Liberty Mutual Group has paid nearly $500 million for 75 Arlington St. and 10 St. James Ave. in Boston, which can be seen from left to right in this photo.
In a major Boston commercial real estate transaction that quietly closed earlier this month, Liberty Mutual Group paid nearly $500 million for 75 Arlington St. and 10 St. James Ave. The adjacent buildings total more than 800,000 square feet of office and retail space and are right next to the insurance giant’s Back Bay headquarters at 175 Berkeley St.
Neither Liberty Mutual nor the seller, Millennium Partners, would divulge the financial terms or discuss the deal in length when contacted last week, but Suffolk County Registry of Deeds documents put the trade at $481 million, or approximately $575 per square foot. Although not a record, the per-square-foot rate is among the highest ever garnered for Boston office space, while the purchase would have been the city’s largest in 2005 had the closing not slipped into early January.
Initially reported by Banker & Tradesman in mid-October, Liberty Mutual’s commitment to the buildings was acknowledged in a press release later that month. At the time, Chairman Edmund F. Kelly cited the opportunity as a solid investment and added the move would provide “considerable flexibility for future expansion of our home base in Boston for many years.” Employing some 1,870 people in the Back Bay, Liberty Mutual already occupies more than 125,000 square feet at 75 Arlington St. and 10 St. James Ave. Coupled with last year’s acquisition of 330 Stuart St., the firm now controls the entire block bounded by Arlington and Berkeley streets, St. James Avenue and Stuart Street.
A Protracted Process
Beyond confirming the properties are now under company ownership, Liberty Mutual spokesman John Cusolito said last week the firm would not discuss plans for 10 St. James Ave. and 75 Arlington St., which house several other tenants such as the Holland & Knight law firm and Pearson Education. When the agreement was first unveiled, company officials said they would continue to lease space to office and retail tenants. According to one source, Liberty Mutual had long coveted 75 Arlington St. and 10 St. James Ave., which were first offered up for sale to the investment community in early 2005.
When first announced, the landmark acquisition was hailed by city officials and the business community given Liberty Mutual’s indication that it will remain a leading employer in Boston, which has seen its share of corporate defections in recent years. Just up the street, the Prudential Center faces a 500,000-square-foot gap of office space from last year’s takeover of Hub business icon Gillette Corp. by Procter & Gamble. It was the second mega-merger to rock the submarket following the acquisition of John Hancock Financial Services by ManuLife Financial.
The larger of the two buildings added to Liberty Mutual’s Back Bay fiefdom is 10 St. James Ave., a 19-story, 570,000-square-foot tower and 400-vehicle parking garage that rose from the site of a former Greyhound bus terminal. Known locally as the Paine Furniture Building, 75 Arlington St. has 256,000 square feet on 10 floors. Constructed in 1914, the property was renovated by Millennium Partners in 2001 just as 10 St. James Ave. was nearing its opening.
The sale marks the end of a protracted development process, with developers Byron Gilchrest and Anthony Pangaro buying 75 Arlington St. in 1989 and announcing their intentions for 10 St. James Ave. the following year. The proposal by the pair’s Macomber Development Assoc. was delayed following the brutal recession of the early 1990s, but a partnership with New York-based Millennium Partners helped kick start the project several years later, as did a hefty lease from expanding neighbor Liberty Mutual, which today is ranked 111th on the Fortune 500 list of the country’s biggest corporations.
