How to stay warm in Boston during the winter months While La Nina has stalled a typical Boston winter, Bean Town's real estate market has also remained anything but frosty. Boston-based Meredith & Grew*ONCOR International represented Stone & Webster Inc. in the sale of its Summer Street headquarters, while the Boston office of Dallas-based Trammell Crow Co. negotiated the sale of 99 High Street on behalf of Keystone-Centrose Associates.
Stone & Webster sold 245 Summer Street to Boston-based Fidelity Corporate Real Estate LLC for $187 million. Stone & Webster has been the lead tenant in the 14-story, 867,249 sq. ft. building since its construction in 1975. Trammell Crow represented Fidelity in the transaction.
In the Financial District, Keystone-Centrose sold 99 High Street to Boston Capital Institutional Advisors for $168.5 million. The 32-story, 731,204 sq. ft. building was completed in 1971 and renovated between 1992 and 1995.
In suburban Needham, Mass., Boston Properties Inc. has acquired a 14.3-acre, build-to-suit site for $31 million. The site will include three Class-A buildings totaling 381,000 sq. ft., and will be leased to Parametric Technology Corp. (PTC) for 12 years. Represented by Boston-based Spaulding & Slye Colliers, PTC sold the headquarters site to Boston Properties. The acquisition will be funded from Boston Properties' line of credit.
Hines reunited with Houston's 1100 Louisiana office tower National Office Partners LP, a joint venture between Houston-based Hines and the California Public Employees Retirement System (CalPERS), has acquired 1100 Louisiana in downtown Houston from an affiliate of Geneva, Switzerland-based Capital Guidance Corp. The Greenwich Group, New York, arranged the $212 million ($163 per sq. ft.) transaction.
A 55-story office tower, 1100 Louisiana totals 1.3 million sq. ft. and is 97% leased to 110 tenants. The property also includes 36,000 sq. ft. of retail space and a 1,500 space garage.
Hines developed 1100 Louisiana in 1980 and sold the building to Capital Guidance Associates IV in 1985.
Once more, Lend Lease goes on an acquisition binge Atlanta-based Lend Lease Real Estate Investments Inc. continues to gobble up real estate from coast to coast. On behalf of a public pension fund client, Lend Lease has acquired 3 Imperial Promenade Center in Santa Ana, Calif., from Toronto-based Brookfield Properties Inc. for $51.6 million. In New York, Lend Lease acquired 44 Wall Street for an undisclosed amount on behalf of the company's Value Enhancement Fund IV. The company also has acquired Andersen Consulting Tower at Metropolitan Centre and an adjacent parcel in Minneapolis for a reported $90 million.
Located in the Airport Area submarket of Orange County, Calif., 3 Imperial Promenade is an 11-story, 239,000 sq. ft. Class-A building. Built in 1991, the building is 98% leased. Lend Lease has acquired more than $100 million in Orange County office product in the past 18 months, increasing the company's Orange County office portfolio to more than $300 million.
In New York, Lend Lease acquired 44 Wall Street from a joint venture between New York-based CS First Boston and locally based Ascott & Smiles Corp. The 337,000 sq. ft. building was constructed in 1927, and is located across the street from the New York Stock Exchange's planned new location. The building is 65% leased with leases pending for an additional 15% of the building.
In Minneapolis, Lend Lease acquired Andersen Consulting Centre from New York-based Metropolitan Life Insurance Co., which developed the 31-story, 627,324 sq. ft. tower in 1987 in a joint venture with Dallas-based Lincoln Property Co. Cushman & Wakefield represented Met Life. Andersen Consulting Tower is 94% leased.
Chase Manhattan chooses Duke-Weeks for TampaIndianapolis-based Duke-Weeks Realty Corp. has begun construction ona three-building, build-to-suit office complex in Tampa, Fla., for New York-based Chase Manhattan Corp. The Chase campus is located in Duke-Weeks' Highland Oaks business park along Interstate 75. The first building will be completed in December, and the final two buildings are scheduled for completion in January 2001.
The Chase complex will include three, five-story suburban office buildings totaling 150,000 sq. ft. each, plus garage and surface parking for 1,830 cars. After completing the Chase development, Duke-Weeks will own an additional 40 acres in Highland Oaks, including three sites that can support up to 400,000 sq. ft. of future office buildings and one site that will likely be sold for hotel development. o
Mack-Cali expands Keystone Mercy lease Cranford, N.J.-based Mack-Cali Realty Corp. has signed Keystone Mercy Health Plan to a 15-year, 303,149 sq. ft. lease at Mack-Cali's Airport Business Center in Lester, Pa. The lease expands Keystone Mercy's current 119,500 sq. ft. headquarters lease at Airport Business Center.
Keystone Mercy will fully occupy 100 and 200 Stevens Drive in Airport Business Center, a three-building, 371,000 sq. ft. Class-A complex adjacent to the Philadelphia International Airport.
Grubb & Ellis manages Aetna facilities
Northbrook, Ill.-based Grubb & Ellis Management Services Inc. has been selected by Hartford, Conn.-based Aetna Inc. to be the facilities management provider for Aetna's 15 corporate facilities in Connecticut, Pennsylvania and New Jersey totaling 4.5 million sq. ft. Grubb & Ellis now manages approximately 140 million sq. ft. of commercial property.
Praedium spending spree: nearly $100M on two properties
The Praedium Group, New York, has acquired a seven-property portfolio in New Jersey, and, in a joint venture with Chicago-based Golub & Co., an office building in Evanston, Ill. In northern and central New Jersey, The Praedium Group acquired the 551,000 sq. ft. portfolio from Bloomington, Ill.-based State Farm Insurance Cos. for $57 million. The Capital Advisors Group of New York-based Insignia/ESG arranged the sale on behalf of State Farm.
The portfolio includes six office properties and one industrial facility, and follows Praedium's Garden State expansion strategy. An affiliate of Credit Suisse First Boston, Praedium is developing a 76,000 sq. ft., three-story office property in its 420,000 sq. ft. Forestal Village in Princeton, N.J. Praedium also owns 45 Eisenhower Drive in Paramus, N.J., and the Grant Center Building in Fort Lee, N.J.
In Evanston, Ill., Praedium and Golub & Co. acquired 1603 Orrington Ave. for $36 million. A venture between Chicago-based John Buck Co. and a unit of Atlanta-based Lend Lease Real Estate Investments sold the building. The 20-story, 309,000 sq. ft. Class-A building recently underwent a full renovation.
Kilroy prepares to expand in high-tech corridor
Los Angeles-based Kilroy Realty Corp. has acquired 19 acres adjacent to San Diego's Carmel Mountain Technology Center from Cleveland-based TRW. The $12.6 million transaction was closed in eight days and enables Kilroy to expand the development with 348,000 sq. ft. of new Class-A office space. Los Angeles-based CB Richard Ellis represented both TRW and Kilroy in the transaction.
According to Steve Scott, senior vice president of Kilroy Realty Corp., the company plans to build eight buildings at Carmel Mountain Technology Center to serve growing high-tech and e-commerce companies' needs for corporate headquarters and R&D space. Six buildings on the TRW site will range in size from 37,000 sq. ft. to 75,000 sq. ft. With development in three phases, construction begins in April, with completion expected in February 2003. Kilroy currently is developing two buildings totaling 103,000 sq. ft. on its existing site.
Don't blink - you might miss something in New York
With the volume of real estate transactions in New York, it can be difficult to figure out where to start. Why not start with the biggest? New York-based Colliers ABR Inc. represented Max Capital Management Corp. in the purchase of 1440 Broadway for $152 million. New York-based Max Capital acquired 1440 Broadway from New York-based Investment Property Associates, which is headed by Irving Schneider. Investment Property Associates had owned the building since 1964. The building contains more than 770,000 sq. ft. of rentable space, with more than 500,000 sq. ft. currently vacant.
According to Craig Panzirer, managing director of Colliers ABR, Max Capital plans a major renovation and repositioning of the property, which overlooks the Times Square district. Within a few weeks of the acquisition, Colliers ABR brokered a 170,000 sq. ft. lease at 1440 Broadway on behalf of Max Capital. Represented by Insignia/ESG in the deal, About.com has taken the 17th through 21st floors in the building, which will serve as About.com's headquarters. About.com is moving from 22 East 42nd Street where the company leased 35,000 sq. ft. Colliers ABR currently has leases pending for another 265,000 sq. ft. of space at 1440 Broadway.
Investment Property Associates, in partnership with two other families, also has sold the Marbridge Building at 1328 Broadway to New York-based RFR Holding LLC for approximately $90 million. One of the families in the partnership, the Goelets, will remain in the new venture. RFR Realty LLC will manage the building.
RFR plans to reposition 1328 Broadway by creating additional upscale retail space and upgrading the office space for full-floor tenants. Of the building's 365,000 sq. ft., 140,000 sq. ft. will be retail. RFR is in the final stages of negotiating a 70,000 sq. ft. lease to an upscale European designer, but the company has equally large plans for the building's office space.
RFR can offer up to 200,000 sq. ft. of contiguous space in the Midtown South submarket, or offer full-floor leases of 27,000 sq. ft., according to company principal Aby Rosen.
RFR also has acquired 757 Third Avenue from New York-based Apollo/Emmes for $102 million. Insignia/ESG Capital Advisors Group arranged the sale of the 27-story, 460,000 sq. ft. Class-A building on the southwest side of 47th Street and Third Avenue.
A few blocks away, Melville, N.Y.-based Reckson Associates Realty Corp. acquired 1350 Avenue of the Americas from a Minskoff family partnership for $126 million, or $234 per sq. ft. New York-based Morgan Stanley reportedly has agreed to provide a $70 million loan for the acquisition of the 35-story, 540,000 sq. ft. Class-A building, which is 88% occupied. A long-time player in the New York suburbs, Reckson now owns more than 3.5 million sq. ft. of Class-A space in New York City.
With current rents in place that are 40% below the $53 per sq. ft. average asking price, Reckson expects to generate an initial net operating income (NOI) yield of 9.5%. With the rollover of existing leases and leasing of vacant space, Reckson hopes to generate NOI growth in excess of 11% through 2007. Over the same period, Reckson hopes to increase cash NOI yields from 7.5% to 14.5%.
In the Chelsea submarket, the Manhattan office of Dallas-based Holliday Fenoglio Fowler LP, working in co-with New York-based Pembroke Realty, has arranged $77 million in refinancing for the Chelsea Market. The three-year, adjustable rate financing was arranged on behalf of affiliates of Angelo Gordon & Co., Belvedere Capital, Scoggin Capital and the family of developer Irwin Cohen - all of New York - through New York-based Deutsche Bank Securities Inc. During the past year, the Manhattan office of Holiday Fenoglio Fowler has secured more than $350 million in mortgage financing in the Chelsea area.
The Chelsea Market is a 775,000 sq. ft. mixed-use complex, which is 80% office space.
Atlanta: Will the Phoenix continue to rise? Over the past few years, Atlanta's office market - and industrial and most everything else - has raised fears of overbuilding, especially in some suburban submarkets. And let's not even get into NREI's hometown traffic and sprawl woes.
Grubb & Ellis' 2000 Real Estate Forecast breakfast at Atlanta's Ritz-Carlton Buckhead delved into the issues that will shape Atlanta's commercial real estate markets this year and into the first few decades of the new century. Lead by local industry veteran and new executive vice president and managing director Rick Lackey Jr., the Atlanta office of Northbrook, Ill.-based Grubb & Ellis expects to radically raise its profile in Atlanta and the rest of the Southeast this year and in years to come.
Grubb & Ellis senior vice president and high-tech group chief Jim Simpson - a 25-year vet in the Atlanta commercial real estate arena - predicts at least a 20-year technological revolution that will spread across Atlanta, which is already home to MindSpring, BellSouth and iXL. Simpson expects Atlanta to emerge as a high-tech leader on the national and international stage.
Simpson also points to Atlanta's Central Perimeter and North Fulton submarkets as high-tech hot points, with Cherokee County to the north also a potential bright spot for high-tech relocations and expansions. Of course, we'd be remiss not to mention BellSouth's plans to develop about 3 million sq. ft. of office space around MARTA transit stations and MindSpring's and iXL's recent CBD leases of 264,000 sq. ft. and 360,000 sq. ft., respectively.
"Atlanta is a sleeping giant with the high-tech companies that are here or coming here," says Simpson. "The speed at which these dot-com companies are coming to Atlanta has created a need for short-term office space."
Grubb & Ellis predicts completions and absorption will continue to decline in the metro Atlanta area with more than 4 million sq. ft. completed and slightly less than 4 million sq. ft. absorbed this year. Grubb & Ellis expects this trend to continue in 2001. Analysts predict that one or two high-rise office buildings are expected to break ground in the Downtown submarket, while Midtown will have three or four begin construction - but not all that have been announced.
The vacancy rate forecast calls for CBD rates to continue to fall to near 10% in 2001, after hovering around 20% only a few years ago. The suburban vacancy rate is expected to surpass that of the CBD and hit 12% by 2001, according to Grubb & Ellis' forecast. North Fulton is expected to remain the leading suburban submarket.
The number of high-growth companies in the Atlanta area should lead to a vibrant sublease market and great opportunities for companies that specialize in providing short-term office space. But with construction continuing to outpace absorption, rent increases are expected to be incremental at best, says Phillip Barry, senior vice president of the investment services group in Grubb & Ellis' Atlanta office.
"Even with Atlanta's job growth, as long as these trends continue, it will be more difficult for rents to rise faster than the rate of inflation," says Barry.
On the investment side, Grubb & Ellis expects properties to continue to trade before officially entering the marketplace, with sellers offering product to a select group of potential purchasers. Still, excessive price inflation is not anticipated for Atlanta, as investors are expected to keep a realistic view of the market and maintain a sense of balance and stability.