Stoughton-based Conroy Development Corp. reportedly will pay about $29 million for the Lone Star Funds’ stake in Canton’s 130 Royall St., a 175,000-square-foot office building that the two firms recently constructed on a speculative basis.
One of suburban Boston’s newest commercial properties is about to change hands – sort of.
According to industry sources, Stoughton-based Conroy Development Corp. is preparing to buy out the interest of the Lone Star Funds on 130 Royall St. in Canton, the 175,000-square-foot office building that the two firms recently constructed on a speculative basis. Sources claim that Conroy will pay about $29 million for Lone Star’s stake in the property, which last year scored a major coup when the parent company of Dunkin’ Donuts signed a full-building lease for 10 years.
“It is under agreement,” confirmed Trammell Crow Co. principal Peter Joseph, whose company was retained to sell the building. Joseph would not identify the buyer or disclose the sales price, but sources insisted that Conroy is taking out Lone Star’s position in 130 Royall St., with one broker maintaining that the local group had always been at odds over their Texas investment partner’s desire to quickly trade the building. Conroy officials did not respond to inquiries about the sale by Banker & Tradesman’s press deadline, while Lone Star officials were also unavailable for comment on the matter.
Conroy sees 130 Royall St. “as a good long-term play,” said one broker tracking the deal. “It’s a very stable building.” Joseph did report a solid level of interest among outside suitors for 130 Royall St. when it was being marketed, citing such attractions as the modern construction, long-term lease with the credit anchor tenant, and the building’s prime location near the confluence of Interstate 93, Interstate 95, Route 24 and Route 128.
‘Very Busy’
The lease agreement at 130 Royall St. with the new tenant, Allied Domecq, has been one of the few bright spots for the South office submarket that includes Canton. Among the areas of the suburbs hardest hit by the region’s economic slide, those problems have continued to linger well into 2004. According to Cushman & Wakefield, the South market had a vacancy rate of 20.5 percent at the midyear mark, with 159,000 square feet of negative net absorption during the first six months of 2004 running counter to a solid performance for most of the suburban office sector.
The Conroy/Lone Star venture was one of two major speculative office buildings that broke ground in Canton just as the Massachusetts economy was plummeting into a three-year downturn. National Development of New England simultaneously developed the Blue View Corporate Center in conjunction with Fidelity Investments on a site adjacent to 130 Royall St. Totaling more than 180,000 square feet, Blue View’s uncertain future was successfully resolved when EquiServe paid $25 million for the building last fall. The shareholder services firm acquired BlueView to consolidate its regional operations, joining a host of other companies which have acquired buildings for their own occupancy in recent months. One of the greatest examples of that trend occurred this spring when Boston Scientific Corp. of Natick paid $43 million to acquire a 500,000-square-foot corporate campus in Marlborough.
Between investors, value-added developers and buyers looking to use properties themselves, office and industrial buildings have been trading at a dramatic pace this year throughout Greater Boston. Trammell Crow itself has already brokered the sale of several assets, including a number of prominent assets in the suburbs. Among the buildings brokered by Trammell were 800 John Quincy Adams Road and 275 John Hancock Road, both in Taunton, and 10 Centennial Drive in Peabody.
“We’re very busy,” acknowledged Joseph, with his company also reportedly about to complete the sale of the Lexington Corporate Center in Lexington. After months of negotiations, that four-building complex is slated to close during the next few weeks, reportedly to a partnership between Essex River Ventures and the Praedium Group. Joseph concurred that the deal is well on its way to completion, although he declined to offer any specific information or a precise timetable.
As for 130 Royall St., Allied Domecq will consolidate an estimated 600 employees from several nearby buildings into the property when the build-out is finished next month. Allied, the parent company of such franchises as Baskin-Robbins and Togo’s in addition to Dunkin’ Donuts, has been headquartered in nearby Randolph. Allied officials have said previously that the new facility will provide for a more streamlined operation, plus offers the firm strong highway visibility and access to a broad workforce.
