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The Hudson Yards development, a residential, commercial, and retail space on Manhattan's West side, is pictured during the grand opening in New York City on March 15, 2019.Brendan McDermid/Reuters

Google Inc. will spend US$2.1-billion to buy a New York development from Oxford Properties, giving the real estate arm of the Ontario Municipal Employees Retirement System what it believes are the two biggest office-building sales announced this year.

Google will own and occupy St. John’s Terminal, a 12-storey, 1.3 million-square-foot office property developed where the New York Central Railroad once brought meat, milk and eggs to the teeming city in the middle of the 20th century. Oxford made it part of its ambitious New York plans, which include the adjacent Hudson Yards project.

Oxford owns 52.5 per cent of the St. John’s project, with partner Canada Pension Plan Investment Board owning the remainder. The two partnered in early 2018 to buy the 3.25-acre site and building for US$700-million from Westbrook Partners and Atlas Capital Group. The Canadian partners then set about renovating the building to modern environmental standards while also cutting below Houston Street to expose the historic rail beds.

Google committed in 2018 to lease the finished product as part of a plan for a three-building New York campus, which included non-Oxford properties. Tuesday’s announcement is Google will now buy the building, with the deal expected to close in the first quarter of 2022, with move-in expected in mid-2023. The St. John’s Terminal site will be the New York headquarters for Google’s global business organization.

For Oxford, the transaction is another in a string of sales, or planned sales, of office buildings in a desire to refresh its portfolio by investing in hot real estate classes such as multifamily residential, life sciences and logistics properties.

Oxford and a partner, J.P. Morgan Global Alternatives, sold a 409,422-square-foot Class A office building near the Harvard University campus in Cambridge, Mass., in August for US$825.1-million, attracting more than 10 bids from institutional investors in the process. That was the biggest office sale announced in 2021, prior to Tuesday’s Google news.

Oxford and CPPIB have also placed Royal Bank Plaza, one of the marquee office properties in the Toronto core, up for sale. The two organizations, which each own 50 per cent of the property, hope to sell it for more than $1-billion, according to two people familiar with the matter, whom The Globe and Mail is not naming because they were not authorized to disclose the amount publicly. Royal Bank Plaza has close to 1.5 million square feet of leasable space across two towers on Bay Street, between Wellington and Front streets.

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