ALP, Northwood to Buy Prospect Hill

WALTHAM—Anchor Line Partners seems to be a big believer in the office market here, or so it would appear given reports the homegrown CRE investment group led by Brian Chaisson and Andrew Maher has tied up Prospect Hill Office Park along with Northwood Investors in a deal expected to crest $102 million. The three buildings on Fifth Avenue are being marketed for sale by JLL on behalf of Divco West Real Estate, owner of the 480,000-sf asset since 2007.

ALP and Northwood already have a major venture underway in Waltham, this summer paying $39.5 million for a vacant 327,000-sf US Postal Service distribution facility into which the groups are pursuing a speculative multi-tenanted strategy to court laboratory users. The proposal at 200 Smith St. is touted as the first suburban speculative project launched in the area since the 2008 recession roiled New England’s economy, a slump even reaching into traditional core areas such as Route 128 Central. West Coast-based DivcoWest purchased Prospect Hill Office Park in summer 2007 as part of a $650 million fund that also that year secured 210 Littleon Rd. in Westford and 100 Crosby Drive in Bedford for a combined $70 million.

DivcoWest has since turned its attention fo Boston and Cambridge, going through JLL this summer to make the historic $291 million acquisition of NorthPont in the city’s Lechmere section, a deal also brokered by JLL. Meanwhile, the fortunes of nearly all Route 128 communities have been boosted over the past 36 months, and to no one’s great surprise, the most popular locations such as Burlington, Waltham and Wellesley are especially robust, with rents for top space attaining record levels as the recovery cements itself into place.

JLL statistics show an astounding 14.7 percent rent growth YOY in the Route 128 Central submarket through Q3, increasing to the current $33.45-per-sf average after the submarket of 20.6 million sf posted 461,325 sf in positive net absorption during the opening nine months to push the vacancy rate down to 7.9 percent. That figure was 10.9 percent in Q3 2013 when the asking rent was $28.22 per sf. Average Class A rates in that period are up to $37.25 per sf versus $32.14 per sf in Q3 2013.

Prospect Hill Office Park had its share of struggles during the downturn, losing key tenants in the economic carnage, but observers familiar with the properties say DivcoWest has made substantial upgrades during its tenure to both the interior and exterior spaces at 100, 200 (pictured) and 300 Fifth Ave., buildings constructed between 1978 and 1982 that the current owner acquired from Broadway Real Estate Partners along with 140 Fifth Ave. Those improvements, coupled with impressive fundamentals and an infusion of modern amenities including retail and restaurants in the immediate area along with a new exit ramp off Route 128 provide reasons for optimism at the park going forward, suburban experts spoken to convey. “I think (Anchor Line) is going to do very well there,” says one CRE professional familiar with the buildings and DivcoWest’s stewardship. “Waltham is on fire right now.” Suburban options are being mulled for life sciences companies due to escalating rents in Boston’s Back Bay, downtown and Seaport Districts plus Kendall Square where $100-per-sf rents seem imminent after seeing landlords crest $90 per sf in recent activity.

As of press deadlne, JLL and Anchor Line had not returned phone calls regarding the pending Waltham purchase. JLL’s Capital Markets team is led by Christopher Angelone and Frank F. Petz, with team members including Managing Director Jessica C. Hughes and Vice Presidents Robert Borden and Matthew Sherry.

As to its abilities, ALP proved at the outset of its company formation two years ago it has the ability to take on such an ambitious project, with its inaugural purchase being over twice the size of Prospect Hill Office Park, i.e. Lowell’s Cross Point Towers where they shelled out $100 million for an asset, ironically, sold by DivcoWest. Cross Point and the Interstate 495 North submarket also went through turbulent times in the recession, but ALP’s efforts to recast the 1.3-million-sf complex into a facility chock full of urban-style amenities has been roundly praised by CRE professionals and well-received in the tenant community with several notable commitments already made in that landmark property which has CBRE/NE as its exclusive leasing agent. As to the speculative Waltham venture at 200 Smith St., the developers have met with community members and public officials several times on their vision to service the life sciences industry with laboratory space that is surprisingly scant outside of Cambridge.

Real Reporter was first to unveil the partnership’s first Waltham venture in early July. Northwood has offices in Chicago and New York City, having been founded by former Blackstone Real Estate Partners official John Z. Kukral. CBRE/NE was broker on that transaction, although former Capital Markets leaders Angelone and colleague William Moylan have since joined the JLL contingent. Community meetings onsite have centered around traffic issues and noise concerns, with the developers proposing mitigation measures to mute any impact from reviving the property that is located on 36 acres near the juncture of Route 128 and Trapelo Rd. and has been largely vacant for the past three years minus a small piece of about 10,000 sf the postal service retain