Cushman & Wakefield will be marketing for sale the 1.2 million-square-foot Cross Point office complex in Lowell on behalf of owners Yale Properties USA and the Blackstone Group.
As spring officially begins this week, it looks like there is another strong crop of commercial property sales blooming in Greater Boston, with several assets said to be moving toward a closing or about to be put on the market.
Last week, for example, it was unveiled that Lincoln Property Co. has agreed to buy into Channel Center, the mixed-use development under way in Boston’s Seaport District. Undertaken initially by Beacon Capital Partners, the $400 million project is expected to yield a mix of office, retail and residential space over time, with Lincoln apparently preparing to develop one of the residential portions of the plan known as 5 Channel Center. Having purchased the site in 2000 for $45 million, Beacon has already constructed several residential buildings itself as part of the opening phase of Channel Center’s development.
Although the deal was announced last week at a program presented by Cushman & Wakefield of Massachusetts, specific details were not provided. Cushman & Wakefield was retained late last year to market the second phase of the project, aka 5 Channel Center, and has apparently secured Lincoln to commit to the opportunity. Beacon officials declined comment when reached last week, while efforts to contact Lincoln Property officials were unsuccessful. According to one source, the deal is in the $15 million range, and would allow Lincoln to construct about 200,000 square feet of residential space. It is unclear whether the space would be offered to the public as condominiums or as apartments, or when Lincoln might commence construction. In any event, 5 Channel Center “is under contract” to Lincoln, one source concurred.
On another front, Cushman & Wakefield also revealed that it will be marketing the Cross Point office complex in Lowell on behalf of Yale Properties USA and the Blackstone Group. The three-tower park, which features 1.2 million square feet, was put on the market in 2002 but received a tepid response in the wake of the declining office market. After failing to reach the target of $167 million in the previous attempt, the owners of Cross Point reportedly will be seeking about $115 per square foot this time around, or close to $138 million.
Crossing Over
Cushman & Wakefield of Massachusetts President Robert E. Griffin Jr. presided over last week’s program, the firm’s sixth annual overview of the real estate capital markets. The popular event at Boston’s Faneuil Hall drew a packed audience of investors and Cushman clients to review activities of the previous year and hear the firm’s forecast of the investment climate for the coming campaign. Despite coming off a record effort, during which his firm brokered an astounding $2.1 billion worth of properties in 2004, Griffin expressed optimism that 2005 may be even more successful.
“It looks like it is going to be a banner year,” Griffin told attendees, with low interest rates and a lack of alternative investments continuing to drive money into commercial real estate. According to Griffin, some $38 billion worth of pension fund capital earmarked for real estate was unable to find a home last year, adding that he believes the bulk of those funds are still being targeted toward real estate, which has continued to outperform the stock market and other indices, such as the Standard & Poors 500.
Griffin offered particular hope for suburban Boston, maintaining that a dearth of core opportunities in such markets as downtown Boston and Cambridge is leading investors to consider assets farther away from the center. Although the mid-Route 128 and Massachusetts Turnpike submarkets appear to be doing the best at present, Griffin said it appears many areas will begin to see rents appreciate during the next 12 to 18 months, indicating that the worst difficulties are behind the region.
Although the office market has pockets of instability, Griffin said virtually every property type is receiving investor attention, including industrial, retail and multifamily. Record low capitalization rates are common throughout the sales spectrum, said Griffin, while the increased competition among buyers is leading to shorter due diligence periods and quicker closings, in some cases as soon as a week or less.
Griffin did note that a recent survey by the Association of Foreign Investors in Real Estate (AFIRE) had Boston well down the list of cities being targeted by overseas investors. And while the Hub once enjoyed one of the top spots on that annual survey, Griffin insisted that there remains considerable interest among foreign capital to buy local real estate. Indeed, as witnessed by last year’s purchase of a Woburn office development by German capital, Griffin said overseas buyers are actually expanding their investment criteria to suburban locations and for other types of property other than the downtown office buildings once favored. “We have not been written off by any stretch of the imagination,” Griffin said of the overseas capital flow.
