John Hancock Wins Out in Spirited Bidding for Back Bay Building

535-545 Boylston St., Boston, MA

BOSTON—John Hancock Real Estate has increased its portfolio here with the $100.5-million acquisition of the 535-545 Boylston St. complex in the Back Bay from Clarion Partners, LLC. The deal calculates out to more than $544-a-square-foot. New York City-based Clarion Partners acquired the two-building complex back in November 2012 for $87.1 million. The 13-story complex totals 184,642 square feet and is currently 87% leased. The complex also features a retail component that includes TD Bank, GNC and three dining options. The Boston capital markets team of Newmark Grubb Knight Frank, led by U.S. head of capital markets Robert Griffin, vice chairman Edward Maher and executive managing director Matthew Pullen, oversaw the transaction in conjunction with NGKF senior managing directors Jim Brady and Jason Cameron. “Firmly situated among the Back Bay’s top Class B assets, 535-545 Boylston Street offers ideally-sized, flexible floor plates that can accommodate a wide variety of tenant requirements,” says Pullen. “Consequently, the property is well suited to benefit from the Back Bay’s rising-rent environment and consistently strong demand.” The average asking rent for a low rise Class B building in the Back Bay in the second quarter was $48.41-a-square-foot, according to NGKF. Total asking rent for low-rise towers in the Back Bay was $52.82-a-square-foot. Rents at the property range on average from $48-a-square-foot to approximately $55-a-square-foot. NGKF’s Maher says that the complex attracted significant investor interest. The property was on the market for about five weeks. A total of 73 groups signed confidentially agreements during the process and a total of 28 property tours were conducted prior to the sale. A total of 13 offers were received. Maher refused to divulge the identity of the bidders. He says that the final sale price was above asking price. Maher says that the location near two train stops, shopping and the fact that it is a corner property make the complex very attractive to tenants. He says that the buildings are very active because of their flexibility, accommodating tenants of between 2,000 square feet to 15,000 square feet. “It is in a nice niche in the market for tenants that don’t want to be a small fish in a big pond,” Maher says. “It is one of those buildings that shows well and locationally it is a great spot in the Back Bay.” “Boston is ranked as one of the top cities for long term investment performance and is also home to John Hancock, our U.S. headquarters,” says Kevin Adolphe, president and CEO of Manulife Real Estate. “We have deep roots here and are pleased to strengthen and build our commitment in the City of Boston.” Among those that were vying for the Boylston Street complex, according to industry sources, included: BlackRock, Tishman Speyer, DivcoWest and Deutsche Bank John Hancock also owns the 197 Clarendon St. and 200 Berkeley St. buildings in the Back Bay. In addition, the firm was granted approval by the Boston Redevelopment Authority last November for its $350-million redevelopment of 380 Stuart St. The project will involve the replacement of an existing nine-story 140,000-square-foot office building at 380 Stuart St. with a new 26-story 625,000-square-foot office tower. The new office building, which will provide workspace for more than 3,000 employees, is expected to include a conference center, collaborative space, a fitness center, ground floor retail and restaurant space, and a roof deck that could be used for community events. Beth McGoldrick, a spokesperson for John Hancock Financial Services/Manulife Asset Management, tells Globest.com that the firm intends to start the project at the end of this year with the demolition of the existing building.