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Boston's Commercial Market Picking Up?

Tower’s sale may be a sign office market’s stirring
By Casey Ross, Globe Staff | September 30, 2009

In a sign that Boston’s moribund office market is stirring, a 14-story building on the waterfront drew heated bidding from more than a score of potential buyers before selling to the investment bank Credit Suisse for $106.2 million.

Credit Suisse beat out 21 other bidders for 470 Atlantic Ave., a 330,000-square-foot building on Independence Wharf, an executive involved in the deal said.

The sale breaks months of paralysis in an office market that has been starved of capital for large transactions, as banks and other institutional buyers hesitate to put money out while office rents are falling and property owners are losing large tenants. But the 470 Atlantic Ave. sale suggests there is demand for well-located buildings with solid tenants.

Sandwiched between the InterContinental Boston hotel and the Moakley Bridge over Fort Point Channel, the building is 90 percent leased by several large firms, including the insurance firm William Gallagher Associates and Babson Capital Management, a subsidiary of MassMutual Financial Group.

Robert Griffin, of the Cushman & Wakefield brokerage, handled the sale for the owner, a General Electric Co. subsidiary. He said the building quickly attracted interest after going on the market in June, with more than 40 potential buyers touring the property before about half submitted bids.

“The conventional wisdom right now would say there is not a lot of money out there for assets like this, but we found just the opposite,’’ said Griffin, president of the New England region for Cushman. “This is an indication there is a lot of equity out there to buy property that might be put on the market in the future.’’

Executives at Credit Suisse could not be reached for comment. Built in 1927, 470 Atlantic was renovated in 2001 and 2004, creating 28,000-square-foot floor plates and 9-foot ceilings. The wharf outside the building is known as the site of the Boston Tea Party in 1773.

The building’s sale is the first major transaction since the sale of One Winthrop Square in July. Before that, there had not been a sale of a major building in more than six months.

Boston’s office market has suffered in the economic downturn, with job losses opening chunks of space in office towers. Asking rents for premium space in office towers have dropped about 28 percent in two years, to about $50 per square foot, according to the real estate services firm Jones Lang LaSalle.

The numbers are similar, if not worse, in other major cities, where sales of office building have all but stalled, save for a few transactions due to foreclosures and other distress situations.

In Boston, a lack of construction has kept vacancy rates from increasing even more. During the third quarter, a tower at Two Financial Center became the first new office property to hit the market in five years.

Casey Ross can be reached at cross@globe.com.

© Copyright 2009 The New York Times Company

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