(Read more on the industrial market.)

CAMBRIDGE, MA-A 375,000-sf office/lab complex and adjacent development site are reportedly being acquired by Alexandria Real Estate Equities, industry sources have told GlobeSt.com. The transaction could exceed $145 million, which would far surpass industry forecasts made when brokers Cushman & Wakefield launched the marketing campaign in late spring. The price would also be more than double the $68 million paid in 2000 by the current owners, a partnership of Capital Properties LLC and Lehman Brothers.

"That's good info," offers one source responding to rumors that 215 First St. has found a taker in the Pasadena, CA-based REIT. "I think they have committed to it," concurs another. Constructed for industrial purposes in the late 19th century, 215 First St. was reborn as an office destination during the 1980s. The East Cambridge market has since emerged as one of the world's Meccas for life sciences, and 215 First St. is favored for its location near Lechmere Square and the Charles River.

"We are actively in negotiations," was all C&W New England president Robert Griffin Jr. would say when contacted by GlobeSt.com, although he did acknowledge substantial interest for the property. The chief of C&W's Capital Markets Group would not identify the lead prospect, and would neither confirm nor deny reports of Alexandria being the front-runner. Efforts to contact Capital founder Richard Cohen and Alexandria officials by press deadline were unsuccessful, but a filing of state documents late last week indicates Alexandria is poising to acquire another property in Massachusetts, a region where the REIT already has substantial holdings. Alexandria is active in Cambridge, last year paying nearly $100 million for one nearby complex and also doling out $675 million for the Technology Square office/lab complex.

In certain respects, 215 First St. is a bit atypical of Alexandria's investment type given a concentration of office space versus the REIT's focus on lab product. A sliver of laboratory function in the building offers hope that more could be converted, according to one observer, but that source maintains the real value lurks in the adjacent parking lot that could yield a quarter-million sf of high-grade laboratory space. "That would be a premium lab location, no doubt," says the source, who estimates that such space is fetching upwards of $70 per sf from tenants. Even a resurgent office market in Cambridge that has deals being done in the $40 per sf range cannot stack up against the lab space rewards, notes the industry professional.

As office space, 215 First St. has had its share of difficulties during Cambridge's down times, a substantial drop that occurred after the city became overwhelmed by new supply and the technology bust that began the decade. Cambridge has been on a steady rebound of late, however, especially during the past year. The improving economy has helped, as has conversion of excess office space to laboratory. Still, vacancy at 215 First St. now exceeds 30%, and the current roster includes such diverse users as Le Cordon Bleu Culinary Institute.

The development site of slightly less than two acres could be converted to residential use, a plan that Capital Properties had once pursued. But given the current climate and the supposed buyer, laboratory space is considered the most likely future for the site, sources opine. "That's what they do," one broker notes of Alexandria.

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