Samuels Property Group reportedly has agreed to purchase the 30,000-square-foot retail/office building at 7 Winthrop Square in Boston.
A small but well-located retail/office building in Boston’s Downtown Crossing district has found a buyer following an extensive search, with industry sources reporting last week that Samuels Property Group has agreed to purchase the 30,000-square-foot structure from Archon Atlantic.
“It is under agreement,” confirmed Spaulding & Slye Colliers principal Michael G. Smith, who is brokering the sale of 7 Winthrop Square. Smith declined to identify the suitor or discuss the sales price, but sources maintained that Samuels has committed to the asset, and is paying an estimated $5.2 million. Calls to Samuels principal Jonathan H. Samuels and to Archon Atlantic official William Rand were not returned by Banker & Tradesman’s press deadline.
Built in 1899, Smith said that 7 Winthrop Square was acquired by the Archon Group from Teachers Insurance and Annuity Association as part of a portfolio deal involving 42 Bay State commercial properties. That 1997 transaction was estimated to be in the $225 million range, but the breakdown of individual pricing of each asset was never revealed.
Although Smith would not talk about the deal itself, he did report that 7 Winthrop Square received interest by both investors and potential users alike, with the main attributes including a position in the heart of the city’s prime shopping district and floorplates positioned above the retail space that can be developed as multitenanted office quarters.
“It’s a great little building,” said Smith, who is brokering the sale with colleague Cappy F. Daume. “Summer Street has really [improved] in the last few years.”
The Winthrop Square asset is just the latest in a series of properties that Archon has traded in recent years. The firm acquired a substantial block of commercial buildings in the market through its predecessors, which include the J.E. Robert Co. and the Archon Group. Archon Atlantic was formed several months ago following the merger between the Archon Group and WP Commercial, both of which had been owned by Goldman Sach’s Whitehall Street Real Estate Funds.
Along with 7 Winthrop Square, Archon has also previously held such Downtown Crossing buildings as 87 Summer St., 99 Summer St. and 99 Bedford St. in Boston. Under its J.E. Robert name, the company was among the first players to take advantage of the real estate crash of the early 1990s, with J.E. Robert purchasing numerous buildings in Boston between 1992 and 1995. That Virginia-based firm was then acquired by Whitehall. The largest of the downtown buildings, 99 Summer St., was purchased by a partnership of Paradigm Properties and the Carlyle Group.
WP Commercial had also made its foray into Boston during the 1990s, and was perhaps best known for its acquisition and repositioning of two Financial District buildings into what is now known as 3 Post Office Square. That 140,000-square-foot building has also now changed hands, with Cornerstone Real Estate Advisors of Connecticut having closed on the building 10 days ago. The sale, first reported by Banker & Tradesman in April, provides Cornerstone a renovated property in the city’s core office sector. Boston’s Financial District currently has a vacancy rate of 11.1 percent, according to the Codman Co. Cornerstone is funded primarily by MassMutual Life Insurance Co.
Smith and Daume also brokered the sale of 3 Post Office Square. While acknowledging that the negotiations have been completed, Smith said he could still not comment on the details of the deal. A press release is being prepared, he said, but sources have previously placed the price tag at between $31 million and $35 million.
Drug Store Wars
One issue involving the 7 Winthrop Square transaction is the health of the property’s prime retail tenant, Walgreen’s Drug Store. The Illinois-based pharmacy giant made its first move into Downtown Crossing just over a year ago, leasing 8,200 square feet of basement storage and retail space at 7 Winthrop Square. But with rival CVS Pharmacy opening an operation across the street that is more than double the 4,100-square-foot retail portion of the Walgreen’s store, sources maintain that Walgreen’s has fared poorly at its pioneering location.
Calls to Walgreen’s officials at the Illinois headquarters were not returned by press deadline, but some downtown brokers agreed that the store has not done as well as the company had initially projected. The store is substantially smaller than the typical Walgreen’s, sources noted, while the recent economic slide has had a negative impact on Downtown Crossing, according to broker Joseph Levanto of Schaffer & Assoc.
“It has been very tough the last 18 months,” said Levanto. Despite that, he dismissed a persistent rumor that Walgreen’s may even pull out of the property, particularly with the imminent opening of a new Hub office tower a few blocks away. Bolstered by lead tenant State Street Bank, the 36-story One Lincoln St. should provide a needed boost to the retail district, said Levanto.
“I find it hard to believe [Walgreen’s] would give up with One Lincoln St. ready to open,” said Levanto. “That should be a huge help to them.”
Joe Clements may be reached at jclements@thewarrengroup.com.
