The 262,000-square-foot office building at 116 Huntington Ave. in Boston’s Back Bay was designed by Boston architects CBT/Childs Bertman Tseckares and developed by JMB Property Corp. just over a decade ago.
Even as another Boston office building hits the trading block, it appears 116 Huntington Ave. is about to be pulled off, with sources telling Banker & Tradesman last week that the New Boston Fund has agreed to buy the 11-year-old Back Bay structure. The 12-story property is being marketed by Trammell Crow Co., with an asking price of $75 million.
If the report bears out, it would be the latest indication of widespread investment interest in Boston’s office sector, which has seen a number of deals consummated in recent months despite a continued deterioration of market fundamentals. Among the Boston office properties that have sold or are in the process of doing so are Lafeyette Corporate Center, One Boston Place and One Beacon St., while the 280,000-square-foot 50 Milk St. is said to be fetching a $400 per-square-foot price from an Australian investment group.
As those Boston transactions wind down, Cushman & Wakefield has been hired to broker the sale of 101 Arch St., a 21-story office tower developed by Lincoln Property Co. in 1988. Now owned by Metropolitan Life Insurance Co., the 400,000-square-foot building is located on the edge of the Financial District in the Downtown Crossing shopping area.
“It’s a very nice asset,” said Cushman & Wakefield New England President Robert E. Griffin Jr., who predicted 101 Arch St. would garner as many as 15 bidders. Considering that anticipated interest, no asking price is being attached to the sale, which comes as part of a national effort by MetLife to harvest a major piece of its real estate portfolio. The Boston tower is being marketed as a stand-alone deal, although Griffin added there is a possibility it could eventually become part of a package arrangement.
As Cushman gears up for the 101 Arch St. marketing campaign, the owners of 116 Huntington Ave. are hoping to take advantage of the extensive clamor for Boston office opportunities. It is unclear what price NBF would purchase the building for, with both Trammell Crow investment group chief James McCaffrey and NBF acquisitions director James P. Kelleher not returning phone calls by Banker & Tradesman’s press deadline.
Despite that, sources insisted NBF is aggressively pursuing 116 Huntington Ave., with some claiming the private real estate investment group has already committed to buying the ornate property, which was designed by renowned Boston architects CBT/Childs Bertman Tseckares and developed by JMB Property Corp. “I’m told it is under agreement,” said one broker who has been following the deal. American Tower Corp. currently owns the property.
Coup for Crow
If the $75 million figure is attained, or American Tower receives anything close to its asking price, the sale would represent a demonstrated upside for the 262,000-square-foot building. After opening at the height of the 1990-1991 recession, 116 Huntington Ave. struggled initially to find office tenants and ultimately in 1994 was sold for $23 million to Vermont-based IDX Corp., a high-tech firm that moved its operations to the building. American Tower then acquired the building in 1999 for $55.2 million, or $211 per square foot. At $75 million, 116 Huntington Ave. would sell for $286 per square foot.
Despite the oft-cited bid/ask gap that has permeated the 2002 real estate investment cycle, one of the sources following the sale called 116 Huntingon Ave. “a great building” that should garner a solid price. Not only does the building offer efficient floor plates and quick access to the western suburbs, that section of Huntington Avenue has evolved in recent years from being the Back Bay’s unused back door into a bustling thoroughfare, with the street benefiting from a massive redevelopment of the Prudential Center and the Druker Co.’s construction of a luxury apartment complex.
On the down side, there is a ground lease on 116 Huntington Ave, and the source said that could serve to eliminate certain institutional investors who would be concerned about an exit strategy. “Some might see that as a problem when they go to sell it,” the source said, while acknowledging the repeated number of ownership changes in the past decade apparently have been done with no complications.
If nothing else, the sale of 116 Huntington Ave. represents a coup for Trammell Crow Co., which just a year ago this month lost its entire investment team when Griffin and his group defected for Cushman & Wakefield. McCaffrey was hired a few months later to head up that division, followed by the addition of sales veteran Peter Joseph.
Trammell Crow scored another high-profile assignment recently when it was selected to sell the Westborough Office Park in Westborough. That deal could take a bit longer to work through, however, considering the major difficulties seen in the outer suburbs since the recession took hold last year. Trammell Crow did successfully sell the Lake Williams Corporate Center in Marlborough earlier this year to Great Point Investors, but the office market has continued to slide throughout the summer, with the overall suburban availability rate at 20.7 percent, according to third-quarter figures released by Richards Barry Joyce & Partners.
Owned by the Archon Group since 1997, the four-building, 375,000-square-foot Westborough Office Park was developed in the 1980s. It is being marketed with an asking price said to be in the $65 million range, and includes an additional development site that could yield another 750,000 square feet of space.
