Canada-based insurance firm Manulife Financial Corp acquired its first office building located in the financial district of New York to take advantage of demand as commercial space is slowly lessened due to residential conversions, Bloomberg reported. The seller of the building was Mitsui Fudosan Co, the largest property developer in Japan. Manulife Chief Investment Officer Warren Thomson said the price tag for the deal was $166.5 million, the report said.

The 21-story tower, designed by architect Emery Roth & Sons, is on 100 William St. Bloomberg said in its report that Emery Roth & Sons were also involved in the design of the World Trade Center towers that were decimated in the 9/11 attacks.

Thomson told the news agency in a phone interview, "There's quite a bit of activity right now converting Class-A offices in the financial district into residential. Those conversions start to reduce the supply. We think it's going to be an interesting market for commercial rates. There should be some good pricing over time."

In September, Manulife said it was not fully committed about looking for Manhattan assets since the real estate there was subject to value swings, but the most recent move was proof that it had tweaked its strategy. The insurer expected the value of Manhattan's commercial towers to increase as offices get converted to living spaces, the report said.

The report also disclosed that the insurer's allocation to real estate as of September 30 had increased 4% from 3% at the same time two years ago. After the fall of the US mortgage market in the 2008 financial crisis, Manulife's commercial mortgages have also gathered steam. It now maes up 16% of the firm's portfolio, a 1% increase to last year's 15%. Thomson said it will stay at that level or rise next year.

Thomson said, "The credit spreads that we're achieving relative to the risk inherent in the mortgages is attractive. Since the financial crisis it's been a more favorable asset class."