Last year’s acquisition of 305 Foster St. and another Littleton building by FTK Realty was good news for the Interstate 495 commercial real estate market.
Providing a spark of optimism for the Interstate 495 office market, a vacant building owned by Hewlett-Packard Co. is reportedly being sold to a local real estate investor, with Bulfinch Cos. of Needham said to be paying approximately $7 million for 151 Taylor St. The 108,000-square-foot structure has been on the block since last year when Spaulding & Slye Colliers was retained to sell it and a Shrewsbury asset on behalf of California-based Hewlett Packard.
Efforts to contact Bulfinch officials and brokers at Spaulding & Slye Colliers were unsuccessful by Banker & Tradesman’s press deadline. It is unclear what plans Bulfinch has for the asset, or whether a leasing agent has been retained, but some observers maintained that the transaction sends a message that even fringe office markets hit by the regional recession are finally on the mend. Bulfinch’s pursuit of 151 Taylor St. follows last year’s acquisition of two nearby commercial buildings at 295 and 305 Foster St. by another local player, FTK Realty, for $10.5 million. Those two buildings had been taken back by the lender after the Littleton office market cratered from the technology bust that set in during mid-2001.
FTK has since hired CBRE/Whittier Partners to market the properties, which were approximately 50 percent leased at the time of the purchase. That occupancy figure is closer to 75 percent following several significant transactions, including a 25,000-square-foot lease with Marathon Technologies and a pair of other deals totaling nearly 20,000 square feet.
“Things have picked up a bit, but I think we’ve had a little more activity than some of our neighbors,” said CBRE/Whittier principal Christopher Tosti, who is handling the Foster Street assignment along with CBRE/Whittier principal Mark Reardon and colleagues Jason Levendusky, Bob McGuire, Robert Walles and Matt Flaherty. Along with an “entrepreneurial and creative” landlord who has enabled deals to be completed, Tosti credited the flexibility and other physical features of 295 and 305 Foster St. for creating the spate of momentum.
“We’ve made a good percentage of the deals that have come through the building,” said Tosti. The two properties were constructed in the 1980s by the Nordblom Co.
As for the Hewlett-Packard property, the Littleton structure was deemed expendable after the computer giant acquired Compaq Computer Corp. in 2002, with Compaq having taken control of 151 Taylor St. following its own purchase of Digital Equipment Corp. a few years earlier. Hewlett-Packard initially said it would retain some space in the property, but ultimately opted against that strategy, quashing a deal made early on by another investor that had factored in the firm’s lease commitment. With the vacancy aspect put in place, the price was subsequently lowered to meet the additional risk attendant with buying a vacant asset.
Recovery Expected
Spaulding & Slye earlier sold the Shrewsbury building for Hewlett-Packard. Totaling 400,000 square feet, the hulking structure was purchased for about $18 million by Suffolk Advisors, a real estate investment group formed by Beacon Cos. veteran Erin O’Boyle and Cigna Investments official Ivy Freedman.
Although some observers say office leasing has not been as robust as anticipated to start 2005, it does appear that many real estate investors are circulating about in anticipation of a market recovery. With the first quarter of the year ending next week, a slew of suburban office buildings have changed hands in the early going, while several others are said to be on the verge of selling or are being prepared to be put on the market. The most significant deal already completed would certainly be the $272 million disposition of the Bay Colony Corporate Center in Waltham, acquired by Beacon Capital Partners in January from the Shorenstein Cos., but various smaller properties are also moving through the investment sales pipeline.
Earlier this month, for example, Berwind Property Group of Philadelphia paid $28 million for the Highwood Office Park in Tewksbury, a 778,000-square-foot complex, while New Boston Fund also recently completed its purchase of 9 Technology Drive in Westborough from the RREEF Funds for just over $15 million. Meanwhile, after buying assets in Lexington and Newton Corner in recent months, TA Associates Realty is reportedly close to buying a Burlington office building as well. A surge of capital has continued to flood the market overall, and to date there have been no indication that the supply of funds will abate any time soon.
Bulfinch has been among the more active investors in recent years, with the firm currently owning properties throughout Greater Boston. Among the company’s holdings is the former Arthur D. Little headquarters in Cambridge, now known as Cambridge Discovery Park, as well as Three Forbes Road in Lexington, the Wells Business Center in Newton and the Derby Corporate Center in Hingham.
Joe Clements may be reached at jclements@thewarrengroup.com.
