18 Tremont St.

That rate is well above the $186-per-sf Meritage paid for the asset in May 2005, with the accretion attributed to a series of capital improvements and the surging Boston office market, in which landlords are benefiting from the improving economy and a dearth of space. The B sector that includes 18 Tremont St. saw at least one million sf eliminated earlier this decade when a wave of residential conversions swept into the Downtown and Back Bay districts.

In a release acknowledging the purchase, which was first reported by GlobeSt.com on Sept. 28, BPG SVP Roy Perry concurs that the Philadelphia-based fund manager was attracted to 18 Tremont St. by encouraging fundamentals. The deal, he says, "provided us with the opportunity to acquire a proven office building in a highly desirable area of Downtown Boston that has experienced significant leasing and rental growth over the past year." The JLL Q3 overview puts the average asking rent for the city at $45.47 per sf, and $34.47 per sf for class B. Rates at 18 Tremont St. were not provided, but one document puts asking rents there in the high $20's to low $30's per sf.

Meritage founder Andrew Nathan predicts that BPG will fare well with 18 Tremont St. going forward despite the premium paid. "I think they will be looking to take it to the next level," says Nathan, whose firm acquired the building when the market's direction was less clear. Whereas many investors were hesitant to pursue older office product, Nathan says Meritage felt the resiliency of the Boston market would lead to a rebound, and was mindful that considerable space was being removed. "We thought that we were getting in a bit early, but always believed the recovery was inevitable," Nathan tells GlobeSt.com. The city's livability, deep pool of intellectual capital, and the limited chances to add class B space to the mix all factored into that upbeat assessment, as did 18 Tremont St. itself. "When we first toured the building, we knew we wanted to buy it," he recalls. Main draws included the location, strong physical foundation and bountiful stock of tenants.