The Mayo Group, which is based in Boston’s Roxbury neighborhood, reportedly has agreed to purchase 121 Portland St. in the city’s North Station market.
Having earned its stripes buying and developing real estate in some of the region’s most challenging markets, the Roxbury-based Mayo Group is setting its Irish investor eyes on another area teeming with potential pitfalls: downtown Boston.
After last week tying up 211 Congress St., a well-located but struggling office building in the Hub’s Financial District, Mayo has now agreed to purchase 121 Portland St. in the city’s North Station market, with sources estimating that the barren, 72,000-square-foot structure will fetch just over $7 million. A one-time raincoat factory, the building was purchased in 2000 by Cathartes Investments and AEW Real Estate for $6.6 million, fueled by a plan to redevelop the property into a telecommunications center.
The telecom concept died when the technology market soured shortly after Cathartes/AEW closed on the asset. A renovation that would have included a new roof and windows for the 6-story brick building was never carried out, while Boston-based Cathartes itself disbanded earlier this year. AEW officials did not return phone calls regarding 121 Portland St. by press deadline.
In acknowledging his firm’s commitment, attorney Taran T. Grigsby said last week that the Mayo Group was attracted by 121 Portland St.’s prime location and unusual flexibility. “We think it’s a great building,” said Grigsby. “The difficult thing will be figuring out which way to go with it.”
A stone’s throw from the property are several successful retail, hotel, office and residential uses, noted Grigsby, who offered all four as possible outcomes for 121 Portland St., as well as a more simple strategy: creating self-storage space. “That is becoming a hot item,” said Grigsby, whose firm recently opened a storage facility in Milford, N.H., close to where Mayo has a cluster of apartments. The continued migration of people moving back into Boston could fuel demand for storage in the urban core, suggested Grigsby, while the heavy floor loads that made 121 Portland St. a candidate for telecom would seem able to accommodate substantial storage capacity. Built in 1918, 121 Portland St. was even once used as a garage.
‘Perfect’ Opportunities
Mayo principal John A. McGrail, who came from the Emerald Isle in the mid-1980s, has been known locally as a residential investor and developer, with the firm now controlling more than 1,400 residential units in Greater Boston and the surrounding region. But the Mayo Group also has about 1 million square feet of commercial space, estimated Grigsby, whose firm redeveloped the old Ruggles Hall in Roxbury’s Dudley Square into its headquarters two years ago, and has also been active in such business districts as Lynn’s Central Square.
The simultaneous nature of the current acquisitions is mainly happenstance, said Grigsby. “We had been looking to get into the downtown [Boston] area for awhile, and when these two opportunities came along, we thought they were perfect,” he said, explaining the firm had pursued other assets in the market previously without any resulting agreements. The sale of 211 Congress St. is being handled by Meredith & Grew on behalf of the owner, SSR Realty Advisors, while Spaulding & Slye Colliers is reportedly assisting AEW in the 121 Portland St. negotiations.
Mayo is operating in one of two investor classes chasing commercial real estate in Boston, with the company willing to entertain deals sporting a measure of risk. Institutional buyers, in particular, have shied away from properties with substantial vacancy or tentative leasing rosters, but have paid aggressively for buildings with long-term leases in place and predictable cash flow that should help owners survive the current office market slump.
Many of the older, less stable properties have been targeted for residential conversion, but Grigsby expressed optimism about 211 Congress St. going forward as an office use. Efforts to beef up the 11-story building’s occupancy have been ongoing throughout the summer, while Grigsby said the Mayo Group is also confident about the investment due to the building’s presence in the heart of the Financial District.
“It’s a landmark location,” said Grigsby, with the popular Post Office Square Park a few steps one way and the planned Rose Kennedy Greenway barely a block away from the property toward the east. The Mayo Group also will be buying the asset at a discount to the $19.3 million paid by SSR Realty in early 2001. Grigsby would not provide an exact price, but confirmed earlier reports that it will range between $15 million and $17 million.
If the sale of 211 Congress St. is completed, it will be the second SSR property in Boston’s Financial District to be acquired by a local investment group. Just last month, for example, Oasis Development Enterprises of Lynn paid $19.5 million for 100 Franklin St., a 9-story, 117,000-square-foot office building that serves as home to the Boston Stock Exchange. That sale was handled by Cushman & Wakefield of Massachusetts. SSR had purchased the building in September 2000 for $27.8 million.
Joe Clements may be reached at jclements@thewarrengroup.com.
