New York-based Sumitomo Corp. of Americas makes its entrance into the Minneapolis office market with the acquisition of SPS Tower in the central business district. The real estate investment company, a subsidiary of Tokyo’s Sumitomo Corp., acquired the approximately 655,000-square-foot office property from CalSTRS in a $144 million transaction.
“We were looking for an asset in a stable market with good returns,” a spokesperson for SCOA told Commercial Property Executive of the company’s reasons for setting its sights on Minneapolis.
Located on a 2.5-acre site at 333 S. Seventh St., SPS Tower first opened its doors to tenants in 1986. The 31-story high-rise is linked via skywalk to three adjacent buildings and offers a 630-space underground parking facility and 3,000 square feet of retail space. SPS Tower is 84 percent occupied, with retail software company SPS Commerce Inc. and global professional services firm Accenture LLP serving as anchor tenants.
SCOA plans to achieve improvements at SPS Tower by employing building management methods it has honed over the years since its first investment in the U.S.
The investment community made a solid showing in the Twin Cities in 2018, according to a Minneapolis/St. Paul report by commercial real estate services firm Cushman & Wakefield. “Out-of-state investment groups were attracted to the strong economy and higher yields compared to peer metropolitan areas,” per the report. “A majority of that capital was focused on acquiring assets in the Minneapolis central business district.”
Most of the top office trades of 2018 took place in the CBD. Samsung Life Insurance garnered attention with the $320 million purchase of 33 S. Sixth St., a 1.6 million-square-foot property. Shorenstein acquired the 1.4 million-square-foot Capella Tower for $255 million, and Menlo Equities bought the 498,800-square-foot building at 50 S. 10th St. for $171 million, or a notable $343 per square foot.
Having established a presence in the City of Lakes, SCOA plans to continue the expansion of its geographic footprint, which currently encompasses Atlanta, Chicago, Miami and San Diego. “Los Angeles, Phoenix, D.C., Denver, Boston—these are some markets which currently seem to offer the right sized/priced assets we are looking for,” the spokesperson said.
Image courtesy of Sumitomo Corp. of Americas