With the passing of Labor Day summer unofficially may be over, but Greater Boston’s commercial investment market is showing no signs of cooling down, with several major transactions in the works. Headlining the latest activity is the sale of Acorn Park in Cambridge, a 41-acre office development said to be under agreement to the Bulfinch Cos.
“They’ve definitely got it,” one source familiar with the deal said of the Needham-based real estate company. “There’s no question about it.”
Calls to Bulfinch were not returned by Banker & Tradesman’s press deadline, but the source estimated the selling price to be in the $65 million range. The park features 400,000 square feet of space in seven buildings.
A similar-sized transaction is occurring in downtown Boston, where TMW Realty Advisors has tied up 40 Broad St. The 267,000-square-foot building reportedly attracted an unusually high number of bidders, with one source estimating that at least 20 entities made offers for the 11-story structure. The property is also reportedly being sold for about $65 million.
Calls to TMW and the building’s current owners, Leggat McCall Properties, were not returned, but several sources insisted that the Atlanta-based investment advisor is buying 40 Broad St. on behalf of German investors. “I’d say that’s a pretty good guess,” said one industry source. “That would be accurate.”
Officials at Trammell Crow, which is marketing the property, declined comment on the matter, but principal Robert E. Griffin Jr. acknowledged there has been strong interest in the 77-year-old property. It is indicative, he said, of the positive view of Boston among investors, one fueled by the city’s skyrocketing rental rates and plummeting vacancies.
“The Central Business District is as hot as it has ever been,” said Griffin. “There’s a lot of stuff on the market, and the good product is getting snapped up very quickly.”
‘Active’ Market
Although Griffin cautioned that deals are taking longer to work their way to the finish line, with investors more nervous as prices near replacement cost, he said the city’s position as one of the top three office rental markets in the country has kept a steady stream of buyers lining up for deals. Now that the summer is over, Griffin predicted the investment market will kick into high gear for the remainder of the year.
“It’s going to be very active,” Griffin said. “Everybody wants to get into Boston.”
As for 40 Broad St., industry observers said they believe the building attracted significant interest due to a combination of a prime location in the city’s Financial District as well as the prospect of several below-market leases rolling over. Leggat has been making improvements to the property, but sources said further stabilization may be required of the new owner.
“That’s a value-added play for sure,” said one Boston broker. Although that is not what most overseas buyers have traditionally pursued in buying United States real estate, the broker maintained that TMW is more willing than others to make such an investment.
Representing large German institutions such as insurance companies and private banks, TMW has been somewhat insulated from the difficulties encountered this year by other German investors, with the plunge of the euro sending those who raise monies through syndicators to the sidelines. The firm has been an active buyer in Boston since the mid-1990s.
Among other assets, TMW paid $29.9 million last year for 745 Boylston St. in the city’s Back Bay. Along with that eight-story office/retail building, the firm also owns such properties as 18 Newbury St. and 181 Newbury St. The latter property, according to one source, is itself being placed on the market for sale.
Although 40 Broad St. is seen as having good upside for TMW, the Acorn Park deal is perhaps a bit more cloudy. Most of the seven-building park is occupied by Arthur D. Little Corp., which recently signed a long-term lease with O’Neill Properties. That followed a strange series of events, in which ADL initially committed to relocate to O’Neill’s Arsenal on the Charles project in Watertown. O’Neill subsequently bought what is now known as Acorn Park from ADL, but a mid-stream change in management prompted ADL to stay at its longtime home.
The source following the Bulfinch deal said it was not surprising to see the park go under agreement, noting that Cambridge has seen some of the quickest commercial sales ever this year. Capital Properties paid $68 million for 215 First St. barely a week after that 300,000-square-foot building was placed on the market, while Hines Interests and a California teachers pension fund have supposedly put the Riverfront Office Park near Kendall Square under agreement as well. The buyers also moved quickly to secure that deal, with Blackstone Real Estate Advisors only recently offering that two-building, 665,000-square-foot complex to investors. It is said to be selling for nearly $215 million.
