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REA
September 21, 2016  

Developer Shops New Boston Seaport Offices

Boston’s newest office building is up for grabs.

The 515,000-square-foot property, at 100 Northern Avenue in the Seaport District, is expected to draw bids of about $515 million, or $1,000/sf, from core investors. At that valuation, a buyer could expect a stabilized capitalization rate of just over 5%.

The developer, a partnership between Boston developer Fallon Co. and the Barings arm of MassMutual, has given the listing to HFF.

The Class-A building, on the Boston Harbor waterfront next to Fan Pier, was completed this summer. Law firm Goodwin Procter is the anchor tenant, occupying some 75% of the space on a 15-year lease.

Comparable space in the Seaport district is at or near full occupancy. Class-A asking rents reached $66.11/sf in the second quarter, up 8% from a year earlier. Leasing demand has been boosted by the relocation of several large tenants into the submarket, including Goodwin. The area has seen substantial development in the last decade, including shops, restaurants and hotels.

The listed property has ground-floor retail space, which the Fallon team is in negotiations to lease up. Fallon’s partner, formerly known as Cornerstone Real Estate, this month was merged with two other MassMutual units to form Charlotte-based Barings.

The 17-story building, with a glass facade, is on track for at least a LEED silver designation. It’s adjacent to the Institute of Contemporary Art and overlooks the Public Green.

The offering comes as foreign and domestic buyers are eager to acquire high-caliber office properties in Boston, where the relatively small size of the market limits the available supply.

Another large listing now in the market is the 825,000-sf trophy complex at 10 St. James Avenue and 75 Arlington Street, in the Back Bay district. It’s expected to trade for around $650 million, which could produce a 4.3% initial annual yield. Newmark Grubb is marketing the property for Liberty Mutual.