With commercial real estate selling at all-time highs, public pension funds are among the major beneficiaries, earning exceptional returns and wielding large amounts of liquid capital.

The New York City Employees’ Retirement System, for example, is in line to reap a windfall from the famed Lipstick Building at 885 Third Ave. Along with Tishman Speyer Properties and other partners, the pension fund in March 2004 purchased the 34-story, 635,000-squarefoot tower, designed by architects Philip Johnson and John Burgee, for $235 million. In April 2005, it was announced that the TMW Property Fund had agreed to pay about $164 million for a 49% ownership interest in the building. Two weeks ago, the joint venture announced it had retained an investment sales broker to sell the building. Industry leaders expect the property to fetch close to $635 million, or $1,000 a square foot.

In 2003, Comptroller William Thompson Jr. announced that NYCERS would invest up to $100 million through Tishman Speyer and Travelers NYC Real Estate Venture VLP in a co-venture with the New York State Common Retirement Fund. The objective was to develop, redevelop, and acquire premium commercial property throughout the five boroughs.

In 2002, a joint venture of Taconic Investment Partners and the New York State Common Retirement Fund acquired the 33-story, 350,000-square-foot office tower at 450 Park Ave., at the corner of East 57th Street. It paid $158 million to the estate of Peter Sharp for the Class A office building, which was built in 1972. Industry leaders, including the investment broker who is now marketing the property, Douglas Harmon of Eastdil Secured, expect the property to fetch a record price of close to $1,500 a square foot, or $525 million.

The New York State Common Retirement Fund real estate unit invests in real estate projects primarily through joint venture partners. These include Boston Properties, to acquire and develop office properties in Boston, New York, Washington, D.C., and San Francisco; Apollo Real Estate Advisors, to develop and rehab properties throughout New York State; Taconic Investment Partners, to acquire strategic office properties in New York City; General Growth Properties, to acquire and develop regional malls, and Kimco, to acquire neighborhood, community, and shopping centers.

In 1999, the New York State Common Retirement Fund purchased a 90% interest in the 2.9 million-square-foot building at 111 Eighth Ave., which formerly housed the Port Authority, for $153.6 million. In February 2004, the fund and its joint venture partner, Taconic Investment Partners, sold a 75% interest to the Jamestown Group for $581.3 million. Because of the building’s location, between West 15th and 16th streets, and its prominence in the marketplace, real estate experts say the property could easily fetch more than $1.8 billion.

The New York City Employees’ Retirement System is a joint venture partner with Tishman Speyer Properties in the Met Life Building. The venture acquired the 3.1 million-square-foot building in July 2005 for $1.72 billion. Based on recent selling prices, industry leaders believe the property could fetch close to $3 billion.

The City Investment Fund LP was started in 2004 with $770 million in funding from the New York State Common Retirement Fund, the New York City Pension Plans, and its sponsors, affiliates of Morgan Stanley and Fisher Brothers. The fund has made 33 investments in the five boroughs, ranging from large office buildings such as 485 Lexington Ave., in partnership with SL Green and the Witkoff Organization, to housing developments in Brooklyn, the Bronx, and Staten Island. In addition, investments have been made in selfstorage facilities, new condominium projects, thousands of units of workforce housing, and, most recently, the purchase of Crown Plaza Hotel in Times Square.

According to its president, Thomas Lydon, the fund “has been able to earn excellent returns for participants in these large plan sponsors, while at the same time contributing to economic growth in all the boroughs of New York City. It has been a win-win for all parties involved.”

Last week, the largest Whole Foods market in the northeast opened at Avalon Chrystie Place, at 229 Chystie St. on the Lower East Side. The store is in a mixeduse residential rental building that contains 361 rental units. In December 2003, the New York State Common Retirement Fund invested $25 million in the first phase of the project, giving it an 80% ownership share.

In October, the California State Teachers’ Retirement System joined the ranks of out-of-state and foreign pension plans investing in ownership of office buildings in Manhattan. A joint venture of CalSTRS and Silverstein Properties paid about $418 million for the 35-story, 611,000-squarefoot office building at 575 Lexington Ave. In December, the joint venture agreed to purchase the corporate headquarters of Moody’s Corp. at 99 Church St. in Lower Manhattan. The joint venture paid $170 million, or $505 a square foot.

In March 2005, MacFarlane Partners acquired an equity interest in the retail and parking garage component of Time Warner Center. MacFarlane Partners took the step as part of its joint venture with California Public Employees’ Retirement System to invest in urban infill properties in major metropolitan areas nationwide. CalPERS is the nation’s largest public pension fund, with assets of $186 billion.

In September 2005, CalPERS and Black-Rock Realty paid $97 million to Rudin Management for the 238-unit rental apartment building at 30 Park Ave. Later in the year, the joint venture purchased the 115-unit rental apartment building known as the Wellington at 200 E. 62nd St. for $173 million.

The Retirement System of Alabama is the owner of the 3.6 million-square-foot office building at 55 Water St. The fund originally purchased 20% of the building for $90 million and paid about $119 million in October 1993 to acquire the remaining stock in the entity owning the property. With values for Class A office buildings in Lower Manhattan rising to more than $500 a square foot, the property might fetch close to $1.8 billion.

In 2000, the Michigan Retirement System and KBS Realty Advisors purchased the 26-story, 300,000-square-foot office building at 245 Fifth Ave., at the southeast corner of East 28th Street, and the 425,000-square-foot office building at 261 Fifth Ave. The joint venture paid $135 million to a local group led by developer Harry Helmsley’s estate and investor Irving Schneider. In 2004, it sold the office building at 261 Fifth Ave. to L&L Acquisitions for $113.4 million. As I reported last month, the joint venture has entered a contract to sell 245 Fifth Ave. to the Moinian Organization for $190 million, or $633 a square foot. The retirement system acquired the building for $48.3 million.

The two largest Canadian pension plans have been very active investors in America, especially in New York City.

The Public Sector Pension Investment Board is a crown corporation established by Canadian Parliament through the Public Sector Pension Investment Board Act. The mandate of PSP Investments is to manage employer and employee contributions made after April 1, 2000, to the federal Public Service pension fund, as well as the pension funds for the Canadian Forces and the Royal Canadian Mounted Police.

The Caisse de dépôt et placement du Québec was created in 1965 by an Act of the National Assembly to manage the funds contributed to a newly created universal pension plan, the Québec Pension Plan. Today, the Caisse is the largest institutional fund manager in Canada and one of Québec’s leading financial institutions.

For more than a decade, the Caisse has invested in residential rental apartments in New York City together with Stonehenge Partners. In 2005, Caisse and PSP joined with Ofer Yardeni and Joel Seiden, principals of Stonehenge Partners, to purchase residential rental developments, including the buildings at 20 Park Ave., 41 Park Ave., 10 Downing St., 167 E. 82nd St., the Olivia at 304–324 W. 34th St., and Stonehenge Village at 120–160 W. 97th St.

One of the Caisse Real Estate Group’s major partners is SL Green Realty Corp. The partnership goes back to May 2001, when SL Green sold a 45% interest in One Park Ave. to its partner. Caisse paid about $170 million for its ownership interest. In 2004, Caisse sold its 55% ownership stake in the 913,000-square-foot office building at One Park Ave. A Caisse subsidiary, SITQ, has been a partner with SL Green in office buildings at 1515 Broadway and 1250 Broadway.

In May 2005, SITQ acquired a 40.5% interest in 450 Lexington Ave. with its partners Murray Hill Properties, Westbrook Partners Ltd., and other investors. It paid about $500 million for this Class A building. Last year, the joint venture sold the building for $600 million to Isithmar for $600 million.

In October, Macklowe Properties and its joint venture partner, SITQ, sold the 750,000-squarefoot office building at 340 Madison Ave. to Broadway Partners for $550 million. In 2002, SITQ became a partner in the property, paying about $170 million for its 50% ownership.

Another subsidiary of the Canadian pension fund Caisse, Cadim, is a merchant banking company with ownership interest in two American real estate companies, Praedium Group and CWCapital. Praedium Group is a real estate investor focusing on middle-market, underperforming, and undervalued assets throughout America and Canada. CWCapital is a national lender for multifamily and senior housing, as well as commercial properties.

Praedium Group is one of the largest owners of residential rental apartments in New York City, partnering with Pinnacle Realty Co. to own and operate more than 6,000 apartments.

Last December, a Praedium Group partnership acquired a condominium interest in the office building at One Newark Center, with Seton Hall University Law School as the lead tenant. The group paid $111 million for floors six to 22. The prior year, a joint venture of Praedium and Lincoln Property Co. purchased a four-story office building at 611 Route 46 W. in Hasbrouck Heights, N.J.

Just about everyone, including some of the world’s biggest pension funds, seems to love New York, the best investment in the world.

Mr. Stoler, a contributing editor to The New York Sun, is a television broadcaster and senior principal at a real estate investment fund. He can be reached at mstoler@newyorkrealestatetv.com.