Known as Independence Wharf for its proximity to the site of the Boston Tea Party, 470 Atlantic Ave. is a former warehouse that recently was converted into 335,000 square feet of first-class office space.

In an action that speaks volumes about the current state of Boston’s commercial real estate market, Modern Continental Enterprises announced last week that it has removed Trammell Crow Co. as exclusive leasing agent at 470 Atlantic Ave., a 335,000-square-foot office building located on the edge of Boston’s Financial District.

Adding insult to the injury of the move, MCE has selected Cushman & Wakefield as the new agent after a heavy competition for the contract, which reportedly included Meredith & Grew as a finalist. C&W shook the Boston real estate market last October when Trammell Crow investment chief Robert E. Griffin Jr. and the entire investment services team jumped ship to Crow’s cross-town rival.

According to one industry observer, Griffin’s arrival at C&W as its New England regional president aided his new company in securing the plum assignment. It is a direct result of Rob Griffin’s positive impact on Cushman & Wakefield, said the source, who requested anonymity. They certainly wouldn’t have gotten it without him.

Trammell Crow principal Robert M. DeLaney referred all questions to MCE, saying only of the decision, It is what it is.

We wish Modern Continental well with the project, he added. We’ve enjoyed working with them for the past two-and-a-half years.

DeLaney did call the action old news, although as of last week, his firm’s phone number was still emblazoned on banners adorning the building, which is also known as Independence Wharf for being the site of the famous Boston Tea Party. Interestingly, it appears Trammell Crow is leaving the property on an up note, with sources claiming last week that Gallagher Insurance Co. will lease nearly 40,000 square feet in the 14-story building. The insurer reportedly will take both the ninth and 10th floors of the property. Efforts to contact Gallagher Insurance officials to confirm the deal were not successful.

DeLaney would not discuss the latest lease, which would be one of the biggest in Boston this year. MCE spokeswoman Lorraine Marino would only acknowledge that a deal is in the works, one which would bring occupancy at Independence Wharf to nearly 40 percent. Other tenants include Duane, Morris & Heckscher, a law firm, and Regus, a company that provides short-term office space to third parties.

While certainly a boost, the Gallagher Insurance deal also reflects how markedly conditions have changed since MCE bought the former warehouse three years ago for $52 million and began its gut rehabilitation into first-class office space. Once quoting per-square-foot rents in the high $50s and low $60s, the Gallagher deal was reportedly made in the low $40 per-square-foot range, while MCE also supposedly agreed to take on some $1 million in lease obligations left over from Gallagher’s current lease at 200 State St. That pact does not expire until sometime next year.

They are really taking it on the chin, one source said of MCE, estimating the lease obligation will bring the effective rental rate into the high $30 per-square-foot range. That’s a Class B [rate], said the source, adding, That is going to seriously impact the value of the property moving ahead.

The source said MCE had several opportunities to make pricier deals during the boom period, with a number of Cambridge firms aggressively chasing space there at one point. But the landlord reportedly would not adjust the pricing to get deals done, and the leasing cycle dried up before MCE could take advantage of other leads or respond to the changing conditions. They just waited too long at the tail end of the market to do deals, said the source.

‘Chaos’ Coming
As for naming a new agent, Marino would not discuss the decision in detail, but insisted it was not a reflection of Trammell Crow’s performance in leasing the building during its protracted stint. We just thought it was a time to take a new approach, she said.

Griffin, meanwhile, agreed that the selection was a coup for Cushman & Wakefield, especially given the surge of competition that chased after the job.

It’s huge, he said. There aren’t many assignments up for grabs and this is one of the larger ones. Griffin also vowed his company will employ a full-court offensive to lease the property despite the ongoing challenges. Prestigious assignments like Independence Wharf are how brokers earn their stripes, he said.

Griffin downplayed his role in winning the job, instead citing veteran broker Frank Nelson and his downtown leasing team as chief reasons MCE felt the company would be the best selection. Nonetheless, Griffin noted that new business development was one of the leading reasons he was recruited by Cushman & Wakefield, adding that it is a goal the company is pursuing with vigor.

We’re putting together a game plan that we think is going to allow us to become one of the top two teams in the city, he said. We’re not there yet, but we think we are on our way.

Even in light of that commitment, Griffin also acknowledged that the depressed economy will mean a dogfight for every opportunity that presents itself. Whereas there was plenty of work to go around in the past few years, the recent downturn has real estate companies scrambling to keep busy, ensuring a steady stream of competition. Although insisting Cushman & Wakefield will be up to the task, Griffin predicted a shakeup in the commercial real estate industry is in the offing.

The market is much slower, and there are more brokers out there than are needed, he said. It’s going to be chaos for awhile.

The source following the change of leasing agents at Independence Wharf agreed that brokers will have to be more proactive in seeking out listings, and also in keeping those that they already have secured. At the same time, the source said it is rare for a landlord to make a change in agents midstream, especially for such a high-profile property as Independence Wharf.

That’s pretty big news, the source said. It’s great for Cushman & Wakefield, but it’s a real blow for Trammell Crow.

Cushman & Wakefield Lands Independence Wharf Contract

by Banker & Tradesman time to read: 4 min
0