Cambridge Office Trades for $825M

MetLife Investment Management and Norges Bank Investment Management have acquired One Memorial Drive in Cambridge, Mass. for $825.1 million. The transaction represents the largest single-asset US office transaction to date in 2021, according to CoStar.

MIM and NBIM acquired the property from Oxford Properties Group and a fund advised by J.P. Morgan Global Alternatives.

One Memorial Drive is a 17-story, Class A office building located on the Charles River with 409,422 square feet of leasable space. Built in 1986 and renovated in 2018, the fully occupied property has two long-term tenants, InterSystems and Microsoft.

The transaction is the latest joint venture between MIM and NBIM, building on a program established in 2013 to invest in Class A office properties in key US markets. 

This acquisition will build on the companies’ sustainability efforts. One Memorial Drive, which received LEED silver certification from the US  Green Building Council in 2017, will be included in MIM’s MetZero program to reduce net greenhouse gas emissions. 

The deal also points to confidence in the office asset class, which since the pandemic has been shaken with the rise of remote and hybrid work. 

That said, transactions have been occurring. Yardi Matrix, for example, points to the sale of 725 Ponce in Atlanta, which traded for $300.2 million, or an average of $807 per foot. The building—fully leased to tenants including BlackRock, Chick-fil-A and McKinsey—sold at the highest average price per foot Yardi Matrix has ever logged in the Atlanta market. Across the country in the Bay Area, LinkedIn paid $323.0 million to purchase its headquarters in Sunnyvale. 

“Surprisingly, weeks after this purchase was completed, LinkedIn announced that employees will be able to work fully remote permanently,” Yardi said in its report. “While this may seem paradoxical on the surface, it is emblematic of a growing consensus among many large companies. Even if employees are allowed to work wherever they choose, firms believe the physical office will continue to be part of the work equation.” 

MIM and Norges appear to be of similar mindset. 

“One Memorial Drive reflects our continued strategy to pursue top commercial real estate assets in highly coveted markets,” Ashleigh R. Simpson, regional head of Acquisitions and Joint Ventures at MetLife Investment Management, said in prepared remarks. “Located in a city where demand for office space significantly outstrips supply, and with reliable tenants in resilient industries such as technology and life sciences, we believe One Memorial Drive will be a trophy property within our portfolio.”