ROBERT E. GRIFFIN JR.
Buyer is in place
There is a new new owner in store for Boston’s Ten/10 Post Office Square.
A deal with Lincoln Property Co. and an Illinois state pension fund has gone awry, leading to the selection of Broadway Partners to acquire the 14-story, 440,000-square-foot office building, which is located in the heart of the Hub’s Financial District. New York-based Broadway had been a close second when Lincoln and the pension fund were chosen in November to acquire the asset for a price estimated at around $109 million.
“That’s what is happening,” one Boston investment sales broker said last week, although it was unclear what cratered the earlier pact. Sources could also not say what the new sales price is, but Broadway had reportedly been near Lincoln’s winning bid initially, and one observer maintained it is unlikely the figure would have changed substantially three months later.
Calls to officials at Broadway Partners and Lincoln in its Chicago office were not returned by Banker & Tradesman’s press deadline. Cushman & Wakefield of Massachusetts President Robert E. Griffin Jr. acknowledged on Friday that a new buyer is in place for Ten/10 Post Office Square, although he would only identify them as “an out-of-town investor.” Nonetheless, sources insisted that Broadway now has Ten/10 Post Office Square under a purchase-and-sales agreement. Owner Walton Street Capital has owned the property since 2000 when it paid $105 million. At $109 million, the asset would trade for about $247 per square foot. Griffin would not discuss specifics of the sale, but said he anticipates a closing “within 30 to 60 days.”
Broadway Partners has already purchased one local property through Cushman & Wakefield, with the firm buying Waltham’s Prospect Hill Office Park in December from TA Associates Realty. The firm paid $63 million for that three-building asset, located along Route 128. Founded in 2000, Broadway Partners has purchased 16 assets since then totaling 6.1 million square feet and valued in excess of $1.6 billion. The firm announced in September that it was launching a $250 million private equity fund seeking to acquire upwards of $700 million of real estate. Griffin could not say whether Ten/10 Post Office Square would be purchased for that fund, but Broadway founder Scott Lawlor said in one release that the vehicle would be used to buy “value-added investment opportunities in the office sector in select primary markets nationwide,” a description that seems apt for Ten/10 Post Office Square.
Despite substantial space for lease, Ten/10 Post Office Square was a “hotly contested asset,” Griffin said when Lincoln was first selected, and market conditions have only improved since then, as evidenced by Lincoln Property Cos.’ own year-end data. Boston posted one million square feet of positive net absorption last year, dropping the availability rate from 16 percent to 14.3 percent, according to Lincoln Research Director Emily Schwartz. The firm projects another 1 to 2 percent drop in the availability rate this year, and an increase in average rental rates by another 10 percent after a slight hike in 2005.
Ten/10 Post Office Square was among a handful of properties being marketed by Cushman & Wakefield last year that were pushed into 2006. Even with carryovers such as the Village at Quarry Hills in Quincy, which is expected to close this spring, Griffin and his Capital Markets Group still had their best year ever in selling $2.4 million. The pace was also a record for any Boston investment sales team, the firm noted in a release issued last week, with Cushman & Wakefield also holding the earlier mark after brokering $2.1 million of deals in 2004.
“The appetite for real estate by investors continues to amaze us,” Griffin said, adding that the activity level is already promising another banner campaign in 2006. Already, the company is marketing One Federal St., a 38-story Financial District expected to fetch $500 million. Cushman & Wakefield is also peddling the Technology Square office/laboratory complex in Cambridge on behalf of the Massachusetts Institute of Technology. Along with new addition Elizabeth Carrillo Thomas from CBRE/New England, Cushman & Wakefield’s Capital Markets Group has 17 members, including Griffin and longtime colleagues Edward C. Maher Jr. and Marci Griffith Loeber, plus two junior brokers, eight analysts and support staff. The core team has now been operating for 25 years, having previously worked for Trammell Crow Co.
As for last year’s record effort, Cushman & Wakefield sold 13.1 million square feet of office, industrial and retail space, plus 576 residential units. The average deal size was $67.4 million, and the median deal size was $25.5 million. Leading the charge was the $507 million disposition of 47 assets on behalf of CrossHarbor Capital Partners to the RREEF Funds, followed by two sales that fetched $272 million each, the Bay Colony Corporate Center in Waltham and 99 High St. in Boston, which was also owned by Walton Street Capital along with Westbrook Partners. Retail activity was headlined by the sale of the Assembly Square Mall in Somerville, a prime development opportunity that was purchased for $64 million by a real estate investment trust which plans to create a new retail/residential enclave on the property.
