Norges Bank Invests $217M in Bay Area Office Building
Norges Bank Investment Management, the world’s largest sovereign wealth fund, has expanded its North American holdings.
NBIM acquired the majority stake in a two-building, 133,449-square-foot office campus in Menlo Park, Calif., on the most expensive street for office space in the U.S. The fund paid $217 million, or $1,632 per square foot, for its 97.7 percent ownership interest in 2882-2884 Sand Hill Road, valuing the property at $222 million.
NBIM bought the Silicon Valley asset in partnership with DivcoWest, from Clarion Partners and Invesco Real Estate. According to the sovereign fund, the property is unencumbered by debt and there was no financing involved in the transaction.
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A subsidiary of DivcoWest, which acquired the remaining 2.3 percent interest in the office campus, will perform the asset management for the property on behalf of the NBIM-DivcoWest joint venture. DivcoWest also owns three office campuses on Sand Hill Road known as The Sand Hill Collection, totaling 570,000 square feet among 22 buildings.
Clarion Partners had owned the office property since June 2006, when it acquired the asset also known as Sand Hill Commons from The Courson Co. for $138.8 million, or $1,044 per square foot. Eight years later, Invesco acquired a 49 percent ownership stake in the campus for $117.6 million. Courson still maintains office space at the property, according to CommercialEdge.
Prestigious location
Located in the Redwood City submarket of San Francisco, the property came online in 1964. In its most recent report released in April, JLL ranked Sand Hill Road in Menlo Park as the nation’s most expensive street for office space, with rents averaging $167.74 per square foot. Sand Hill Road is considered the “epicenter for the rapidly growing AI industry” and is home to some of the top venture capital and private equity firms which have been active in 2024, driven largely by funding for generative AI companies, the report showed.
Another Silicon Valley thoroughfare is on JLL’s top five—University Avenue in Palo Alto, Calif., occupies fourth place, with rents averaging $109.04 per square foot. Other top expensive streets for office properties are 34th Street, Hudson Yards in Manhattan; Royal Palm Way in Palm Beach, Fla., and Greenwich Avenue in Greenwich, Conn.
The office campus features floorplates averaging 66,500 square feet and some 530 parking spaces. Firms leasing space at the two-story property include Patient Square Capital, which occupies 24,754 square feet, CommercialEdge reported. Other tenants include Lightstone Ventures and GE Ventures, among others.
More NBIM investments
Meanwhile, on the East Coast, NBIM acquired a 45 percent interest in 290 Binney St., a life science development in Cambridge, Mass., from BXP in March. The 16-story, 570,000-square-foot laboratory/life science property will be fully occupied by AstraZeneca when it’s completed in April 2026.
BXP is retaining 55 percent interest in two joint ventures with NBIM that also include 300 Binney St., which is also fully preleased. NBIM’s total investment in both assets totals about $746.4 million. 300 Binney St. is undergoing a complete renovation and will have 240,000 square feet of lab and life science space when it is completed next year.
NBIM also has a presence in Washington, D.C. The fund owns District Center, a Class A, 850,000-square-foot office building at 555 12th St. NW, in partnership with MetLife Investment Management. The joint venture had acquired the building in 2014 for $505 million, according to CommercialEdge.
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