Equity Office Properties is said to be buying 25 Burlington Mall Road, a 277,000-square-foot, 6-story building in Burlington.
Equity Office Properties appears to be losing a major Burlington tenant but gaining an even larger office building in that suburban Boston community. According to industry sources, the Chicago-based real estate investment trust is saying goodbye to Bank of America at 7 New England Executive Park while at the same time agreeing to acquire 25 Burlington Mall Road from Prudential Real Estate Investors.
“It’s happening,” one industry source said of the latter situation, with some estimates placing the sales price for the 277,000-square-foot 25 Burlington Mall Road at more than $50 million. The 6-story, Class A property is being marketed by Meredith & Grew Oncor and Eastdil Realty Inc. Calls to both firms were not returned by Banker & Tradesman’s press deadline, but sources insisted 25 Burlington Mall Road will become the latest Equity conquest in the Bay State.
Equity’s deal comes amidst a hyperactive climate for commercial real estate sales, even in the suburban office sector, which has seen substantial difficulty as a result of the region’s lingering economic problems. Sources also told Banker & Tradesman last week that Divco West Properties LLC has agreed to invest in Lowell’s Cross Point office complex as a partner with current owner Yale Properties USA, while Trammell Crow Co. has been hired to sell 400 Crown Colony Drive in Quincy on behalf of Allied Capital. Prudential recently took control of 25 Burlington Mall Road when it acquired the holdings of Cigna Real Estate, with that firm paying $42 million for the building in 1996.
‘End of an Era’
As for the leasing situation, sources said Boston Properties has lured Bank of America from 7 New England Executive Park into nearly 25,000 square feet at 10 Burlington Mall Road. Although the pact is hardly the largest in the market this year, observers noted it will end a lengthy tenure at the distinctive 11-story New England Executive Park building by the bank and its erstwhile predecessors. Dating back 30 years, the lineage in the building passed from BayBanks to BankBoston and ultimately Fleet Bank, which this past weekend was meshing its accounts with Bank of America as the final piece of the mega-merger that brought the two institutions together last year.
“It’s the end of an era,” one broker said of the financial institution’s ties to 7 New England Executive Park, a prominent building overlooking Route 128 that Equity acquired in 1998 from BankBoston for $27.9 million. Equity officials did not respond to inquiries regarding the departure. It is also unclear how much the move affects the vacancy rate at 7 New England Executive Park, a 36-year-old building that has just under 200,000 square feet of space in total.
North of Burlington, Divco West Properties reportedly is teaming up with Yale Properties USA on Lowell’s Cross Point office complex for a price said to be between $111 million and $113 million. The partnership would essentially buy out the Blackstone Group of New York, which paid $103 million for the park in 1998 with San Diego-based Yale.
“They are making a big run at it,” one source told Banker & Tradesman last week of the Divco/Yale team. Sources could not say as of Banker & Tradesman’s press deadline whether the complex was actually under agreement to the partnership, with at least one other suitor said to be aggressively competing for the property in the late stages of the bidding process. Brokers at Cushman & Wakefield marketing the property declined to discuss the matter, while calls to Divco and Yale officials were not returned by press deadline.
If the estimated sales price is accurate, it would be less than both the $167 million sought by Yale and Blackstone when Cross Point was put on the market two years ago, and slightly less than the $115 million target from the latest sales effort. The deteriorating north suburban office market was a key reason for the building dropping in value, according to observers, with the Lowell/Chelmsford office market currently sporting a vacancy rate of 19 percent, according to Meredith & Grew.
Despite the recent struggles, industry experts insist that suburban Boston is seeing a resurgence in the office market to date in 2005. “It has been a steady improvement,” said Trammell Crow Co. principal James F. McCaffrey, who noted that upper-crust properties are faring particularly well in the rebound. Not surprisingly, core assets are also among the most popular for investors at present, as witnessed by the $272 million paid for the Bay Colony Corporate Center in Waltham in January by Beacon Capital Partners.
Also considered in the upper echelon of buildings being put on the market is 400 Crown Colony Drive, which McCaffrey is marketing along with colleagues Peter Joseph and Chris Phaneuf. McCaffrey said there is no asking price on the property, although some observers said they expect it will trade for more than $20 million. “It should be well-received,” was all McCaffrey would offer on the prospects for the building, which is currently about 60 percent occupied.
Joe Clements may be reached at jclements@thewarrengroup.com.
