TA Associates Realty is among the local firms stepping up its pursuit of commercial real estate properties in the area, including One Newton Place in Newton Corner.
Although Greater Boston’s commercial real estate market is attracting capital from the four corners of the globe, there is plenty of local interest as well, with regional players moving as aggressively as any global investment source in buying Bay State opportunities.
Along with such firms as Beacon Capital Partners, Essex River Ventures and the Mayo Group, homegrown TA Associates Realty is also apparently stepping up its pursuit of area assets. Not only is the firm said to be buying One Newton Place in Newton Corner, sources last week claimed the company is also chasing a Burlington office building once occupied by Genuity Inc.
“I hear they are close,” one Boston investment broker insisted last week of a deal for the building, 3 Van de Graff Drive. Other sources agreed, although none could provide an estimated sales price or say whether a purchase-and-sale contract has been executed. It is, however, unlikely that the sale will be completed by year’s end, according to the broker, who requested anonymity.
Efforts to contact TA Associates Realty officials and the current owners of 3 Van de Graaff Drive were unsuccessful by Banker & Tradesman’s press deadline last week. The building was occupied for several years by Genuity Inc., a spin-off of GTE Internetworking, but the company was disbanded in the wake of the technology crash that took hold of the region in 2001.
TA Associates Realty already owns several buildings in the area, including several in the Waltham market that the Boston-based company has been trying to sell. Those efforts are apparently not an indication that TA is looking to abandon the Greater Boston market given its interest in Newton and the reported Burlington negotiations. “They really seem to be getting more active,” said the investment broker, adding, “I just think they recognize there are some good [opportunities] to be had here right now.”
TA Associates Realty owns commercial property throughout the United States, investing both in commingled funds and managing separate accounts for pension funds. The firm has been negotiating for more than a month to acquire One Newton Place, a four-story building developed in the 1980s by the Druker Co. Due to the pending departure of its longtime tenant, Reed Elsevier, One Newton Place is expected to sell for substantially less than the $34.5 million Druker received when the building was last sold in 1996, with sources placing the current sales price at about $125 per square foot, or somewhere in the range of $27 million.
A Possible Turnaround
One Newton Place is owned by Morgan Stanley, which acquired the asset in 2003 through a merger with Lend Lease Real Estate Corp. Cushman & Wakefield of Massachusetts has been handling the negotiations to sell the property to TA Associates Realty, although members of Cushman’s investment sales team were unavailable last week to update the status of those discussions. It is unclear whether there is a broker involved in the Burlington talks.
Sources were also unable to say what the current occupancy rate is at 3 Van de Graaff Drive, but the market itself has been hit hard by the regional recession that has gripped Massachusetts since the start of the new millennium. According to third quarter figures provided by CBRE/Whittier Partners, the 15.3 million-square-foot Route 128 North office market still has a vacancy rate of 25.1 percent despite a relatively solid 2004, during which the submarket has seen 102,000 square feet of net absorption. While hardly operating at a breakneck pace, the positive outcome to date could signal a turnaround for Burlington and surrounding communities as landlords and real estate professionals prepare for 2005.
Genuity had been a major force at one time in the Route 128 office market, occupying not only the 3 Van de Graaff Drive building, but also more than 430,000 square feet next door in Woburn at the MetroNorth Corporate Center. When the company was downsized and ultimately acquired by Level 3 Communications, it left several troublesome assets behind. The Woburn properties were subsequently purchased back by the original developers, National Development of Newton, which then successfully re-tenanted them with Raytheon Inc.
Given the region’s lingering economic difficulties, many suitors have kept a watchful eye on local real estate investors, and for most of 2004, their signal of long-term confidence seemed to come through loud and clear. Essex River, for example, teamed up with a New York company to purchase office buildings in Lexington and Boston, while Beacon Capital Partners has also demonstrated its willingness to invest heavily in Massachusetts. Earlier this month, for example, Beacon paid $77 million for 116 Huntington Ave. in Boston’s Back district, while the company is also supposedly one of about a dozen bidders competing for the Bay Colony Corporate Center in Waltham. That four-building office complex is expected to trade for more than $250 million when it changes hands sometime in early 2005.
Joe Clements may be reached at jclements@thewarrengroup.com.
