-listed REITs in order to take advantage of strong office demand. In May 2016 Hines REIT put a $5.5B portfolio featuring London's Canary Wharf building up for bid. Last year it sold an office portfolio that included Los Angeles' Howard Center and properties throughout Seattle and Washington to a Blackstone affiliate for $1.16B, in addition to selling One Victory Park, a 17-story Dallas office tower, to Clarion Partners.
6. Ivanhoé Cambridge and Callahan Capital Properties
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Headquarters: Montreal
Portfolio Size: 43.7M SF
Ivanhoé and Callahan bought NYC office tower Three Bryant Park from Blackstone Group in 2015 for $2.2B, marking one of the most expensive office transactions in U.S. history. When the two firms finished the deal the property was 97% leased and home to MetLife and Verizon. At the start of 2017 Ivanhoé and SL Green closed a $375M refinancing loan from the Bank of China for 1745 Broadway. The two companies own 685K SF and rent the space primarily to Penguin Random House.
