The Deal Sheet
The latest office market numbers may remind some of a hot 2007, but there’s a whole new profile of who’s leasing space downtown and where they’re settling, Colliers partner Kristin Blount tells us. (So don't try to fit in your 2007 pants... trust us.)
Financial, accounting, and law firms once clustered together in the CBD, but in 2013 PwC took a 300k SF build-to-suit in the Seaport where its neighbors will be Vertex, Data Xu, and Logmein. Today’s downtown tenants are more diverse, repping the life science, tech, and creative sectors. (It makes happy hour a lot more interesting.) In the past, there were rapid market peaks and troughs. Now, the upswing has been gradual and based on strong fundamentals like the rise of the new urbanism, she says.
Some neighborhoods are on course for a renaissance, she tells us. North Station, where several projects are in construction or have been recently completed, hit a tipping point last month when Boston Properties won a city tax break that will advance its $1B mixed-use complex at the TD Garden. The investors and tenants represented by the Colliers Boston team—John Hines, Roger Breslin, Tim Lahey, Jeff Gates, Rob Daley, Lauren Vecchione, Ron Perry (Colliers Boston prez), Larry Epstein, Mike McElaney, and Matt Perry—are already showing interest in leasing there. This year, and in the next few years, she expects positive net absorption without a lot of those “crazy peaks and troughs.”
Rents in Class-A towers are almost exactly where they were at the end of ’07: from about $40/SF to $80/SF, she says. Q4 ’13 was the 11th-consecutive quarter of positive absorption in the Boston market, with about 1.4 M SF of office space leased during the year, according to firm research. The Boston vacancy rate, 11.9%, is down from 13.0% a year earlier. In Class-A Back Bay towers, the vacancy rate above the 20th floor is 2.9% and below the 20th floor is 5.5%, mirroring almost exactly their performance six years ago.
ASB Real Estate Investments, a Maryland-based real estate investment management firm, paid $90.1M for four Back Bay retail properties totaling approximately 51k SF: 801 Boylston St, 333-335 Newbury St, 342 Newbury St, and 352 Newbury St. The seller, Frazer Boylston Holdings, an entity formed by Irish investor Paul O’Sullivan and local partner, John Driscoll, bought the buildings over the last three years for $49.3 M.
The Sanders Trust of Birmingham, Ala. and capital partner Harrison Street Real Estate Capital of Chicago have bought New England Rehabilitation Hospital in Woburn and Braintree Rehabilitation Hospital from Senior Housing Properties Trust in Newton for $90M. The deal includes a new 15-year lease agreement with Reliant Hospital Partners of Richardson, Texas. Braintree Rehab has 166 licensed beds and New England Rehab, 198 beds. Together, they account for 5,000 annual discharges.
On New Year’s Eve, Related Beal announced that its Related Real Estate Recovery Fund closed on the $87.2M purchase of The Block from Fidelity Investments, a five-building, 343k SF portfolio on Congress that includes: 82 Devonshire St/35 Congress St, 68 Devonshire St, 19 Congress St, 15 Congress St, and 54 Devonshire St. Related Beal EVP Stephen Faber says some space will be offices, some retail for delivery in late 2015 or early 2016, and some TBD. Repping Fidelity was CBRE’s Chris Angelone, Andy Hoar, and Carlos Febres-Mazzei.
How’s this for a hot multifamily market: In a small but telling deal, Plumosa‘s Paula Turnbull and Reenie McCarthy paid $1.5M over asking price—$8.3M—for a 14-unit complex near Harvard Square in Cambridge. The buildings at 382-392 Harvard St and 15 Remington St, assessed at $2.7M, sold in less than three weeks. Hammond Real Estate’s Laura Paulmbo Hanson repped the seller, and Ross Duncan-Brown repped the buyer.
Linear Retail paid $3.1M for its sixth retail property in Nashua at 304 Daniel Webster Hwy. Spectra Realty’s Rick Rostoff repped Linear Retail in the purchase of the 5,700 SF freestanding, single-tenant restaurant property occupied by Uno Chicago Grill near the entrance to Pheasant Lane Mall.
CONSTRUCTION & DEVELOPMENT
The Boston Archdiocese recently broke ground on the $36.7M redevelopment of the former St. Kevin’s Parish in Dorchester into 80 units of affordable housing. The project in Dorchester's Upham’s Corner—being developed by the Archdiocese Planning Office for Urban Affairs, St. Mary’s Center for Women and Children ,and Holy Family Parish—is slated for completion in July ‘15. The 102k SF development will include three buildings: two new ones at 35 Bird St and 530 Columbia Rd, and one renovated building at 516 Columbia Rd.
The Massachusetts National Guard completed construction of its $20.7M, 172k SF Joint Force Headquarters at Hanscom Air Force Base in Bedford. It features classrooms, an outdoor amphitheater for lectures and emergency operations, and is designed to resist earthquakes. The project team included Nauset Construction and architect Kleinfelder.
Historic Boston Inc’s sustainable redevelopment of The Eustis Street Fire House in Roxbury—one of the oldest remaining fire stations in the US—and the Hayden Building downtown, the last surviving H.H. Richardson commercial building, have won Silver and Platinum LEED designations respectively from the US Green Building Council.
LeMaitre Vascular has signed a lease for nearly 16k SF down the street from its current office in Burlington. In about 18 months, it plans to move to 41 Second Ave from 63 Second Ave. The company, which makes treatments for peripheral vascular disease, last summer acquired Lexington-based InaVein.
Medical Healthcare Solutions leased 9,700 SF at 300 Brickstone Square in Andover, which is a 282k SF, 10-story, Class-A office building. Repping the medical services firm that expects to occupy the new space in Q2 was Cresa Boston’s Matt Quinlan and Joe Doyle.
North East Sports Consultants, a sports-media content provider for Internet and television, leased 8,300 SF at 92 Montvale Ave in Woburn, a 4,300 SF expansion. Landlord Cummings Properties built-out and manages the space.
The developer of One Greenway—an affiliate of New Boston Fund, Urban Strategy America Fund, and the Asian Community Development Corporation—secured a $104M construction loan through PNC Bank, People’s United Bank, and Boston Private Bank & Trust, as well as a $10.7M equity investment from National Real Estate Advisors. All of the financing was arranged by HFF managing director Riaz Cassum and director Porter Terry.