CB Richard Ellis Investors, which recently acquired 101 Arch St. in Boston, has tapped its affiliate, CB Richard Ellis/Whittier Partners, to run the 21-story office tower, displacing current leasing agent Cushman & Wakefield and property manager Lincoln Property Co.
In completing the acquisition of Boston’s 101 Arch St., what are the chances CB Richard Ellis Investors will now turn to its Hub affiliate, CB Richard Ellis/Whittier Partners, to run the 21-story office tower?
Pretty good, apparently. In a decision that underscores the brave new world of being a real estate services firm, where past patterns are no longer guaranteed, CB/Whittier has been retained as leasing and managing agent of the 15-year-old building. The Boston-based company supplants 101 Arch St.’s original developer, Lincoln Property Co., as leasing agent and Cushman & Wakefield as property manager. The changes were reportedly put into effect as of last Friday.
Cushman & Wakefield spokeswoman Victoria Goldberg confirmed that the company is no longer managing 101 Arch St., while Lincoln Property Co. officials did not return phone calls by press deadline. According to CB/Whittier President Andrew W. Hoar, however, his company will handle both managing and leasing duties for the building.
“It’s a great assignment,” Hoar told Banker & Tradesman. The designation follows closely on the heels of another home run for the firm’s downtown operation, with CB/Whittier also winning a spirited competition to lease and manage One Boston Place for its new owners, Teachers Insurance and Annuity Association. TIAA recently completed its purchase of that 41-story tower for $265 million.
“That was huge for us,” acknowledged Hoar, adding, “We’ve got some excellent momentum right now.” In the case of One Boston Place, CB/Whittier slugged it out with several major competitors before beating out Insignia/ESG in the final round.
While the tower had been self-managed by the previous ownership, CB/Whittier was in charge of leasing. One factor seen helping the firm keep that listing assignment and expand to managing One Boston Place was a successful re-tenanting prior to the sale. In brokering several key leases there, CB/Whittier negotiated a long-term deal with anchor tenant Mellon Financial that allowed owners Walton Street Capital and Blackstone Real Estate Advisors to put the tower on the block less than two years after buying it for $189 million.
In the case of 101 Arch St., CB Richard Ellis Investors, a Los Angeles based pension advisor firm, had used CB/Whittier to perform due diligence and rent analysis of the 407,000-square-foot tower before turning to them as leasing and managing agents. Interestingly, Cushman & Wakefield brokered the sale of the building, an arrangement that in the past often would have resulted in its selection – or retention, in the 101 Arch St. instance – as building manager.
No Sure Thing
With national affiliations and other structural changes such as self-management now in vogue, however, carryover relationships are no longer a certainty. Another Boston firm recently left out in the cold, for example, was Spaulding & Slye Colliers, which helped broker the One Boston Place sale. On the flip side, a relationship can be a detriment as well, with buyers sometimes reluctant to use an affiliated company to run a property for fear there may seem to be a conflict. Hoar said that is occasionally the case with CB Richard Ellis Investors, but it would typically only occur if the affiliated company were also involved in the sale. It also depends largely on the client, he said.
In any event, the designations at One Boston Place and 101 Arch St. have certainly helped reinforce CB/Whittier’s position as a leading commercial real estate services firm, both in downtown Boston and throughout New England. Overall, the company oversees more than 40 million square feet in the region, said Hoar, with Boston management and leasing assignments including such prime properties as One Beacon St., 75-101 Federal St., Copley Place and One Bowdoin Square.
“Our downtown group couldn’t be busier,” said Hoar, a rare situation given the recent upheaval in the real estate industry. CB/Whittier is even entertaining possible hirings of new personnel to handle the added requirements. “We’re definitely looking at people on both the management and leasing side,” Hoar said, offering encouraging news for a sector that has seen many firms moving into a downsizing mode.
The sale of 101 Arch St. is estimated to be in the $90 million range, although calls to Cushman & Wakefield and to CB Richard Ellis Investors to discuss the specifics were not returned by press deadline. The deal, first announced by Banker & Tradesman last month, is among a slew of office building sales that have occurred in the past few weeks despite one of the worst years ever for the Massachusetts office market. The seller was MetLife Real Estate Investments.
Although it previously has been regarded by some observers as being on the fringe of Boston’s Financial District, Hoar said he believes 101 Arch St. is an improving location given the recent expansion of the Financial District’s boundaries. Aided by the addition of the Lafayette Corporate Center, the Downtown Crossing district – which 101 Arch St. straddles – is now becoming a Mecca for office users, while the pending completion of the One Lincoln St. office tower a few blocks away is only expected to further enhance that migration.
“I think 101 Arch St. is going to be a great long-term play,” said Hoar, citing such amenities as the shopping district and direct access to the city’s subway network, including the Red, Orange and Green Lines. While perhaps at one time deemed a pioneering location, Hoar said he no longer believes that is the case. “I think any of the commercial firms in Boston would love to have” 101 Arch St. as a listing, he said.
