Another downtown Boston office building has sold as the market freeze begins to thaw, but the price represented a steep discount.
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Kendall Capital, through the entity 33 West LLC, acquired an eight-story, 38K SF Class-B office building at 33-41 West St. for $4.1M from Dedham-based Bay Management Corp., according to public records. The deal was a 74% discount from the $16M price that Bay Management paid for the property in 2016, Banker & Tradesman first reported Monday.
Mai Luo, president at Kendall Capital, told Bisnow Tuesday that the property had been listed on the auction site Ten-X. Luo said that although the price was lower than expected, it might be the reality of the market as more deals begin to happen.
“It’s reasonable because if we look back and say, ‘Oh, my gosh, it’s 75% off,’ people often forget the value goes up and down, and maybe this is the new normal,” Luo said.
The office building is 50% occupied by tenants including Escape the Room Boston, Musicians Playground and MassVOTE. Bay Management bought the property in 2016 for $16M, more than double the $7.2M price the prior owner paid in 2008.
Comparable sale prices have been hard to come by in the market over the last year, as rising interest rates and uncertainty about the office sector have frozen the capital markets. JLL said in late August that it brokered the first downtown Boston office sale since early 2022.
That sale, Azora Exan's acquisition of 7 Post Office Square from Nuveen Real Estate for $41M, represented a 7% increase from Nuveen's 2016 acquisition price. But another deal to close last month, Synergy Investments' $45M acquisition of One Liberty Square near Faneuil Hall from Clarion Partners, represented a 17% discount from the 2013 sale price.
Luo said that though the market is unpredictable, Kendall Capital is looking for other opportunities in Greater Boston's office market.
“Although it is challenging right now and probably for years, I’m optimistic about the long-term future,” Luo said.
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