Yale Properties USA has hired Trammell Crow Co. to market for sale the building at 230 Congress St., a 75-year-old art deco-style building that has undergone a series of restorations in recent years.
A downtown Boston office building considered among the first properties to chase telecommunications tenants is on the market for sale, with Yale Properties USA hiring Trammell Crow Co. to peddle the 12-story, 150,000-square-foot asset. Sources could not say whether an asking price has been set for the 75-year-old structure.
“It’s very sturdy,” one Boston broker said in assessing 230 Congress St., an art deco-style structure that was originally built as the headquarters of Western Union. After being purchased by Nordic Properties in 1995, the property underwent a series of restorations and upgrades, including a recently completed program to overhaul the red brick facade. By some estimates, Yale has poured close to $7 million into 230 Congress St. since taking control in 1999.
Calls to Yale and Trammell Crow officials were not returned by Banker & Tradesman’s press deadline, and others close to the deal were unavailable to say how 230 Congress St. will be positioned to potential investors. The halcyon days for data-center space have long passed, although 230 Congress St. appeared to enjoy that brief bump of activity as much as any local building. A popular target for most of the late 1990s and into 2001, several buildings in the city were acquired and repositioned for telecom use until demand fell precipitously in lockstep with the technology bubble bursting, a collapse that left data-center landlords scrambling to seek new users.
Nearby, for example, the former Jordan Marsh Department Store building at One Summer St. was recast as a combination retail/data-center building by Markley Stearns, a firm that also fell into internal strife, resulting in a lawsuit and further entangling the property for several years. The erstwhile Cathartes Investments bought a North Station building on Portland Street with an eye toward positioning the property as telecom space, but that effort also failed when the sector soured. Yale Properties itself jumped head-first into the data-center trend, also purchasing 451 D St. in Boston’s Seaport District and setting about recasting that asset as a telecom building.
The latter initiative did not fare so well for Yale, which ultimately had to give the massive 500,000-square-foot building back to its lender, a German bank that now is mulling residential and hotel uses for a portion of the structure. Yale also made news recently when it reversed course on a plan to sell the Cross Point office complex in Lowell, instead bringing in another capital source to buy out original partner Blackstone Real Estate Advisors.
Conversion Course?
In any event, Yale has apparently opted to put 230 Congress St. on the block after considering the idea for several months. Trammell Crow already is working on another property purchased several years ago by Yale, that being the North Andover Mills, a multi-building commercial complex just off Interstates 93 and 495. Schneider Automation Inc. occupies part of the North Andover Mills, but sources said a partial conversion to residential space might be a possibility for any investor pursuing that 612,000-square-foot property.
Several Boston commercial buildings are being recast as residential opportunities, but observers could not say whether that option might lure buyers to 230 Congress St., which some claim could potentially work as a hotel given the recent resurgence of interest in the hospitality arena. Current tenants in 230 Congress St. include MCI, PaeTec Communications and Frontier Communications, but it is unclear what the occupancy rate is or whether there are any long-term leases in place that might prevent a change to another use. By some estimates, close to 2 million square feet of office space in Boston is being revamped into condominiums or luxury apartments.
Besides being a possible revenue-generator for Yale Properties, the decision to sell 230 Congress St. is the latest assignment for Trammell Crow’s active investment sales group, which is fresh off the sale of 399 Boylston St. in Boston’s Back Bay and the $18.7 million disposition of the city’s 31 Milk St. on behalf of Paradigm Properties.
One situation that could hasten the sale of 230 Congress St. is Boston’s improving office market. Although several pending corporate consolidations have some concerned that the Hub is still in for additional problems going forward, the Spaulding & Slye Colliers midyear report showed 384,000 square feet of net positive absorption in Boston’s Financial District, and 713,000 square feet of positive absorption for the entire city, bringing the direct vacancy rate down to 12.1 percent. Given that Boston remained popular for investors during the prolonged economic slide, the prospect of a better times ahead seems to be keeping the capital pumps primed, leading to additional assets hitting the market.
Besides 230 Congress St., for example, Trammell Crow came out last week with a pair of suburban buildings to sell, those being 859 Middlesex Turnpike in Billerica and 300 Billerica Road in Chelmsford. The latter building, a 2-story, 111,000-square-foot office building, is being marketed on behalf of the New Boston Fund.
