Beacon-led venture to pay $850m for Boston office property
A venture of Beacon Capital Partners and Allianz has agreed to pay $850 million for 53 State Street in Boston, according to The Real Reporter.
UBS Realty Investors is the seller of the 40-story, 1.3 million-square-foot office building.
The acquisition follows other recent high-price Boston office purchases. CommonWealth Partners acquired the Pier 4 office building in Boston’s seaport district from developer Tishman Speyer for $450 million. And TH Real Estate, an affiliate of Nuveen, the investment management arm of TIAA, sold a 49.9 percent ownership interest in a mixed-use office and retail property located at 501 Boylston Street in Boston to Norges Bank Real Estate Management, which manages the unlisted real estate assets of the Norwegian Government Pension Fund Global.
Boston’s 979,000 square feet (sf) of office space absorption in the first half of 2018 was the highest it has been in Cushman & Wakefield’s tracked history — higher than midyear 2000 and higher than midyear 2007, according to the firm’s second quarter report.
This is predominantly due to Wayfair’s 400,000-square-foot expansion in Back Bay and the delivery of 121 Seaport Boulevard and 140 Northern Avenue in the Seaport — both of which were fully occupied (by Boston Consulting Group, Cengage, Alexion and PTC) upon delivery.
The movement of such large tenants means that conditions in Boston are tightening drastically. Tenants over 100,000 square feet with looming lease expiration dates may experience diminished leverage when negotiating a renewal. And those that are new to the market should be aware of this acceleration and have a solid second choice in mind. There is now a significant likelihood that a tenant’s first-choice space could be leased out from under them during the negotiation process.
Cushman & Wakefield notes economists may be watching for a slowdown, but in greater Boston, the commercial real estate market couldn’t be hotter, and the firm expects this to continue at least through the end of the year.
