It is said that April is the cruelest month, but when it comes to this year’s commercial real estate sales market, December suddenly appears destined to assume that ignoble designation.

According to industry observers, concerns over a jittery economy and other factors are conspiring to trip up several significant sales just as negotiations near the critical end-of-year deadline. Among the largest said to be on life support is the planned sale of One Kendall Square in Cambridge to a partnership between Lincoln Property Co. and the JE Robert Co.

Although some investment sales specialists maintained last week that a closing of the 665,000-square-foot portfolio is imminent, a source close to the deal insisted otherwise. “It’s in big trouble,” said the source, adding that the buyers and the seller, Beacon Capital Partners, are “trying to resuscitate it.” The sales price was said to be as much as $200 million, but officials at neither Lincoln nor Beacon would discuss anything regarding the deal.

“Right now, it’s as dead as a doornail,” said the source familiar with the negotiations. Even with the two sides reportedly slated to meet on the matter this week, the source expressed doubt that the sale will be consummated.

Beacon acquired One Kendall Square in May 1998, along with 215 First St., for $195 million. It was the company’s first purchase since Beacon Properties Corp. veterans Alan Leventhal and Lionel Fortin formed the private real estate investment trust earlier that year after Beacon Properties was purchased by Equity Office. The 306,000-square-foot 215 First St. sold this summer to Capital Properties for $68 million.

In some respects, the differing results in the Kendall Square and 215 First St. negotiations reflect the fickle nature of the investment sales sector. Brokered by Trammell Crow, 215 First St. was snapped up within a week of going on the market, with the deal taking place amidst a record run-up of Cambridge rents and an atmosphere of economic exuberance. A few months later, however, continued troubles on Wall Street and a shake-up in the hyperactive high-tech market are apparently making life difficult as Trammell Crow peddles One Kendall Square.

“Several deals have fallen out of bed recently, especially in the suburbs,” acknowledged investment broker Lisa Campoli of Insignia/ESG. “There’s been a number that were brought to market where there hasn’t been a meeting of the minds” between buyer and seller.

Short-Term Problem
Besides One Kendall Square, for example, sources say 45 Milk St. in downtown Boston has been pulled off the trading block after one buyer who had it under agreement backtracked during due diligence. Meanwhile, Bluestone Advisors reportedly has opted against buying 117 Kendrick St. in Needham from Wellsford Commercial Properties. The deal, said to be in the $47 million range, cratered after the 210,000-square-foot building’s chief tenant was battered on Wall Street and decided against relocating to the property. In another instance, Lend Lease Real Estate Investments supposedly has opted to hold onto 400 Fifth Ave. in Waltham after its offering to investors received a tepid response.

“Right now, people are nervous,” said CB Richard Ellis/Whittier Partners principal Gary W. Lemire, who agreed that the climate has shifted significantly in the past few weeks. Lemire said it reminds him of August 1998 when global economic fears triggered a panic in the real estate industry, with several deals underway at the time disintegrating virtually overnight. While many of the properties did ultimately sell, it took upwards of six months before the angst subsided.

Along with the precipitous fall of Nasdaq, which has many fearing that high-tech companies will be giving space back to the market, Lemire said activity has slowed because many pension funds are cutting back on their allocation of office buildings, particularly suburban assets. Not only have many pension funds concentrated on office product for the past several years, Lemire noted that such groups typically like to keep a certain percentage of their holdings targeted to real estate, with the balance in stocks and other financial instruments. If stock values plummet, that has a corresponding impact on the real estate ratio, Lemire said.

Despite the sudden shift in attitude, Lemire and others insist it does not mean the run is over entirely for commercial property sales. With super-tight vacancy rates and a perceived lack of new construction in the pipeline, Lemire predicted that the situation will clear up once investors get a better sense of the future.

“I do think it is a short-term problem,” he said. “There will be a push-back in pushing the envelope on pricing and we’ll probably see a moderation in rental growth, but overall, the real estate fundamentals are still there and I think this will work itself out fairly quickly.”

Campoli agreed, adding that she believes many properties were pulled off the market because the owners felt a delay will only increase values. Although Trammell Crow officials declined to discuss any of its deals, sources said 45 Milk St. was taken off because the German ownership believes it will fetch a better price down the road.

“For a lot of the owners, time is on their side,” said Campoli. “It’s not going to hurt them to wait it out.”

In addition, several deals are being completed. Campoli declined comment, but Insignia/ESG reportedly is in the final stages of selling 211 Congress St. in Boston’s Financial District, for example, with State Street Realty Advisors said to be acquiring the 73,000-square-foot structure. Trammell Crow placed three office buildings under agreement last week alone, while Bluestone did purchase a block of Newton properties from Wellsford despite passing on the Needham building.

“We think this is going to be nearly as big a year as last year,” said Campoli, estimating that Boston alone will see $1.6 billion in commercial sales, just slightly off the $1.8 billion posted in 1999.