Museum Towers, a two-building apartment complex in Cambridge, traded hands for $147.5 million following protracted negotiations.
The dream season of commercial real estate sales continues for Cushman & Wakefield of Massachusetts. The firm’s successful marketing of the Museum Towers apartments in Cambridge has put the company over $1 billion for 2004 in property transactions with the final quarter of the year still left to go.
“We’re rocking,” concurred C&W of Massachusetts President Robert E. Griffin Jr., whose firm brokered the $147.5 million sale of the two-building Museum Towers on behalf of ING Clarion. The protracted sale to Crescent Heights Inc., initially announced last week by Banker & Tradesman, provided a measure of vindication for C&W’s team given that many observers had predicted the property would never come close to reaching the ultimate price it fetched when put on the block earlier this year.
“I think the seller was happy with us,” offered Griffin, who nonetheless acknowledged that the negotiations were unusually lengthy, stretching from the spring until near the end of the summer. While he would not provide any reason for the torpid pace of that deal, Griffin stressed that investment sales in the current economic climate are often being stretched out because all parties are being careful in their assessments and are loathe to stray from pricing estimates. “It’s very difficult to get a deal across the finish line these days,” said Griffin. “You’re never really sure [it will happen] until the day it closes.”
Bloodied or not by the experience, C&W’s investment sales team has managed to carry many an asset across the dotted line this year, brokering a variety of multifamily, retail, office and industrial properties on behalf of clients. Thus far, the results are decidedly different from last year, with Griffin estimating that deals in 2003 totaled about $500 million for his group.
Although 2003 could hardly be described as a bust, C&W did have several high-profile sales collapse as the year went on, including two large portfolios that did not move after their owners opted to retain the holdings. With a sense that pending interest rate hikes could dampen investor returns in the coming year, owners have apparently been more willing to see deals to completion than they were in 2003, while capital from various sources continues to aggressively pursue commercial real estate opportunities.
Efforts to contact Miami-based Crescent Heights by press deadline were unsuccessful, but the firm does appear intent on converting Museum Towers into condominiums as had previously been reported. At the $147.5 million rate, the 435-unit asset sold for about $340,000 per unit, although approximately 30 apartments had been set aside as affordable units during the initial construction. If those are taken out of the equation, the per-unit price achieved by ING/Clarion averages about $364,000 per unit. Griffin declined to discuss how the affordable units were treated, but one source said they were indeed exempted from the deal with Crescent Heights and may have essentially been handed over to the city of Cambridge.
Reaching New Heights
Crescent Heights certainly has its share of condominiums to peddle in Cambridge, with the firm earlier this year having purchased the CambridgeSide Apartments a few blocks from Museum Towers, also as part of a conversion program. That 104-unit complex was acquired for $24.7 million.
Built by local developer Dean Stratouly, the Museum Towers apartments are in an emerging section of Cambridge, with railroad yards dominating one stretch and the Kendall Square office/research district on the other side. Along with Crescent’s investment, Spaulding & Slye Colliers is teaming up with Guilford Enterprises to craft a vast swath of land into residential, retail and office uses. Meanwhile, Leggat McCall Properties recently unveiled its plans to construct 199 condominiums at an old candy factory in the area.
As for 2004 investment sales activity, C&W has several other properties making their way through the marketing process, including the two-building Riverfront Office Park in Cambridge and One Beacon St. in Boston, a 34-story office tower said to be under agreement to a group of New York investors. Griffin would not discuss the status of the One Beacon St. sale, which also has meandered along throughout much of 2004. According to sources, owners Westbrook Partners and Prudential Real Estate Investors have agreed to sell One Beacon St. for about $360 million. The property has 1.1 million square feet of space.
Griffin would not provide an estimate on Riverfront Office Park, which totals about 670,000 square feet, but other industry watchers maintained that the Class A office complex will sell for at least $200 million. The buildings are owned by a partnership of Hines Interests and the California Public Employees Retirement System, or CalPers.
There is no set timetable for trading Riverfront Office Park, said Griffin, but even without that deal, the chances appear strong that C&W could reach the $1.5 billion mark in sales by year’s end. And while that goal could be difficult for other firms to reach, investment sales groups at Spaulding & Slye, Meredith & Grew, Trammell Crow Co. and CB Richard Ellis/Whittier Partners are also enjoying banner campaigns, with several high-profile buildings changing hands throughout Greater Boston in recent months. Calls to several competing firms to discuss their projections for the year were not returned by press deadline.
