Calls to the Archon Group were not returned by press deadline, and brokers at Jones Lang LaSalle were unavailable for comment. JLL, whose predecessor developed the assets, is marketing the buildings on behalf of New York City-based J.P. Morgan Investment Co., which acquired them in 2001 for $97 million.
Despite the official silence, Archon is said to have emerged victorious over several well-heeled competitors for 125 and 150 CambridgePark Dr. "I know it's them," one Boston investment specialist tells GlobeSt.com. Another says an "extremely reliable" player close to the negotiations had relayed as much. Other industry professionals concur that Archon made a hard charge at the buildings after they hit the sales block, part of an overall strategy to invest in Massachusetts even as the firm harvests certain portions of its portfolio. Just last month, the Texas-based investor sold off four properties in Boston's Fort Point Channel area in two separate transactions totaling more than $90 million.
In the marketing brochure for the Cambridge assets, 125 and 150 CambridgePark Dr. are referred to as a "core-plus opportunity," with benefits including proximity next to the hulking Alewife garage and mass transit center, from which begins the regional Red Line subway line. The road network is at the junction of Routes 2 and 16, two key regional thoroughfares. A luxury residential property was added on CambridgePark Drive earlier this decade, and the office buildings are close to retail and restaurant options.
Given the arrival of ancillary uses since 125 and 150 CambridgePark Dr. helped pioneer the Alewife District in the mid-1980s, JLL opines that buyers of the buildings "are positioned to take advantage of strong class A leasing fundamentals within Cambridge." In other climes, the 73.1% occupancy of the package might be cause for alarm, but improvement of the Massachusetts economy, a lack of new supply, and belief that rents have room for growth is leading many investors to embrace empty office space, experts have reported as a decided trend. Alewife was averaging rental rates of $27.42 at the end of the first quarter, according to JLL research, with net absorption in the opening quarter at just under 15,000 sf. That performance puts the current vacancy rate in Alewife at 11%, while the 16.1 million sf Cambridge market overall is at 7.3% and falling fast.
The older of the two buildings, 125 CambridgePark Dr., was constructed in 1984. The 184,000 sf is 91.2% occupied, compared to 59.9% occupancy at 150 CambridgePark Dr., a 21-year-old property which has 252,000 sf. The buildings are located on a 16.4-acre parcel divided into four sections. Besides parking for nearly 1,100 vehicles, there is also said to be a land piece that could generate more construction. One source pegged the sales price at about $280 per sf, which would equate to $122 million, but it is unclear what value was ascribed to the future land parcel.
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