Global investment giant Blackstone is extending its retreat from the national office market through a recently closed deal by one of its affiliates.

Link Logistics, one of the nation's largest industrial property landlords that is owned by the private equity giant, finalized a $44.3 million deal with a Texas-based entity for an office campus in Phoenix leased entirely to Bank of America, according to property records and CoStar data. The sale includes the five office buildings at 1825 E. Buckeye Road and closed as part of a long-term ground lease with the land owned by the city of Phoenix.

The deal is the latest step the New York-based firm is making to reduce its exposure to the office market, a sector that has been battered by higher borrowing costs, remote work and depressed leasing demand that has pushed landlords such as Blackstone to sell properties at steep discounts.

Blackstone, the world’s largest commercial property owner, called 2023 a cyclical bottom for commercial real estate and has cut its U.S. office exposure to just 1% of its global real estate portfolio. The firm acquired the 37-acre Bank of America campus in October 2018 as part of its $7.6 billion acquisition of Gramercy Property Trust. That deal included 335 office, industrial and other properties across the United States and in parts of Europe.

The Phoenix campus, located within the Sky Harbor Center near the city's international airport, spans roughly 534,900 square feet across the five buildings. The Bank of America campus is the largest office deal to close so far this year in the greater Phoenix area based on square footage and one of the largest based on price, according to CoStar data and Cushman & Wakefield, which represented Blackstone in the deal. The deal came out to about $90 per square foot.

Despite the discounts and many sellers' eagerness to quickly offload properties, sales such as the Sky Harbor Center portfolio deal spotlight building momentum among investors once again willing to bet on the national office market.

“Office properties are selling again as price discovery emerges and lenders slowly return to the market," Cushman & Wakefield Executive Managing Director Steve Lindley said in a statement. "For the most part, however, buyers will only pursue the best office assets and that have credit tenancy, a strong location and appealing on-site or nearby amenities. In the case of Sky Harbor Center, the demonstrated tenant commitment created significant buyer interest.”

Bank of America has leased all five buildings since the late 1980s, and Lindley added that the bank still has "several years remaining on its existing lease term" after signing an extension in the early days of the pandemic.

Office sales nationally have plummeted by more than 55% over the past year to $35 billion, according to CoStar data, a nearly 15-year low. Yet, on a quarterly basis, sales activity held steady throughout 2023 and even ticked up in the early months of 2024 as significant discounts pushed an expanding group of investors to take advantage of more deals, data shows.

That is especially true in Phoenix, where a flurry of smaller deals has pointed to a mounting uptick in buyer interest as pricing certainty begins to take hold.

Properties including the 3200 Central office building in Midtown as well as the Beam on Farmer building in nearby Tempe, Arizona, have helped boost an investment volume that still has a long way to go before it reaches pre-pandemic levels. Buyers have collectively funneled about $1.3 billion into the region's office market over the past year, according to CoStar data, with many priced at discounts of more than 30% compared to their previous peak.

Deals priced at less than $5 million accounted for about a quarter of the total deal volume in 2022, according to the data. Last year that share spiked to more than 40%.

Cushman & Wakefield's Steve Lindley, Alexandra Loye, Will Strong, Molly Hunt, Eric Wichterman and Mike Coover represented Blackstone in the deal.