Prudential Real Estate Investors has sold the 110,000-square-foot office and retail building at 745 Boylston St. in Boston’s Back Bay for $32 million.
A well-located office/retail building in the heart of Boston’s Back Bay has sold for $32 million, with investor Bernard Chiu outbidding several other suitors to acquire 745 Boylston St. The eight-story, 110,000-square-foot structure was purchased from Prudential Real Estate Investors.
According to Spaulding & Slye Colliers principal Michael G. Smith, whose investment sales group negotiated the transaction, the $292-per-square-foot price was “in line” with projections made when the marketing campaign began earlier this summer, even though the Back Bay office market has struggled in recent months. Not only is 745 Boylston St. fully leased, Smith said it also offers future upside as well as a rare commodity in the bustling urban district – 12 off-street parking spaces.
“It’s a unique asset,” said Smith. “Very few buildings of this size come up [for sale] on Boylston Street.” Prudential obtained control of the building after it absorbed the overseas parent of TMW Real Estate Group, an Atlanta-based investment advisor which paid just over $29 million for 745 Boylston St. in early 1999. Built in 1923, the property was renovated and expanded in the 1980s using a design by CBT Architects. Slightly under 10,000 square feet of the space is retail, most of it fronting Boylston Street.
Although it is a limited commodity, a number of significant commercial properties have changed hands in the Back Bay during the past few years, including 330 Stuart St., just purchased by Liberty Mutual for $28 million in a deal also brokered by Spaulding & Slye Colliers. In June, another firm paid $37.5 million for 441 Stuart St., while Beacon Capital Partners has been busy transforming 501 Boylston St. into a multi-tenanted office and retail complex after buying the longtime home of the New England Life Insurance Co. in 2002 for $123 million. Beacon, which has a major presence in the Back Bay already following its $910 million acquisition of the John Hancock complex in 2003, has also entered into an agreement to buy 116 Huntington Ave., a 14-story, 265,000-square-foot office building expected to trade for more than $75 million.
A native of Hong Kong, Chiu has lived in Massachusetts since the early 1980s when he launched Duracraft Inc., a Southborough firm specializing in consumer products. Chiu retired in 1998, two years after he sold the firm to Honeywell Inc. for a figure estimated in the $300 million range. Now in his late 40s, Chiu has set upon several diverse ventures since the sale of his company, including design of a championship-level golf course near Lake Winnipesaukee in New Hampshire.
Reached on Friday, Chiu explained that he has acquired property for his company’s purposes in the past, but noted that the Boylston Street asset is being purchased as an individual investment for him and his family. “It’s a very nice building,” said Chiu, citing the prime location, as well as substantial capital investment by the previous owners, including a lobby upgrade completed by TMW during its stewardship. Whereas the facade offers a traditional Boston feel, Chiu said he was impressed by the modern amenities found inside the building.
Chiu praised Spaulding & Slye and Prudential for the “professional” manner in which they conducted the sale, adding that Meredith & Grew Vice President Anthony W. Biette acted as his consultant in assessing the building. The buyer also said he plans to move some of his operations to the property, and acknowledged he will retain Lincoln Property Co. as managers and leasing agents for the building.
No Prudential Pullout
The Boylston Street deal comes as the Back Bay fights a rising tide of office vacancies, with defections to other properties and the region’s three-year economic slump opening up large blocks of space at such properties as Copley Place, the Hancock Tower and 101 Huntington Ave. Regardless, Smith reported strong interest in 745 Boylston St., with plentiful capital helping keep the investment sales market busy for much of 2004.
Property sales continue to be one of the commercial real estate industry’s few bright spots, with investors chasing available product throughout the city and in well-situated suburban locales. As with many of its competitors, Spaulding & Slye Colliers is enjoying a solid year on the investment front, with the Back Bay deals bolstered by a series of sales occurring elsewhere in the area. According to company estimates, the firm is on track to handle close to $500 million this year, with such downtown deals as the $13 million sale of One State St. earlier in the year among the firm’s accomplishments. A number of other transactions are in the pipeline and slated to close by year’s end, said Smith, who declined to provide details.
Smith also dismissed the notion that the sale of 745 Boylston St. and other recent transactions indicate that Prudential is abandoning Boston after being a lead player in the city’s ascension during the past 40 years. Following the sale in 1998 of its landmark Prudential Center complex in the Back Bay, a multi-faceted development credited with jumpstarting Boston’s commercial rebirth, Prudential last month divested its interest in One Beacon St., a 41-story office tower in the Financial District that it had owned jointly with Westbrook Partners. Calls to Prudential officials in the firm’s New Jersey headquarters were not returned by Banker & Tradesman’s press deadline, but Smith said he believes the recent dispositions are not indicative that Prudential is on its way out of the market.
Not only did a Prudential fund just purchase an apartment complex in Lexington, Smith said he believes the company is eyeing additional opportunities in the region as well. “They are actively looking to acquire [properties] in Boston,” he said.
Prudential does still have some holdings left over from TMW’s Bay State portfolio, including 40 Broad St. in the Financial District, an 11-story asset purchased in late 2000 for $63 million. Backed primarily by overseas investors, most of them in Germany, TMW was a significant presence in Boston during the mid- to late 1990s, acquiring such assets as 84 State St., 18 Newbury St. and 55 Thomson Place. All of those properties have since been sold by the group.
