Infill Cambridge Office/Retail Building Fetching $35M+ from Bentall Kennedy Via CBRE
January 18, 2017 - By Joe Clements
CAMBRIDGE—Barely four months after its companion property next door yielded $46 million from Texas-based L&B Realty Advisors—a figure eclipsing $735 per sf—1100 Massachusetts Ave. is being acquired by investment manager Bentall Kennedy at a consideration also surpassing the $700-per-sf threshold, sources are telling therealreporter.com. The same CBRE/NE Capital Markets team whose exclusive listing fomented early September’s harvesting of 1050 Massachusetts Ave. is also orchestrating the 1100 Massachusetts Ave. exchange for an entity managed by Thomas H. Dupree, whose oversight of both first-class assets date to their construction in the 1970s.
“Imminent” is the term one industry source conveys in defining that timetable for a closing as being before this week’s end, although at press deadline nothing had yet been recorded at Middlesex Registry of Deeds. Sandwiched at the front of a V-shaped intersection where Massachusetts Avenue and Mt. Auburn Street convene a diploma’s throw from Harvard Yard, the building encompasses 50,000 sf on five floors, the lowest featuring prime street-level retail space.
“It is a phenomenal piece of real estate,” one market expert declares of 1100 Massachusetts Ave., praising among other elements a unique design which is the product of renowned architect Hugh Stubbins. While the source is among others insisting the asset will eclipse $700 per sf, it remains unclear whether CBRE/NE’s result will meet what was achieved by 1050 Massachusetts Ave., a six-story, 62,400-sf property which came on line in 1974 and counts among its tenants building architect Cambridge 7 Associates.
As of press deadline, CBRE/NE team members were not responding to inquiries regarding the latest transaction which one observer maintains is being purchased by nationally known Bentall Kennedy on behalf of parent company Sun Life. Bentall Kennedy has been a familiar figure regionally this millennium, having made a series of high-profile investments of top-notch CRE, nearly always in recent years as counsel to the Multi-Employer Property Trust, an open-ended co-mingled equity fund whose participants include numerous investment vehicles.
Members of CBRE/NE’s Capital Markets contingent negotiating the pending transfer include principals David J. Pergola and Brian R. Doherty and Client Services Coordinator Sara Forino plus principal Chuck Kavoogian and First VP Bruce Lusa. When consummated, the sale will become “a nice bookend” to the summertime 1050 Massachusetts Ave. conclusion, remarks one observer of the latter sale which despite its age commanded a price rivaling that one might expect of a downtown Boston office tower.
Many factors contribute to the superior outcomes, those spoken to outline, including efficient layouts and having on-site parking to accommodate tenants commuting via automobile down Route 2 or from Interstate 93 and the Massachusetts Turnpike. Even more contemporary is “remarkable access” to public transportation generated by numerous bus lines running down Massachusetts Avenue connecting Central and Harvard Squares. The buildings are within walking distance to Harvard Square’s Red Line station offering direct connections to commuter rail and Boston’s Financial and Seaport districts.
In its latest survey of transit-oriented laboratory and office space, Encompass Real Estate Strategies reports four million sf of positive net absorption during the prior 12 months for buildings in that category, the highest such level ever recorded and amounting to 74 percent of all absorption registered across metropolitan Boston. The research and consulting firm led by founder Brendan J. Carroll also shows vacancy for transit-oriented properties at 6.9 percent, a YOY drop from 8.0 percent and less than half the total market vacancy of 13.0 percent. The outcome is not isolated, either, with such product enjoying 22 straight quarters of positive absorption where occupancy levels rose 13.2 million sf, more than double the activity for real estate not on rail-based transit lines. “It checks off that box and all the others,” one CRE professional says of 1100 Massachusetts Ave., even meeting the exacting standards of several institutional investors said to have joined the winning bidder in a fast-paced competition for the structure that dates to 1979.
Beyond the broader transit-oriented trends, mid-Cambridge has traditionally been among the urban core’s most stable—albeit smallest—office submarkets, as indicated in another Encompass survey putting the inventory at just 1.2 million sf and showing a vacancy rate of virtually zero, i.e. 0.3 percent.
