Cushman & Wakefield of Massachusetts is preparing to market One Beacon St. in downtown Boston on behalf of the Feil Organization.
About the only product rising faster price-wise than gasoline these days just might be commercial real estate, but as the normally slow summer season approaches, stratospheric rates have done little to unclog the investment sales highway any more than $3-plus petrol is expected to thin the perennial crawl down to Cape Cod when Memorial Day arrives a few weeks hence.
“There’s tons of interest,” said Cushman & Wakefield of Massachusetts President Robert E. Griffin Jr., whose firm is preparing to market One Beacon St. in downtown Boston on behalf of the Feil Organization. Having just acquired the 34-story, 1.1 million-square-foot tower in October 2004, Feil’s flip strategy underscores the continued popularity for commercial property, with the New York investor anticipating a substantial gain above the $340 million paid the previous owners, Westbrook Partners and Prudential Real Estate Investors.
Unsolicited overtures are already arriving from eager parties, said Griffin, who nonetheless pledged that One Beacon St. will be shopped using a gill-net approach. “Right now, there’s so much activity and so much capital, [an off-market sale] just is not the right thing for a seller,” said Griffin, save for bidders extremely aggressive on pricing and term. While some indicate the transaction will exceed $350 million, Griffin would not discuss his outlook for the deal beyond noting that the Boston office sector appears to have righted itself, or so it would appear from consistent positive-absorption figures in recent months, rising tower rents and a vacancy rate that has finally dipped below 10 percent for the first time in years, according to first-quarter figures produced by Spaulding & Slye.
Because commercial real estate sales remained brisk throughout the prolonged downturn, property is even more highly regarded now in the wake of the healthier fundamentals, said Griffin, as evidenced by the just-completed sale of Ten/10 Post Office Square for an impressive $109 million. Situated in the midst of Boston’s Financial District, the pricing was achieved even saddled by a 23 percent vacancy rate at the time of the closing. “I really was surprised at that price,” said one Boston real estate investor familiar with the 13-story, 435,000-square-foot asset, which Cushman & Wakefield’s Capital Markets Group brokered on behalf of the seller, Walton Street Capital.
Given the $515 million sale of Boston’s One Federal St. and marketing under way in Cambridge on Technology Square – also expected to exceed $500 million – Griffin’s group is hurtling toward the $2 billion mark in sales negotiated for 2006, a lofty figure but one the team has exceeded in the three previous years. Other Hub real estate sales operations also are producing impressive results to date, including a slew of transactions completed or being brokered by Spaulding & Slye.
Growing Confidence
Another barometer of confidence in the local office market occurred in the $52 million purchase of 40 Broad St. near Faneuil Hall by Transwestern Investment Co. Suffering from substantial vacancy when it was first offered for sale, 40 Broad St. had been mulled for possible conversion for hotel or residential purposes, but the rebounding economy helped Transwestern commit to its current use. Spaulding & Slye was also the broker in the just-completed sale of 585 Commercial St. in the North End to CrossHarbor Capital for $10.1 million. The 41,000-square-foot office building is located on the Boston waterfront across from the Charlestown Navy Yard.
Over in Cambridge, Spaulding & Slye orchestrated the blockbuster $210 million sale of One Kendall Square to a partnership between the Beal Cos. and Rockpoint Group, itself one of the busiest investment sales partnerships in the region today. After Beal divested 300 Third St. in Cambridge to Alexandria Real Estate Equities to start the year, the Boston firm and Rockpoint followed up the One Kendall Square acquisition with the purchase earlier this month of 451 D St. in Boston’s Seaport District. The 450,000-square-foot building traded for $40.5 million.
Located directly across from the new Boston Convention & Exhibition Center, the so-called Fargo Building was purchased from Hypo Real Estate Capital Corp., a German investment group that financed a botched conversion to telecommunications space before taking the property back from the developer, Yale Properties USA. In a press release issued announcing the deal, Chairman Bruce A. Beal said the Beal Cos. and Rockpoint are banking on growth in the burgeoning Seaport District during the next decade, and will institute a capital improvements program and hire a leasing broker to fill the imposing 300,000 square feet of vacant space in the hulking building, which was constructed in 1910.
Such confidence is extending to other submarkets throughout the city, including the Leather District near South Station, where Meredith & Grew brokered the $25.6 million sale of 179 Lincoln St., a property no longer needed by owner Teradyne Corp. after the firm’s recent departure for the suburbs. Meredith & Grew also is assisting Teradyne with a second asset on Huntington Avenue in the Fenway district, a deal Senior Vice President David J. Pergola said his firm is “neck deep” in at present, with the opportunity also generating substantial competition.
