Paradigm Properties last week purchased 959 Concord St. in Framingham for $12.1 million.

It hardly represents a torrent of activity, but after a bone-dry summer for commercial real estate sales, deals are once again beginning to flow in the Bay State’s suburban office market.

The latest signs of life occurred last week with Paradigm Properties buying 959 Concord St. in Framingham at the same time that the New Boston Fund cemented its purchase of 5 Burlington Woods Drive in Burlington. Meanwhile, negotiations on two other MetroWest properties are also said to be nearing completion. In the larger of those two, Berkeley Investments of Boston has reportedly entered into a purchase-and-sale agreement for One Research Drive in Westborough, a 280,000-square-foot structure that could sell for more than $50 million.

In the Framingham transaction, Paradigm paid $12.1 million for the 14-year-old office building, a 76,000-square-foot structure developed by the sellers, Leggat McCall Properties. At that price, 959 Concord St. fetched a healthy $160 per square foot.

“It’s a good sale for everybody,” said Cushman & Wakefield Senior Director James Belli, whose firm brokered the deal on behalf of LMP. “It’s a full building in a strong location [from which] the buyers get stability and a good return and the sellers get a good price per square foot.”

Paradigm President Kevin McCall certainly seemed pleased with the result. While calling the purchase “a little contrarian” compared to current industry trends, McCall said his company felt the solid tenant roster, building quality and proximity to major highways made 959 Concord St. a logical choice for Paradigm’s portfolio, which is focused on the Boston-to-Washington, D.C., corridor.

Interestingly, the Framingham deal is just the first of the year for Paradigm, a Boston-based company that had been among the area’s most prolific real estate investors.

Between the fall of 1999 and the end of 2000, Paradigm had made nine commercial property acquisitions, headlined by the $66.5 million purchase of 99 Summer St., a 20-story office tower situated near Boston’s South Station.

“We’ve been actively looking, but we just haven’t found the right situation until now,” said McCall, who had warned last autumn that the spread between bidding and asking prices was widening to the point that many investments were considered overpriced. While some investors bulled ahead nonetheless, anticipating a short-term correction, Paradigm opted to stay on the sidelines until it could make the numbers work.

“I think sellers are being more realistic about where they are pricing stuff,” McCall said, so much so that Paradigm is now eyeing other suburban opportunities after almost completely focusing on urban targets in the past few years. The departure of domestic pension funds for all but top-rated suburban properties has made it easier to compete for assets, he explained, adding that Paradigm feels comfortable with the long-range prospects for its core markets, especially the one in which it is headquartered.

“We like Boston the best,” McCall said. “It’s got the best investment fundamentals.”

The sale of 959 Concord St. also represents the continued sell-off of the restructured LMP, a movement that began last year when principals J. Brad Griffith and J.H. Walton retired from the venerable real estate company. During 2000, LMP disposed of such prime buildings as 10/Ten Post Office Square, 855 Boylston St. and 40 Broad St., all in Boston. In one year alone, the company disposed of $550 million worth of commercial property.

‘Moving Cautiously’
Belli agreed that the pace of property sales is much more sluggish than that seen during 2000, but added that there are players seeking properties featuring strong credit tenants and measured lease turnover. That, he noted, is an 180-degree turn from last year, when the hot office market prompted many to seek buildings that could be quickly emptied out and re-tenanted at higher lease rates.

“Rollover and vacancy went from being seen as an opportunity to a detriment almost overnight,” said Belli, who brokered the Framingham sale along with colleagues Kevin Hanna, Peter Joseph and Christopher Phaneuf.

Belli could not comment on rumors that his firm is also close to negotiating the sale of 120 Turnpike Road in Southborough, an 82,000-square-foot office building owned by the Archon Group of Texas. According to sources, however, HRPT Advisors of Newton has the property under contract and is currently performing due diligence.

“I know it’s under agreement,” insisted one source, who praised the property as a solid asset that features the stability so greatly sought after at present.

In another suburban move, the New Boston Fund is said to have acquired 5 Burlington Woods Drive in Burlington for $18.4 million, or $174 per square foot for the 106,000-square-foot structure. Developed in 1982 by Finard & Co., the three-story building had been owned by Lend Lease Real Estate Investments. Calls to the New Boston Fund were not returned by press deadline, but sources said they believed the deal has already been completed.

Berkeley also did not return phone calls by deadline, but one source said the supposed purchase price of One Research Drive is in the $190 per-square-foot range, bringing the deal to about $53 million. Another source close to the discussions said Berkeley had agreed to buy the property several months ago, but wavering market conditions put it on hold. The deal has since been revived at a slightly lower price, the source said, anticipating a closing within two months if all goes as planned.

Overall, Belli said he is encouraged by the sudden spate of commitments, although he noted that negotiations on many sales have likely been occurring for some time now. Concern among buyers has led to a more studious approach, he said.

“The market is moving more cautiously right now, but hopefully we’ll see some more sales going through in the next three to four weeks and that will build some momentum through the rest of the year,” he said.

Framingham, Burlington Sales Headline Suburban Resurgence

by Banker & Tradesman time to read: 4 min
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