Buying Burlington’s 77 South Bedford St. might not have been an original idea, but it was the right one for Equity Office Properties, Vice President Joe Gorin said after the real estate investment trust acquired the 5-story building for $23.5 million less than a month after the same asset was purchased by Parsons Commercial Group.

“They got it for a great price, and so did we,” said Gorin, whose firm completed the second of two rapid-fire sales of the property last week, both of which were conducted off-market. In the initial pact, Parsons paid $18.3 million for 77 South Bedford St. to Aramantil Inc.

While not unprecedented, the quick flip appeared to catch industry observers off guard. “That’s amazing,” commented one suburban broker last week after learning of the latest transaction, which closed on Wednesday.

The broker deemed the initial sale to Framingham-based Parsons an impressive outcome for the buyer at a rate of $130 per square foot, a notion underscored by EOP’s willingness to snag the property at the higher rate in such an expeditious manner. Even $5 million above the Parsons price, the figure still equates to an economical $163 per square foot for the 144,000-square-foot structure, a level Gorin gauged at perhaps as much as 40 percent below replacement cost. “We’re very excited,” said Gorin. “There’s definite upside, and we hope to take advantage of that.”

In many respects, the acquisition makes even more sense for Equity than its predecessor, said Gorin, in that the firm already has two substantial office holdings in the immediate area, owning the sprawling New England Executive Park and last year buying 25 Mall Road, a 277,000-square-foot Class A building purchased for $55 million. The critical mass enhanced by 77 South Bedford St. will allow the REIT to accommodate large tenants north of Boston, he said, a concept backed up by Equity Senior Vice President Maryann Gilligan Suydam, who explained that some tenants might be able to relocate into more appropriate space for their needs while the landlord is freeing up expansion options for other companies.

Equity “is about leveraging scale, and the flexibility of having more than one asset in an area plays well for us,” said Suydam. “From our perspective, it makes a lot more sense when there’s a synergy to [the portfolio] that we can take advantage of.” Suydam said 77 South Bedford St. complements the other space owned by Equity in Burlington, calling it a “terrific, sophisticated building” that features a solid location right off Route 128 and various on-site amenities.

The latest purchase was forged by a happenstance opportunity which Equity “got wind of,” said Gorin, but he concurred the Chicago-based operation is actively pursuing other real estate investments in Massachusetts in more traditional routes such as open-faced bidding competitions. The highly charged capital chasing commercial real estate has made it difficult to land reasonably priced deals in that environment, he said, even as interest rates continue to rise and leveraged buyers get pushed to the curb. Even with such challenges, the REIT is “absolutely out there scouring the market,” Gorin said, having looked at several offerings locally that he declined to identify. The REIT’s focus remains in urban districts, but Gorin said suburban Boston is also a target of interest.

‘In Full Gear’
Having been “trashed” by the recession which at one point enveloped all of New England, the Burlington market has recovered impressively in recent months, according to Suydam, whose firm also owns office properties in Newton and Wellesley and controls 13 million square feet of space overall in Massachusetts. “Burlington’s recovery is in full gear,” said Suydam, crediting a lack of new construction for keeping supply in check long enough for demand to return.

Rents are up 10 percent to 20 percent at the multi-building NEEP this year, Suydam estimated, while the firm is expected to seek rates in the mid-$20 per-square-foot range at 77 South Bedford St., also known as 2 Burlington Business Center. Although Richards Barry Joyce & Partners puts the overall vacancy rate in the Route 128 North office submarket at a flaccid 26.0 percent in its first quarter 2006 survey, the inventory of Class A space is far tighter than that, said Suydam, putting such product in the 10 percent range. While perhaps not as high-end as its 25 Mall Road asset, 77 South Bedford St. is nonetheless considered a prime suburban address, said Suydam. The structure was built in 1985 by Cabot, Cabot & Forbes just as Burlington was emerging as a viable office destination. The Route 128 North office submarket now has 24 million square feet by RBJ’s estimate.

Offering a parking ratio exceeding 3.5 vehicles per 1,000 square feet leased on the 6.5-acre parcel, 77 South Bedford St. features such tenants as Concentra Integrated Services, which took more than 55,000 square feet there two years ago, as well as Navigant Consulting and defense giant Lockheed Martin. At the time of the purchase by Equity, 77 South Bedford St. was 73 percent occupied, and Suydam said Equity is already pursuing potential prospects to fill that vacancy, an endeavor she predicted will be fulfilled. Not only has the submarket traditionally performed well, Suydam noted that the Burlington community offers more amenities than that available in past office market recoveries, sporting enhanced retail and residential options to complement a skilled workforce demanded by local firms.

Gorin would not detail exactly how Equity became aware of 77 South Bedford St., but Matt Daniels of Spaulding & Slye was listed as buyer’s broker for the agreement. Efforts to contact Daniels and Parsons principal John R. Parsons Jr. were unsuccessful by press deadline.

The initial sale from Arantamil was handled by Parsons Executive Vice President Christopher S. Devaux. Parsons is a diverse real estate services company offering development expertise as well as property management and advisory services. The company controls a large swath of office, flex and industrial product concentrated in the MetroWest. Among the properties owned by the firm are 161 Worcester Road in Framingham, 25 Birch St. in Milford and 10 Commerce Way in Woburn.