Davis Cos. Seen Paying Near $62M to Prologis for 88 Black Falcon Ave.

BOSTON—The Davis Cos. is coming back to Boston’s Seaport—way back, it seems, with CRE sources claiming the hometown investor has tied up 88 Black Falcon Ave. in a deal being orchestrated for seller Prologis through the Robert E. Griffin Jr. brokerage team which is now at Newmark. The 375,000 sf of industrial and office space housed in a low-rise structure on the farthest reaches of Boston’s 1,000-acre waterfront could fetch upwards of $165 per sf, or in the range of $62 million, if industry estimates prove accurate.

“They do have that,” one CRE professional spoken to concurs when apprised of other reports maintaining Davis Cos. has secured the property, its availability part of an ongoing campaign by the seller to purge its entire Massachusetts portfolio in reflection of a broader repositioning program. Presciently for Prologis, the retreat that has already resulted in dozens of other trades over the past two years comes when virtually every other investor across the land is championing regional industrial opportunities, especially those rare properties inside Route 128.

Industrial is even harder to find in the Seaport, an area which is being developed overnight into a multi-billion dollar LWP neighborhood to the aft of 88 Black Falcon Ave. featuring anything but that product. The advance of luxury hotels, laboratory, office, residential and retail construction is halted only by the Marine Industrial Park where 88 Black Falcon Ave. is located and such “higher-and-better-uses” are largely prevented in a bid to preserve the city’s dwindling manufacturing base.

At this juncture, affirmation of a deal regarding the 88 Black Falcon Ave. negotiations is not forthcoming, with inquiries on the pending sale to Davis Cos. CEO Jonathan G. Davis and members of Newmark’s Capital Markets team unanswered as of press deadline, the latter entity led by Robert E. Griffin Jr., Edward C. Maher Jr. and Matthew E. Pullen. Having been at Cushman & Wakefield when the exclusive was awarded, the trade is being handled for that firm which the group departed from a year ago September in favor of rival Newmark.

Despite the silence from involved parties, multiple sources agree a commitment for 88 Black Falcon Ave. is in tow and relay that a closing is anticipated for the coming weeks. The structure is 100 percent leased to 34 tenants, and one observer maintains investors were drawn by the bifurcated use, which is seen as further mitigating any risk and reflected in a capitalization rate pegged in the taut 6.5-percent sphere. “I think they are both attractive,” the source says, pointing out that while industrial might have current cachet and the waterfront inventory offers scant competition, Seaport District office space is among the priciest in New England, as shown in a Transwestern RBJ survey pegging rent growth at a whopping 40 percent this decade, a pace that has moderated but still is up 4.2 percent from Q3 2015. That computes to $52.70 per sf for the asking price while vacancy is down to 9.4 percent on 9.31 million sf after another 980,000 sf in net positive absorption over the prior 12 months.

Besides its unfettered views of Boston Harbor, 88 Black Falcon Ave. was promoted in marketing materials for having clear heights to 16 feet, a wet sprinker fire suppression system and more than two dozen loading docks and drive-in doors. There is also an on-site ATM, full-service cafeteria and plentiful parking, while its presence in a foreign trade zone was also highlighted. Thanks to the nearby Ted Williams Tunnel, Logan International Airport is a quick jaunt under Boston Harbor from 88 Black Falcon Ave., another aspect seen as especially favorable for globe-trotting office tenants. New public transit options connect to LIA and South Station.

For Davis Cos., the pending acquisition marks a return to the Seaport barely a year after harvesting a first-class office building on A Street known as Tower Point, with the firm previously owning and then trading 24 Farnsworth St. in the Seaport’s Fort Point Channel District. Davis Cos. is also in pursuit of a hotel development site in the Seaport, according to published reports. Interestingly, should it hit $62 million, the 88 Black Falcon Ave. purchase would be the same price Davis Cos. yielded in the October 2015 sale of Tower Point to Rockpoint Group, that a $62.1 million consideration. Another similarity? The Griffin Capital Markets team advised the seller and procured the buyer in that instance as well, with Tower Point encompassing 155,000 sf.