Three years after acquiring the 15-story office tower at 116 Huntington Ave. in Boston’s Back Bay for $55 million, American Tower Corp. has reportedly hired Trammell Crow Co. to market the property for sale.
In another sign of investor interest in Boston’s office sector, an 11-year-old Back Bay tower has been placed up for sale barely three years after being acquired by a telecommunications company. According to sources, American Tower Corp. has retained Trammell Crow Co. to sell the 15-story building, located at 116 Huntington Ave. adjacent to Copley Place.
“It is on the market,” one source insisted, with a reported asking price of $75 million, a figure the observer described as “a little rich.” Nonetheless, the source also predicted the ornate property will attract investor interest as it hits the street.
“It’s a nice asset,” said the source, who requested anonymity. “I’d say there’s a decent chance they will get a good price on it, especially with the capital so hot [for commercial real estate] right now.”
Considering the sluggish economy and an office market that continues to suffer from excess supply and shrinking demand, investors have been surprisingly willing to buy commercial real estate, with an apparent belief that it still is one of the more stable places to store money. A cadre of national and international investors have been busy chasing properties throughout the country in the past few months, and Boston seems to be garnering as much attention as any city.
“People are nervous about [the stock market],” said Cushman & Wakefield New England President Robert E. Griffin Jr., so much so that they are focusing their attention on real estate. “I really think we’ve got a while before the capital markets pull back,” said Griffin, whose investment team is selling a number of high-profile assets in the Boston area. The firm, for example, joined John Fowler in brokering the sale of 470 Atlantic Ave. to GE Capital Management earlier this year, with the building trading for a healthy $82 million despite significant vacancies.
Other deals also appear to be proceeding quickly. A prime example can be found at One Boston Place, the 41-story office tower in downtown Boston being sold by Blackstone Real Estate Advisors and Walton Street Capital. Although all sides continue to remain mum on the matter, Banker & Tradesman has previously reported that Teachers Insurance and Annuity Association has agreed to buy the 32-year-old building in conjunction with another institutional partner.
‘A Real Coup’
Officials at Spaulding & Slye Colliers, which is brokering the deal, declined comment on the sale, including the partnership issue. According to sources, however, an unnamed Canadian pension fund has agreed to a minority position in the building. The sale is expected to close later this year, with the building currently in the midst of an extensive renovation.
As for the latest rumor, calls to Trammell Crow principal James McCaffrey were not returned by press deadline, but several sources maintained that the firm’s Boston office did indeed win the listing to market 116 Huntington Ave. “That’s a real coup for them,” said one broker familiar with the deal. “It will attract a lot of attention.”
One barometer of 116 Huntington Ave.’s allure will be whether it sees interest from overseas capital such as the German and Dutch investors who have been scouring the Hub for opportunities. While it might fit the size requirements for overseas capital, some industry watchers question whether the location might be deemed a bit too off-center for those players, who traditionally have chased only core-market properties such as Boston’s 84 State St., One Federal St. or 125 High St. Dutch-based Ibus Co. did acquire a Cambridge office building earlier this year, and officials of that firm have said they are interested in pursuing additional deals in metropolitan Boston.
In any event, 116 Huntington Ave. certainly has seen its share of owners in its brief existence, with American Tower buying the building for $55 million just five years after IDX Systems Corp. paid JMB Properties Co. $23 million for the property, which features 262,000 square feet of space.
Designed by CBT Architects of Boston, 116 Huntington Ave. was an architectural success when it opened in 1991, winning praise for its copper roof, red granite facade and large archway entrance. But whatever the property won in architectural praise, it opened at perhaps the worst possible time, with the Boston office market in perhaps its greatest crisis ever between 1990 and 1992. The purchase by IDX was seen as a good development given that the firm subsequently occupied much of the empty space, enlivening what had been a quiet stretch of Huntington Avenue.
Although there do remain questions as to whether it will fetch the asking price, most agree that 116 Huntington Ave. is in a stronger position than when it first came on the market, with several new development projects helping to make the area a destination for both office workers and residents. Across the street, for example, Boston Properties recently opened its new office tower at 111 Huntington Ave., while both the Prudential Center and developer Ronald Druker are adding residential properties nearby the building.
Despite those improvements, 116 Huntington Ave. does have its share of challenges, at least in the leasing department. After being one of the tightest office markets in the state for most of the 1990s, new construction and the dour economy have conspired to drive up vacancies in the Back Bay. At present, for example, a joint venture partnership is preparing to deliver the new 131 Dartmouth St. office building to the Back Bay market with no tenants in tow to occupy the 353,000-square-foot tower.
