The $272 million sale of the Bay Colony Corporate Center in Waltham got 2005 off to a good start for office building sales in the suburbs.
Things aren’t looking half-bad for suburban office building sales at present. Then again, they are.
Coming off a record pace last year, the volume of deals has continued strong into 2005, but observers caution that not every opportunity is enjoying unfettered interest. While the $272 million sale of the Bay Colony Corporate Center in Waltham yielded an impressive beginning to the new campaign, assets sporting weaker fundamentals have been greeted less enthusiastically, forcing owners to either discount pricing or pursue other options, such as a refinancing or repositioning.
Office leasing activity appears to be encouraging, according to most first-quarter reports, but the recovery has been spotty there as well, further enhancing the so-called “bifurcated” environment which has produced divergent interest levels. “Every suburban deal is its own animal,” Meredith & Grew Vice President Anthony W. Biette said last week, adding that “it’s hard to make a blanket statement” about how a property will be received by investors.
A prime example would seem to be 151 Taylor St. in Littleton, in the process of being purchased by the Bulfinch Cos. for a figure said to be substantially less than the $7 million asking price initially set by the owner, Hewlett-Packard. By some estimates, Bulfinch is expected to pay between $3.5 million and $5 million for the 108,000-square-foot office building, which was acquired by the computer giant as part of its takeover of Compaq. The deal has been held up by a local zoning glitch. Bulfinch officials did not respond to inquiries by press deadline, but one source maintained that the pricing was cut after Hewlett-Packard decided it would not occupy a portion of the building.
Spaulding & Slye Colliers is marketing the property on behalf of Hewlett-Packard. Calls to officials there were not returned by press deadline. The firm earlier this year sold a Shrewsbury asset for Hewlett-Packard, with Suffolk Advisors acquiring 334 South St. for $18 million.
Hitting All the Bases
Biette’s firm also has been busy assisting on a range of building sales, including two significant transactions that have closed this month. Meredith & Grew principal David L. Pergola and Biette recently brokered the sale of two Taunton office buildings to Griffith Properties for $7.7 million. The deal, Biette said, was aided by the experience of the ownership, which includes Hub real estate veteran J. Brad Griffith and colleague Tod Brainard.
In the sale of 440 and 470 Myles Standish Blvd., which was reported in last week’s Banker & Tradesman, the successful bidders were able to resolve a potential hurdle by signing a long-term lease with a major tenant, Princess House. Others might have shied away because they were unable to address that matter, said Biette, while nonetheless stressing that the solidly built properties did attract about a half-dozen serious prospects. Griffith Properties is now said to be working on an extension with another existing tenant to further bolster the leasing situation of the buildings.
In another significant sale negotiated by Meredith & Grew, Morris & Morse Co. of Boston has paid $19.2 million for 2 Hampshire St. in Foxboro, a 117,000-square-foot office building constructed in 2001 by the sellers, National Development and AMB Property Corp. Meredith & Grew Executive Vice President Lisa M. Campoli and Assistant Vice President Kerrin C. Driscoll brokered the deal on behalf of the sellers and procured the buyers. Morris & Morse Co. bought the asset for an unnamed institutional client, with Banker & Tradesman reporting on its Web site last week that the capital source is Quincy Mutual Fire Insurance Co. of Quincy, operating under the auspices of Quincy Foxboro LLC.
In the Web site article, Campoli said that 2 Hampshire St. “hit all the bases on what people are looking for” in a real estate deal, including a stable rental roster and a well-built structure offering a range of tenant amenities. The Interstate 495 South office market has outperformed other submarkets, she added, with Meredith & Grew putting the current vacancy rate there at 7 percent.
Another firm with several deals percolating in the suburbs is Trammell Crow Co. After successfully marketing assets in Westborough and Tewksbury earlier this year, Trammell’s Investment Sales Team of James McCaffrey, Peter Joseph and Christopher Phaneuf have negotiated the sale of 155-159 Swanson Road in Boxboro, said Joseph. New Boston Fund purchased the properties for $19.7 million.
“We had a great response,” Joseph said of the two-building, 100,000-square-foot asset. One major tenant, Synqor, signed a 10-year lease in 2003, while another has a term expiring in three years, providing the buyers with a measure of stability, said Joseph.
Joe Clements may be reached at jclements@thewarrengroup.com.
