Boston-based New Boston Fund has reportedly agreed to buy 70 Fawcett St. in Cambridge, a 141,000-square-foot office building located next 10 Fawcett St. (pictured), which the firm has owned since 1995.
A2-story office building in Cambridge’s Alewife section is being acquired by the New Boston Fund, according to industry sources. The 141,000-square-foot 70 Fawcett St. is currently owned by a real estate partnership that developed the property more than 20 years ago, although New Boston Fund already controls the land beneath the building after buying the ground lease there a few years earlier.
New Boston Fund also owns the adjacent 10 Fawcett St., a 6-story office building that was put on the market for sale last year with an asking price of $18.5 million, but reportedly received a tepid response at the outset due to high vacancy rates. Improving conditions and an active leasing campaign headed up by Meredith & Grew Oncor have helped stabilize the 130,000-square-foot property in recent months, but it is unclear whether the building remains on the trading block, with some sources claiming New Boston Fund has opted to keep the property in its portfolio.
Officials at New Boston Fund did not return phone calls by Banker & Tradesman’s press deadline. Also not responding were officials at Meredith & Grew, which was retained last year to peddle 10 Fawcett St. The 70 Fawcett St. property is a low-rise research-and-development building constructed in the early 1980s on behalf of BB&N, the networking firm that dominated the Alewife office market for years before being brutalized by the technology bubble that burst at the beginning of the new millennium. BB&N was the sole tenant in 70 Fawcett St., which is being sold completely vacant. The building is being marketed by Spaulding & Slye Colliers. The real estate firm’s investment sales specialist Scott J. Jamieson acknowledged last week that 70 Fawcett St. is under agreement, but declined to identify the suitor or provide a sales price for the building. According to some sources, however, New Boston Fund itself has the property under agreement. “They are the logical buyers,” noted one source, given that the firm owns the ground lease.
Jamieson also would not provide details about what the bidder plans to do with 70 Fawcett St., but acknowledged that recent efforts by the city of Cambridge to encourage residential uses in the Alewife area would make the property a candidate for conversion to housing. The city is in the process of changing the local zoning to allow such uses, with the program expected to be in place sometime during the next year. Other commercial sites in Alewife are reportedly also on the radar screen of residential developers.
If New Boston Fund is indeed the investor chasing 70 Fawcett St., it certainly would have the capacity to do a residential or mixed-use development, with the Boston-based firm sporting an extensive track record of such ventures. Among its more recent undertakings was One Brigham Circle in Boston’s Mission Hill neighborhood, a project centered around a 190,000-square-foot office/retail building with ancillary parking and a 5.5-acre community park.
New Boston Fund is not the only local firm targeting Alewife, with Intercontinental Real Estate Corp. recently acquiring a series of buildings also occupied by BB&N in a sale/leaseback transaction. According to sources, Brighton-based Intercontinental is now buying another commercial property near its current holdings in Alewife, although the precise address was not revealed by press deadline. As with New Boston Fund, Intercontinental has been creative in its real estate endeavors, while the firm has recently embarked on a number of diverse investment and development programs. In a presentation last week, the firm’s chairman, Peter Palandjian, outlined his company’s interest in acquiring properties throughout the country as part of its Fund III investment offering. At present, he said, the firm is pursuing deals in Florida, Texas and California, recently committing to six commercial properties in the so-called Inland Empire of Southern California.
Intercontinental also has been active locally in recent months, earlier this year paying $37.5 million for 117 Kendrick St. in Needham. With a total equity commitment of $346 million, Fund III has already secured several Massachusetts properties, including 575 University Ave. in Norwood, 20 Moulton St. in Cambridge and One Washington Mall in downtown Boston. Unlike its more adventurous Fund IV, Intercontinental’s Fund III targets “enhanced core” assets that have little risk exposure.
Hosting a number of promising technology firms and old-line operators such as BB&N, Alewife had enjoyed several years of growth prior to being slowed by the regional recession. According to Richards Barry Joyce & Partners, the vacancy rate for the Alewife market is about 20 percent at present. While not particularly healthy, the figure is not as onerous when considering there is just about 2 million square feet in the submarket. Even one new tenant needing 100,000 square feet would cut the rate in half, noted one local broker. “A recovery could really happen overnight,” said the source. Another cited the recent arrival of the Smithsonian Astrophysical Observatory, which signed a long-term lease for 85,000 square feet at Cambridge Discovery Park, the one-time headquarters of Arthur D. Little now being converted to multi-tenanted use by the Bulfinch Cos.
“They could have gone anywhere, but they chose [Alewife],” said the source. “That’s a pretty good sign” of the market’s potential.
