The 66-acre, undeveloped portion of the Westborough Office Park can accommodate 750,000 square feet of office space.

Apparently, Carruth Capital is not tense about the future.

Despite continued difficulties for the suburban office market, with rents still trending downward and millions of square feet of excess space hanging over the region, Westborough-based Carruth Capital has reportedly agreed to purchase the undeveloped portion of the Westborough Office Park, a 66-acre swath that can produce 750,000 square feet of office space. The deal, expected to be consummated within a few weeks, is progressing just as another Bay State investor closed last week on the existing four buildings at the complex, with the Windsor Fund of Boston paying $49.6 million for 1700, 1800, 1900 and 2000 West Park Drive.

According to local observers, the Windsor Fund has invested in one of suburban Boston’s best-located and most-soundly conceived office parks, one featuring extensive natural landscaping, high-end finishes and a solid tenant roster. “It has been the premier park out there,” said Scott R. Hughes, a veteran MetroWest broker and president of Hughes Properties Corp. “The buildings have always done well with occupancy.”

Hughes said he believes the older properties at the park – 1700 and 1800 West Park Drive – will require some capital investment to remain competitive, but overall said he believes Windsor will benefit from the park’s proximity to Routes 9 and Interstate 495, as well as the nearby Massachusetts Turnpike. The rewards might take a while longer to realize for Carruth, however, with new construction of office space deemed unlikely in the foreseeable future.

“Unless they have a build-to-suit candidate, they are probably not going to [build] in this market,” said Hughes. “I doubt you will see them spec anything right now.”

As a major property owner in Westborough, Carruth appears to be banking on the market’s recovery, said Hughes, adding he believes it is a solid hedge long-term. Others concurred. “They are looking at it as, ‘This is the best piece of dirt out there, so let’s tie it up,'” said one broker familiar with the deal. According to industry sources, Carruth is paying about $10 per buildable square foot for the parcel, which would amount to $7.5 million. One broker estimated that the land would have easily traded for $20 or more a buildable square foot in the boom that ended in mid-2000.

‘First Option’

Officials at Trammell Crow Co., which is brokering the transaction, acknowledged that the undeveloped piece is under agreement, but declined to identify the buyer. Investment specialist Christopher A. Phaneuf did agree that the parcel has strong upside potential, especially since it is fully permitted for 430,000 square feet, making it ready to go once the market does begin to recover. “They will be the first option people will look at,” said Phaneuf. Hughes noted that Carruth has tenant relationships at other nearby properties, and may see it as a chance to accommodate any expansions such firms may ultimately need. “They are a very capable company,” Hughes said of Carruth. Company principal Christopher Egan declined comment when contacted by Banker & Tradesman.

Coupled with the Windsor portion, the Archon Group will reap just over $57 million for the Westborough Office Park. Texas-based Archon acquired the park in 1997 as the centerpiece of its purchase of 42 buildings from Teachers Insurance and Annuity Association, a portfolio that sold for $280 million. The park was developed in the early 1980s by Leggat McCall Properties, with fiscal backing from TIAA.

“This is a great buy for [Windsor] and a great deal for Archon,” Trammell Crow principal James F. McCaffrey told Banker & Tradesman in acknowledging the sale of the existing space. “It was an extremely competitive process, and I think it worked out well for everybody.”

The Windsor Fund, a partnership headed up by Boston-based General Investment and Development, paid approximately $132 per square foot for the 375,000-square-foot complex. “That’s a healthy number,” said Hughes. “It’s a reasonable price in this environment.”

McCaffrey, who brokered the sale with colleagues Peter Joseph and Phaneuf, said there were 18 offers produced from investors looking to acquire all or a portion of the property. The roster included not only some leading institutional funds, but also a number of syndicated equity players with local backing. Such private capital sources, McCaffrey said, “are becoming increasingly competitive on suburban product.”

Officials at General Investment & Development declined comment on the deal, even though it has already closed. As part of the transition, the Windsor Fund has retained Spaulding & Slye Colliers as property manager and exclusive leasing agent. Spaulding & Slye has been an equity participant in past Windsor vehicles with GID, but spokesman Steve Steinberg declined to discuss the firm’s role in the latest fund other than to confirm that his company will be managing and leasing the complex.

The sale of Westborough Office Park is another coup for Trammell Crow’s investment group, which has sold more than $200 million of commercial real estate during the past year, including several notable suburban properties such as Lake Williams Corporate Center in nearby Marlborough. McCaffrey said the Westborough Office Park counts among the most prominent of those offerings, calling it “a prime park at the top of the suburban market.”

“Even in tough leasing times, this park has done well,” said McCaffrey. “It has never experienced protracted vacancy, and as the market improves, this will be one of the first properties that will see [rental growth] … It looks very attractive on a current yield basis.”

The Westborough Office Park also features above-average construction and an efficient layout, said Phaneuf. The original developers designed the park to attract small and medium-sized tenants, he added, and successfully anticipated the migration of firms away from Route 128.

“We got a ton of interest, and that is a testament to the quality of the property,” Phaneuf said. “It shows that people are still attracted to quality assets that have a good long-term story.”