The biggest office park in the Twin Cities has been sold in what's likely the most valuable commercial real estate deal in the region at least since 2019.
Opal Holdings, a New York investment firm, is buying the Normandale Lake Office Park in Bloomington for an as-yet undisclosed sum.
The park's five-building campus sits near Interstate 494 and Hwy. 100, a prominent junction in the south metro. With 1.7 million square feet of office space, the buildings have more combined space than the IDS Tower in downtown Minneapolis.
The complex is more than 90% occupied and houses the headquarters of Bright Health, Dairy Queen and Schwan's Consumer Brands. It is also the home of local offices of Aon Benfield Global and Willis Towers Watson.
The deal closed at the end of June. While public records have yet to reflect the sale price, the property has been a hot commodity and a cash cow for previous investors.
In 2014, MetLife Investment Management and Allstate paid Sam Zell nearly $370 million for the property, shattering previous records for office projects in the Twin Cities. Zell had owned it for just two years and made a $100 million with its sale.
That transaction was the second-largest office sale in the United States in 2014. Its sale now is likely to stand as the biggest commercial real estate deal in the Twin Cities and one of the biggest in the country this year.
The office vacancy rate in the Twin Cities metro during the first quarter of the year was 24.7%, according to research from Cushman & Wakefield. Still, investors have been actively pursuing Class A office properties with desirable amenities in prime locations. This spring, Excelsior Crossings, a 508,000 square-foot complex in Hopkins, sold for $82.5 million. It was more than 90% leased at the time.
Tom O'Brien, executive director of Cushman Wakefield's Minneapolis office, said the Normandale Lake complex was never formally listed, making it an off-market transaction.
"With its leasing momentum and other characteristics, it was a good opportunity to monetize the asset," O'Brien said.
"Top-quality, well-amenitized developments like Normandale Lake Office Park attract tenants, who more than ever are in 'flight-to-quality' mode, so its leasing metrics are better than pre-pandemic," he added. "That's going to make it really attractive to investors as well."
While unable to divulge the sale price, O'Brien said the next biggest comparable office sale was the 57-story Wells Fargo Center in downtown Minneapolis, which fetched $315 million in 2019.
Opal Holdings is new to the Twin Cities. It's a privately held real estate investment company that recently invested $650 million in a trio of office buildings in suburban Chicago, according to local reports.
The Normandale Lake deal was brokered by a team led by David Knapp and Jeremiah Olsen from Cushman & Wakefield's Chicago office.
Knapp said in a statement that Normandale Lake Office Park is a landmark development that's noted for unusual tenant amenities, like child care and car washes. The complex took nearly three decades to fully develop, starting in 1983.
"Over its history, Normandale Lake has thrived amidst most any macro-economic environment," Knapp said. "Primarily because it offers tenants a workplace centered on community and connectivity in an unsurpassed location."
The campus consists of five interconnected mid-rise buildings named for their address along Normandale Lake Boulevard. They included the 12-story 8000 Tower, the 11-story 8200 Tower, the 13-story 8300 Tower, the 17-story 8400 Tower and the 24-story 8500 Tower.
Kristen Leigh Painter contributed to this report.