MAPFRE Buys Hub Office Gem from DivcoWest for $55M

By Joe Clements
BOSTON—One of downtown’s most esteemed “jewel box” office buildings has proven a valuable bauble for DivcoWest Real Estate in the San Francisco-based firm’s tenure of One Winthrop Sq., a brief stretch dating to its $36 million purchase in Dec. 2013. MAPFRE Commerce Insurance Co., a well-known property and casualty firm which reportedly intends to open an office there, paid an astounding $55.0 million for the ornate 114,000-sf property that dates to 1873, its latest exchange orchestrated by the Capital Markets team founded by Robert E. Griffin Jr., sources are telling therealreporter.com.

Having recently moved to Newmark Grubb Knight Frank, the same Capital Markets group which includes leaders Edward C. Maher Jr. and Matthew E. Pullen was exclusive listing agent at Cushman & Wakefield in 2013 when DivcoWest founder Stuart Shiff won a spirited competition for the well-regarded Class B asset. At the time, the winning bid raised a few eyebrows among some who deemed pricing an aggressive play, but the just-concluded outcome indicates his purchase to be among a series of prescient moves by the investor who has already reaped munificent sums flipping CRE in other emerging areas of metropolitan Boston, including a series of rapid-fire transactions in the Seaport District yielding similarly impressive returns to that achieved a One Winthrop Sq.

DivcoWest recently has turned its attention across the Charles River to East Cambridge, with the firm making a bold statement earlier this year in paying $291 million for the rights to master develop North Point in that community’s Lechmere district, an investment negotiated through JLL that could lead to upwards of five million sf of mixed-use construction. That pact was first unveiled by Real Reporter, but DivcoWest had already made vast bets on the submarket, in early 2014 spending $395 million for One Kendall Sq., an existing mixed-use complex also acquired through the Griffin operation. The Kendall Square submarket has since improved dramatically, with asking rents averaging $80 per sf, according to Cresa Boston, and landlords are now said to be achieving actual deals above $90 per sf.

MAPFRE apparently made its purchase of One Winthrop Sq. on an all-cash basis, and one CRE professional spoken to claims the insurer does intend to establish a presence at the building. The scope of its plans remains uncertain although that source calls the initiative “substantial” and intended to enhance the urban profile of a firm founded in Webster. The acquisition was also regarded a wise purchase for investment purposes, the contact relays, opining that “there is plenty of room” for future rent increases in the Class B arena and for One Winthrop Sq., a building so revered many proclaim it could qualify for first-class designation despite the age and relatively modest profile compared to the sea of modern office towers surrounding the property.

Reflecting its popularity, One Winthrop Sq. is already over 90 percent occupancy, having crested that level this spring in a 12,700-sf lease to technology startup Salsify Inc., a commitment Newmark Grubb Knight Frank Senior VP Jason Cameron negotiated on behalf of DivcoWest while CBRE/NE brokers Jon Freni and Charles Kavoogian counseled the tenant. That would leave approximately 8,000 sf remaining in the structure built the year after Boston’s infamous 19th century fire ravaged downtown. The building that later became part of the Hub’s erstwhile “Newspaper Row” was extensively renovated in 1990 and again in 2008, one year before DivcoWest’s predecessor paid $21 million for the property now worth nearly three times as much based on the latest exchange.

Calls to Griffin to discuss the concluded assignment were not returned by therealreporter.com press deadline, while buyer and seller were also not immediately available for comment. Previously known as The Commerce Group Inc., the wholly owned subsidiary of MAPFRE USA Corp. touts itself as the largest provider of private passenger automobile insurance in the Bay State, its products marketed by more than 600 independent agents. Launched in 1972, Commerce was acquired in June 2008 by MAPFRE SA, a global leader with insurance products available in 43 countries.

Shiff launched DivcoWest in 1993 and has acquired over 30 million sf through that property portal. Its NorthPoint investment would be among New England’s largest land deals ever from a value standpoint and considering the anticipated impact on a thickly settled market clamoring for more laboratory and office space but with limited locations in an urban setting.