Two Mansfield Corporate Center, currently leased to Tyco Healthcare Corp., is one of two buildings being marketed for sale by owner LaSalle Investment Advisors.
Investors starving for commercial real estate opportunities have a few new choices to pick from in suburban Boston, with LaSalle Investment Advisors placing a pair of prime Mansfield office buildings on the block, and SSR Realty Advisors doing the same for University Office Park in Waltham. Meanwhile, LaSalle is also peddling two modern industrial buildings in Taunton.
“We think it’s a good time to sell,” broker James McCaffrey of Trammell Crow Co. said last week in explaining LaSalle’s decision to dispose of One and Two Mansfield Corporate Center in Mansfield. The owners have hired McCaffrey’s investment team to market the buildings, which are fully leased to Tyco Healthcare Corp. Originally constructed by National Development Co., the two buildings total 190,000 square feet. The owners are seeking $25 million for the assets, said McCaffrey, or about $131 per square foot.
Meanwhile, sources said CB Richard Ellis/Whittier Partners has been tabbed to market two buildings at the University Office Park on behalf of SSR Realty. It is the second time in two years that SSR has sought to trade the office properties on behalf of an institutional client, but sources said the latest initiative carries a significant discount in pricing from the previously unsuccessful attempt.
According to sources, CB/Whittier broker Elizabeth Thomas has been retained to oversee the marketing program on the Waltham buildings, having also led the previous campaign in 2001. While Thomas did not return a phone call by Banker & Tradesman’s press deadline, sources said SSR Realty hopes to fetch just over $30 million for University Office Park, nearly half the $60 million it was asking for in the initial sales effort. The two buildings owned by SSR total about 268,000 square feet.
“They are accepting reality,” claimed one broker familiar with the offering, noting that the Waltham area has been brutalized by the office sector downturn of the past three years, even though it has long been considered the epicenter of the Route 128 market. The source also claimed that SSR Realty turned down a hard bid estimated in the $50 million range the first time it tried to sell the properties, ostensibly because the offer did not reach the $60 million target.
Reached last Friday at SSR Realty’s New Jersey headquarters, spokesman Linda Berry would only confirm that University Office Park is part of the firm’s core separate account portfolio. “Other than that, I can’t give any comment on the status of the property,” said Berry. According to industry observers, the SSR buildings are in generally good condition but do have some lease rollover in the near term. Another complicated aspect of the sale is a ground lease held by the original developers of the park, Dan Rothenberg and Julian Cohen. As exemplified in the case of last year’s sale of 116 Huntington Ave. in Boston, which also has a ground lease, certain institutional investors are precluded from bidding on a property that contains such encumbrances.
Risk Factor
With investors eager to buy commercial real estate but not interested in any measure of risk, McCaffrey said he believes the Mansfield buildings will be well received. Not only are the properties in good condition physically, according to McCaffrey, but Tyco Healthcare Corp. also is a solid tenant with substantial time left on its leases, offering the credit and term sought by most potential buyers in the currently volatile environment.
“They are in a great park and the buildings are really top notch,” said McCaffrey. “It gives the safe haven [investors] are looking for.” Tyco, which also recently leased space across the street, extensively retrofitted One and Two Mansfield Corporate Center when it moved in, said McCaffrey, improving the buildings’ quality. The two properties were developed in the late 1980s. A visible location near Interstates 95 495 should also bolster their value, said McCaffrey.
While $131 per square foot would be considered a healthy number for a suburban office building at present, McCaffrey said the Mansfield properties are nonetheless priced at a substantial discount to replacement cost. Trammell Crow anticipates a strong response from the investment market, said McCaffrey. “They are really some of the best assets available in the suburbs right now,” he said.
Industrial real estate has also been pursued heavily by investors given that it has held up in rent and vacancy levels much better than the office market. The biggest challenge locally has been a lack of institutional-grade product to sell, and McCaffrey said he believes that is exactly what the Taunton buildings being marketed for LaSalle and joint venture partner Condyne Corp. offer to potential suitors.
Located in the established Myles Standish Industrial Park, the two Taunton properties feature clear heights to 34 feet and tenants that include Trader Joe’s. “We’re going to have a lot of activity on those,” predicted McCaffrey of the properties at 275 John Hancock Road and 800 John Quincy Adams Road. One of the facilities is brand new, while the other was completely renovated in 2001. The asking price for the buildings is $42 million.
