800 Federal St. in Andover is one of three buildings in Woodland Park being offered for sale by developer William J. Callahan. The 600,000-square-foot portfolio being shopped to prospective buyers also includes buildings in Bedford’s Oak Park and the Fields office complex in Billerica.
Fresh off its blockbuster sale of 25 Mall Road in Burlington, Meredith & Grew Oncor has been tabbed to market a multi-building real estate portfolio north of Boston, with the firm retained by veteran Massachusetts developer William J. Callahan to sell properties located in Andover, Bedford and Billerica.
“We’re just hitting the market now,” Meredith & Grew principal David L. Pergola told Banker & Tradesman last week. Totaling 600,000 square feet, the portfolio is about 50 percent vacant, but Pergola said he believes the improving economy and the pedigree of the assets will lure interest from investors. Based in Bedford, Callahan “is a great developer,” said Pergola, whose relationship with the builder extends more than a quarter-century. “It is great quality,” he said of the portfolio, which includes a mix of office and flex space, much of it described as Class A by Pergola.
Included in the package are three buildings at Woodland Park in Andover, two in Oak Park in Bedford and another in the Fields office complex in Billerica. No asking price is being set, said Pergola, instead opting to let investors establish the benchmark. While Pergola declined to discuss specifics about the marketing strategy, he suggested buyers can expect a slight discount to replacement cost, but perhaps not as deep a cut as that found in older, more troubled buildings that are being offered for sale throughout the area.
Continuing an active investment market that has remained busy despite the lingering economic difficulties of the past three years, the Callahan portfolio is just the latest sizeable opportunity to hit the sales block in recent weeks, with Brickstone Properties putting its Minuteman Park in Andover on the market, and Spaulding & Slye Colliers hired to trade a substantial suburban portfolio on behalf of Great Point Investors. Previously, properties that had a measure of vacancy were passed over in favor of core real estate, but Pergola agreed with other observers that the rebounding economy is giving more confidence to real estate investors, a number of whom were active even when conditions were not as promising.
Greater Boston posted more than 1.5 million square feet of positive absorption in the suburban office market during the first half of 2005, according to Spaulding & Slye Colliers, and Pergola noted last week’s news that nearly 10,000 jobs have been added to the Massachusetts economy also is encouraging for real estate. By the broker’s math, that brings the number of new positions since the beginning of 2004 to about 50,000, or nearly 25 percent of the positions lost since the recession began in 2001. “That’s the best news we’ve seen in months,” Pergola said. “If you get job growth, you get positive absorption, and that’s what we really need right now.”
‘Higher Investor Interest’
Regionally, Pergola said he sees good times ahead for the office markets north of Boston, supporting a recent Banker & Tradesman article in which industry professionals said the widening of Route 3 between Burlington and the New Hampshire line is reaping rewards for the area. “Drive the road,” Pergola said of the impact. “It’s great now.” That should translate to higher investor interest in commercial properties, he added, a notion supported by other local investment specialists.
Burlington has had its share of trouble recently, but several leases there and in the Bedford/Billerica submarkets indicate the worst may be behind those communities. That belief was underscored by another recent sale orchestrated by Pergola and Meredith & Grew, the $55 million disposition of 25 Mall Road to Equity Office Properties. “It’s the best office building in Burlington,” said Pergola, whose firm was assisted by Eastdil Realty of New York in that sale, reported last month by Banker & Tradesman. Also participating in that deal were Pergola’s son and Meredith & Grew Senior Vice President David J. Pergola and Assistant Vice President Sarah B. Lagosh.
Both Pergolas and Lagosh will be teaming up on the Callahan portfolio sale, one that David L. Pergola said he hopes can be accomplished by year’s end, although there is apparently no deadline to do so by that point. Overall, David L. Pergola said he believes a range of investors ultimately will pursue the properties.
In addition to the 25 Mall Road sale, Meredith & Grew has also completed a number of other commercial real estate deals this year, including the $7.8 million sale of 200 RiverPark Drive in North Reading, a 92,000-square-foot property acquired by High Street Equity Advisors. In another significant transaction, the Pergolas joined Senior Vice President John A. Carroll III in the sale of 334 South St. in Shrewsbury. That $27.4 million deal involved 334 South Street LLC, the seller, and buyer Charles River Laboratories. The deal was a bit unusual in that 334 South Street LLC had owned the building for barely a year. Spaulding & Slye Colliers was the broker for the buyer in that deal, with the team of William D. Bailey, Matthew P. Dwyer and Philip DeSimone handling the negotiations on behalf of Charles River Labs.
