The portfolio was 95%-leased at the time of acquisition, with in-place rents that are, on average, 40% below market. R2 plans significant improvements that include new amenities, such as bike rooms, fitness centers and dedicated outdoor space.

“It is rare to acquire a portfolio of scale in the creative office space,” says Max Meyers, principal and chief investment officer at R2. “The physical assets are unique, and they range from classic brick-and-timber warehouses to post- industrial office space with 35 foot ceilings. Thanks to an abundance of land, we are able to create truly special urban office campuses. These are unlike anything else that currently exists in Minneapolis and Milwaukee.”

Both cities have benefited from urbanization and subsequent investment in their warehouse districts. This includes the North Loop and Northeast Arts District in Minneapolis and Walker's Point and Third Ward in Milwaukee.

“Creative Office tenants demand non-commodity space,” says Meyers. “This is difficult to replicate in traditional office towers. This portfolio includes some of the most striking buildings in each of these markets.”

The acquisition expands the R2 and Skydeck portfolio. In 2015, the venture acquired Milwaukee's Main Post Office building, a 1.1 million square-foot distribution facility in the Third Ward. In 2017, the venture acquired the Keller Building, a 100,000 square-foot creative office campus in Minneapolis' Northeast Arts District and the 150,000 square-foot Morton Salt factory in the Goose Island submarket of Chicago.

This portfolio was acquired through a new $150 million fund strategy focused on Midwest creative office assets.