International investors have largely shunned the U.S. office market for the past five years, as occupancy and values for all but the best buildings fell off a cliff.
But Dutch investment manager Bouwinvest is reversing this trend, making a major move into the sector, drawn by higher returns and improving occupancy.
Bouwinvest and Tishman Speyer launched a separately managed account to source and acquire prime office buildings across the U.S. with value-add potential in key cities. Their first acquisition was none other than one of New York City’s most iconic skyscrapers, the Chrysler Building, with the purchase of a 150-year ground lease.
The deal, undertaken with a group of investors headed by Canada’s Public Sector Pension Investment Board, includes $235M to renovate the building, plus ground lease payments to Cooper Union.
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“This is obviously a more active strategy, one that’s on the higher end of the risk curve that we’re doing,” Robert Wagenaar, director of North American investments at Bouwinvest, told Bisnow from his office in New York in an interview about the strategy for its U.S. office push, and the Chrysler Building more specifically.
He joined the firm 13 years ago, switching to the North American region in 2023.
“The majority of our portfolio is more core, so the returns for a more technical, selective investment, one that’s a little bit more core-plus like this, are higher than average. It should be above 10% at least,” Wagenaar said.
The Dutch firm — which manages €18.5B ($20.3B) of real estate assets, primarily for Dutch pension fund bpfBouw — prefers partnering with local specialists when working in a foreign market, hence the separate account with Tishman Speyer.
“Our goal is always to select a specialist manager or an operator who is very good in their sector. It’s also why we believe we should have our own offices in Sydney and New York, so we are on the ground and can easily select the best partner,” Wagenaar said.
The vehicle is part of a club managed by Tishman, which has roughly $700M of equity capital available, giving it approximately $1.5B in buying power.
Bouwinvest has a €2.2B North America mandate for bpfBouw, launched in 2014, which focuses primarily on residential, warehousing and office upgrades in easy-to-trade markets with little new construction.
“We are quite constructive in the U.S. market right now,” Wagenaar explained.
“Looking at things from a broader point, the U.S. real estate market went through significant repricing over the last couple of years, and very selectively, we are adding new investments. The office market is one of the few that has corrected the most in recent years, although part of the market is still relatively weak.”
In Wagenaar’s opinion, there’s quite a strong “bifurcation” taking place between high-quality offices in the right location and lesser-quality offices in need of substantial capital to be brought up to standard. The former, especially Class-A, trophy assets, are faring pretty well, particularly in cities like New York, Boston and San Francisco.
Savills’ third-quarter 2026 office market update reflects this. Office availability stands at 22.3%, yet much of that space falls short of what tenants want. Across 14 leading markets, only 13% of buildings could offer 50K SF (4,600 square meters) or more in a single block, and that share falls further for Class-A, trophy or well-located properties.
“During the downturn of the office market in the last cycle, our allocation was relatively low,” Wagenaar added. “So increasing that allocation right now makes sense for us. It’s a tactical move.”
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A separate account can be more “time-consuming” than a broader fund, but it gives Bouwinvest more control.
“We only want to focus on very specific parts of the office market,” Wagenaar said. “By creating an SMA, we are in the driver’s seat on how we want to invest.”
Joining a broader fund would mean following that fund’s investment criteria and waiting longer to put capital to work. Instead, this vehicle allows Bouwinvest to tailor its investments to bpfBouw’s needs and avoid any overlap with its current allocation in the U.S.
During this initial period, the two will focus on acquisitions in strong markets, targeting somewhere between four and eight assets, depending on the pace of recovery in the office market.
“Our goal is to achieve the best risk-adjusted returns. I would say that the Chrysler Building is on the higher end of that risk spectrum in terms of the amount of work needed and the increase in occupancy needed for that building,” Wagenaar noted.
Tishman Speyer plans to reposition the 77-story tower as a “distinctive” office. The building is in need of refurbishment, with less than 50% occupancy, and a “major part” of the investment will go toward renovations and upgrades.
Three-quarters of the space that is vacant or about to become vacant will be upgraded as move-in-ready suites, an approach the developer also used at 6 Grand Central.
In addition, the 61st floor will be turned into an indoor-outdoor amenity space, with a lounge, food and drink options, and a large gathering area. The underground arcade will be transformed into another amenity area, with fitness, wellness and meeting spaces, while the building’s facade and crown will be cleaned and restored.
“It’s a lot of work. For us, brown-to-green really refers to improving the energy efficiency of the building,” Wagenaar said.
That work includes updating the building’s mechanical, electrical and air systems and optimizing the cooling towers.
“Doing all those renovations while there are still tenants in the building is a risk,” he continued. “But I would say that the biggest bet we’re making is bringing the vacancy level from where it is now to fully let.”
Wagenaar maintains that the rental rates in the Chrysler Building are “relatively low” compared to the rest of New York and that the upgrades to the building will draw new tenants, as there’s a “strong submarket” where it’s located.
“With these types of buildings, the rental rates are different than, for example, the trophy buildings you see, for example, in Hudson Yards. Rates there are significantly higher. So, the goal is to achieve the market rate,” Wagenaar said.
Looking further than the office market and its new separate account, Bouwinvest is also tracking other shifts in commercial real estate around the world and applying that to its North American mandate.
“One of the things we have invested in over the last year is senior housing both in Canada and the United States,” Wagenaar said. “Other healthcare-related investment cases are also on the radar.”
New real estate supply in the U.S. has been relatively high in recent years, but it is expected to fall over the next few years, which should improve performance across many sectors, Wagenaar concluded.
“We need to be focusing on high-income sectors with relatively low vacancy, like, for example, infill small-bay industrial, grocery and retail, and medical outpatient buildings, which can generate high income for pensioners.”
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