Trammell Crow Co. has been retained by owner Centremark Properties to market for sale a 13-story, 228,000-square-foot office and retail building at 399 Boylston St. in Boston.
A Boylston Street office/retail building has become the latest morsel being served up in Boston’s commercial real estate investment buffet, with Trammell Crow Co. retained by Centremark Properties to trade the 228,000-square-foot asset.
“Yes,” Centremark President Nader A. Golestaneh said last week in acknowledging the disposition decision for 399 Boylston St., a plan being implemented nearly five years after his Hub-based investment group paid $52 million for the 13-story asset. The monosyllabic confirmation was all Golestaneh would offer about the situation, while efforts to contact Trammell Crow Co. officials by press deadline were unsuccessful. At this point, it is unclear whether an asking price has been established.
The marketing campaign on 399 Boylston St. is being launched amidst what many consider the busiest stretch ever seen for commercial real estate sales in Boston. After billions of dollars of assets changed hands last year, 2005 has shown little sign of easing off, both in the list of properties available for sale and the amount of capital pursuing such opportunities. If anything, the numbers on both fronts appear to be on the upswing.
“There are people placing bets that we are entering a market recovery,” Cushman & Wakefield of Massachusetts President Robert E. Griffin observed last week in explaining the continued flood of money coming into the region.
‘Different Environments’
After trading $2.2 billion worth of commercial real estate in 2004, Cushman & Wakefield is completing several deals carried over from last year that will count on the 2005 ledger, including last week’s closing of the Riverfront Office Park in Cambridge for $175 million. In that transaction, the RREEF Funds acquired the two-building, 660,000-square-foot complex from a partnership of Hines Interests and the California Public Employees Retirement System, or CalPers.
Although Griffin could not provide precise estimates, sources said Cushman & Wakefield alone appears on track to close as much as $500 million worth of deals by the end of the first quarter, more than half of which will likely come from the sale of the Bay Colony Corporate Center in Waltham, another holdover from 2004 that is expected to close over the near term. In that instance, Beacon Capital Partners of Boston is said to be paying upwards of $275 million to acquire the four-building complex, touted as one of the premier properties available on the East Coast. Totaling just under 1 million square feet, Bay Colony Corporate Center has been owned for the past 10 years by the Shorenstein Co.
Although he declined comment on the Bay Colony negotiations, Griffin expressed optimism that investors will remain focused on commercial real estate in the coming months. Still, while insisting that “everything will sell,” Griffin concurred that some properties are attracting greater attention that others, with buildings sporting strong tenant rosters and medium-range stability moving much quicker through the pipeline than assets whose cash flow and future prospects are more clouded. That would include Class B office buildings burdened with substantial vacancies or other commercial properties sited in secondary locations.
“There is money for everything, but there are clearly two different environments out there,” said Griffin. Whereas trophy and institutional-grade buildings such as Bay Colony are receiving aggressive bids from well-heeled capital sources, Griffin noted that assets riddled with question marks are not garnering the same level of ardor. “We’ve had a fair amount of both,” he said, adding that the latter group requires a “pick and shovel” approach to successfully market for the client.
“You’ve definitely got to work them,” said Griffin. Even properties encumbered by problems will attract interest, he insisted, partly from value-added players and also from capital spurned in other competitions. “There are [sellers] who should consider drafting off like-kind assets,” he said. “There are a lot of disappointed buyers out there who will be looking to find the next best opportunities nearby” upon being outbid for a given property.
In Boston, 399 Boylston St. will likely garner attention from various capital sources, according to industry observers, although the property does appear to have a level of vacancy at present. According to one local real estate guide, about 60,000 square feet of space is currently available in the building, which was initially renovated in 1983.
As it gears up the sales effort for 399 Boylston St., Trammell Crow is coming off a strong year for marketing Boston buildings, with the firm last summer helping Paradigm Properties and Westbrook Partners sell 711 Atlantic Ave. in the city’s Leather District for $17 million and completing the $77 million sale of 116 Huntington Ave. in the Back Bay in December, with Beacon Capital Partners purchasing that asset. The 14-story office building had been owned by New Boston Fund.
