Singapore fund and US partner splurge on suburban offices

Thomas Rizk of Workspace Property Trust, Lim Chow Kiat of GIC (Workspace Property Trust, GIC, Getty)

A foreign fund and an American partner have launched a billion-dollar bet on the suburbs as the future of offices.

Singapore’s GIC and Workspace Realty Trust have bought majority stakes in 53 suburban office buildings, according to the Wall Street Journal reported. Properties are scattered across the country, but many are concentrated around Atlanta, Dallas, and San Francisco.

JPMorgan Chase and Bank of Montreal financed the transaction, which closed on Friday. The seller was Griffin Realty Trust, which will retain a minority stake in all properties.

The transaction valued the properties at $1.1 billion. Workspace’s holdings will nearly double with the deal, totaling more than 18 million square feet.

The suburban office market struggled as much as its urban counterpart in the early months of the pandemic. However, flexible work arrangements have sparked renewed interest in suburban properties.

In the second quarter, the downtown office vacancy rate surpassed that of the suburbs for the first time in decades, according to CBRE. The suburbs had a vacancy rate of 16.8%, while the downtown reached 17%.

The deal is Workspace’s latest bet that the move away from downtown could be permanent. This time last year, the company landed a $326 million investment from Oak Hill Advisors. The REIT planned to use the debt and equity investment to complete an additional $5 billion in acquisitions over the next five years.

The Singapore Wealth Fund has a more diverse range of interests. In November, GIC led the purchase of a portfolio of 328 assets from EQT Exeter, a $6.8 billion industrial property trade. It was one of the largest transactions in a warehouse market that was still booming at the time.

—Holden Walter-Warner