ASB Real Estate sells Capella Tower for $255m
Shorenstein has bought the Capella Tower in downtown Minneapolis, from ASB Real Estate Investments.
The sale is one of the highest prices for a Twin Cities office building in recent years.
ASB Real Estate Investments owned the 58-story class A building since 2006, acquiring the property from Hines for $245 million.
The sale included an adjoining 20-story building occupied by the Star Tribune newspaper.
Recently, ASB sold 900 G St., a 112,635-square-foot office building in Washington, D.C.’s East End submarket for $144 million to an affiliate of Masaveu Real Estate U.S. And the firm sold the 1.6 million-square-foot Infomart data center and office complex in Dallas to Equinix for $800 million.
Leasing activity in the Minneapolis-St. Paul office market remained vibrant as overall absorption eclipsed 370,000 square feet in the fourth quarter 2017, bringing the year-end total to nearly 450,000 square feet, according to Cushman & Wakefield. Landlords have succeeded in pushing rents steadily higher, but those growth rates are starting to show signs of slowing heading into 2018. Tenant improvement costs have increased throughout 2017, which is also contributing to slightly higher rents and longer lease terms.
The tight labor market is pushing companies to invest more in their office space environment in order to attract and retain workers, especially technology and other white-collar employees.
Landlords continue investing considerable capital to renovate and reposition properties and improve amenities, states Cushman & Wakefield. Tenant decisions are less dependent on choosing class A versus class B, and more about which owners are “doing it right”. Those owners that have the best value proposition and are aggressively managing their assets to tenant demands are being rewarded with higher occupancies.
