Just two months after it foreclosed on a historic office building one block from the Boston Public Garden, Starwood Property Trust subsidiary LNR Partners is offering it to buyers as an opportunity for a major redevelopment.

LNR paid $95M for the Park Square Building at 31 St. James Ave. at a foreclosure auction in March after it had been managing the asset as the special servicer. It brought on Eastdil Secured to begin marketing the building for sale this week, Bisnow has learned.

An Eastdil listing obtained by Bisnow calls the 503K SF building an "irreplaceable Back Bay asset with significant redevelopment potential."

"With meaningful scale, full-block frontage and embedded optionality, 31 Saint James offers investors the ability to execute a strategic repositioning or pursue a transformative mixed-use redevelopment within one of the nation's most supply constrained urban markets," the listing says.

The Park Square Building is just 35.8% leased, according to the listing, and its tenants have a weighted average remaining lease term of 3.6 years, making it prime for a full-scale transformation in the near future.

The 11-story building spans the full block on St. James Avenue between Berkeley and Arlington streets, two blocks south of the famous shopping corridor Newbury Street. It was constructed in 1922 and last renovated in 2017.

The property was previously owned by New York-based Capital Properties. The company obtained a $150M CMBS loan tied to the property in October 2017, but it ran into trouble halfway through its 10-year term.

Coworking giant WeWork exited its 119K SF in the building in 2022 as it was cutting costs before ultimately going through bankruptcy. Bay State College vacated its space when it shut down in 2023.

The building's remaining office tenants include the School of Fashion Design, IDA Ireland and the Colombian Consulate, and its retail occupants include Back Bay Eye Care, Temu and restaurant Fire + Ice.

Capital Properties fell behind on its mortgage in October 2024, and the loan was then transferred to special servicer LNR. The landlord gave notice that it wouldn't provide additional equity to fund shortfalls, and the special servicer took control of the property's cash flow, according to servicer commentary in Morningstar Credit's database.

LNR brought the property to an auction in March, and it won that auction with a $95M bid. That was below the value of the loan and the property's previous tax assessment of $119M.

The building is one of many Boston office buildings to face financial distress since the pandemic. The city's central business district recorded the largest price decline of any market in the country over the five years ending in December, according to a January report from MSCI.

Developers have begun to pursue conversions of downtown office properties to residential, aided by a city program that expedites approvals and provides a 75% tax abatement.

The Boston Planning & Development Agency last week approved four office conversions totaling 434 units, bringing the total volume of planned, under-construction or completed conversions to nearly 1,800 units. The largest such project is a 219K SF building approved for conversion in March. If the next owner of the Park Square Building were to pursue a residential conversion, it would be by far the biggest in the city.