Atlanta-based VEF Advisors purchased 1 Cabot Road in Medford, a 4-story, 330,000-square-foot property along Route 16, from Berkeley Investments Inc. of Boston.
A prominent office building in Medford is the latest Massachusetts commercial real estate asset to change hands, with 1 Cabot Road being purchased last week by VEF Advisors, an Atlanta-based real estate investment firm.
Located along Route 16 just outside of Wellington Circle, the 4-story, 330,000-square-foot property traded for approximately $50 million, according to industry sources. The seller was Berkeley Investments Inc. of Boston, which has owned the building since buying it in 1998 for $45.5 million.
Efforts to contact Berkeley and VEF officials by Banker & Tradesman’s press deadline were unsuccessful, but sources insisted the sale has been completed. One Cabot Road has been on the market for several months, and reportedly received a substantial level of investor interest before being snagged by VEF, a one-time division of Lend Lease Real Estate Investments now owned by Apollo Real Estate Advisors of New York.
CBRE/New England principals Gary J. Lemire and Philip Giunta had been marketing 1 Cabot Road on behalf of Berkeley, overseeing the assignment in partnership with Rockwood Realty of New York. Calls to CBRE and Rockwood were not returned by press deadline. One broker tracking the activity called 1 Cabot Road “a true jewel” that not only benefits from a location just outside downtown Boston, but also is attractive due to its physical mettle and healthy tenant roster.
“It’s a terrific building,” opined the broker, adding that the structure is well-positioned to accommodate modern tenants due to extensive telecommunications and data infrastructure left over from the days when it housed financial services giant Mellon Bank Corp. Meanwhile, said the observer, Berkeley was “very hands-on” during its ownership tenure, helping to boost occupancy above 90 percent and luring such high-profile companies as Cross Country Automotive and First Marblehead Corp. to the building in recent years.
Berkeley “did a super job” repositioning 1 Cabot Road into a multi-tenanted asset, said the broker, a notion reflected by the impressive selling price. Even at $50 million, however, VEF was able to secure the property below replacement cost, according to the broker, providing potential upside for the new ownership going forward.
Promising Development
One Cabot Road is located on a 17-acre parcel, but the broker could not say whether the site offers any expansion capabilities that VEF could take advantage of in the future. The building is located at the gateway to the ambitious Telecom City business park that straddles Medford, Malden and Everett, and is seen by many as a promising area for development in the coming years as the economy improves and local business and civic leaders renew their promotion of the so-called inner suburbs as a viable business destination.
While slowed by the difficult economy seen locally in recent years, the inner suburbs are enjoying a rebound in the office sector similar to that occurring elsewhere in the region. According to mid-year figures released last week by Meredith & Grew, the 5.6 million-square-foot inner suburbs posted a modest 22,000 square feet of positive net absorption in the second quarter and is up by more than 45,000 square feet for the year overall.
The current vacancy rate for the inner suburbs is 13.7 percent, Meredith & Grew director of research Mary S. Kelly indicated in the report. The rate is the lowest among the nine suburban office submarkets tracked by Meredith & Grew except for Worcester and its 12.3 percent rate, and is well below the overall suburban vacancy rate of 20.8 percent.
The sale of 1 Cabot Road also underscores the continued interest for commercial real estate in the Bay State, with the capital flow halfway through 2006 seemingly even more robust than that seen during the record pace seen last year. Although Boston and Cambridge appear to be attracting the lion’s share of the funds, especially for downtown office buildings and life sciences facilities, the suburban activity has also been impressive to date.
Based in Boston, Berkeley Investments has been concentrating much of its energies in recent months on two major urban redevelopment projects, one in Boston’s Seaport District and the other in downtown Worcester. The firm over the years has owned numerous suburban buildings as well, but has divested itself of many such assets. Late last month, for example, the company traded a portfolio of four suburban buildings to Everest Partners LLC. The package, which fetched $25.5 million, totaled 270,000 square feet and included 3 Riverside Drive in Andover, 115 and 117 Flanders Road in Westborough and 1881 Worcester Road in Framingham.
As for VEF Advisors, one source maintained that the company has a stake in Boston’s 33 Arch St. left over from its days with Lend Lease, but that could not be confirmed and it was unclear whether the company owns any other assets in Massachusetts. The broker familiar with the One Cabot Road sale maintained that VEF is indeed pursuing other deals in the Greater Boston area, claiming the company has a particular desire for suburban office buildings.
