Q2-2018-OfficeReport

Property

177 Huntington Avenue

Property

City/Submarket

Boston

City/Submarket

Buyer Price

AFL-CIO Building Investment Trust

Buyer

CAPITAL MARKETS STATISTICS Price 206,837 Total SF

$137,500,000

67 S Bedford Street Bedford The CarlyleGroup Total SF Price/SF Cap Rate

$665

Price/SF Cap Rate

4.7%

$55,500,000 176,886 $314 5.6%

SALES VOLUME ($)

NUMBER OF TRANSACTIONS

TOTAL SF

MEDIAN $/SF $188

MEDIAN CAP RATE

Sale Volume

$1,229,408,481

78

3,648,439

6.1%

SALES VOLUME

TRENDS • Sales volume reached a four-quarter high in the Boston office market. Propped up by a handful of large Downtown transactions more than $1B in assets changed hands during the second quarter. Slower late-cycle growth, a widening bid-ask spread and rising interest rates are expected to stifle investment sales this year. With that said, Boston remains a highly desirable destination for capital among all investor types. Prices remain elevated and cap rates are compressing modestly. sold the 95%-occupied asset for $417.6 million or $731/SF. Related Beal acquired 451 D Street in Boston’s Seaport Submarket for $276 million or $578/SF, with plans to convert some of the office space to lab. In the Back Bay, Beacon Capital Partners divested the 206,837-square-foot 177 Huntington Avenue for $665/SF. All three properties garnered substantially higher price tags compared to their previous sale price as well as low, single-digit cap rates. Other owners look to be testing the waters as well. Skanska recently listed its newly constructed office at 121 Seaport for sale, and the price could reach $450 million or more than $1,000/SF. • Investors seeking higher yields and greater opportunities are driving suburban investment activity. As a result, recent price growth has accelerated in Boston’s suburban office market. Although sales volume dipped in the ‘burbs during the second quarter, several deals took place. The Carlyle Group acquired 67 S Bedford Street in Burlington for $55 million or $314/SF, and Lincoln Property Company and ASB Management purchased 91 Hartwell Avenue for $22.2 million or $186/SF. The cap rates on these deals were 5.6% and 6.1%, respectively. • Buyers continue to pay a premium for Downtown assets. In June, Heitman LLC closed on the 572,153-square-foot 28 State Street. Mitsubishi Estate and Rockefeller Group

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$ (000s)

$1,000

$500

$0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Suburban Urban

MEDIAN PRICE/SF Median Price/SF

$316.11 $489.20 $245.43 $236.89 $375.34 $243.77 $205.23 $174.11 $178.89 $267.89 $179.34 $209.56 $202.35 $203.24 $183.79 $385.65 $294.56 $243.21 $225.17

$153.51 $154.74 $143.32 $139.75 $115.16

2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012

$95.14 $0 $100 $200 $300 $400 $500 $600 $700 $800 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $122.04 $106.90

$84.40 $97.20 $66.39 $89.85 $77.07 $69.99 $108.08 $123.90 $106.09 $100.00 $111.11

Suburban

Urban

TOP Q2 / INVESTMENT SALES

INDUSTRIAL SALES

Q1 2017

Q2 2017

Q3 2017

Q4 2017

TOTAL

SALES VOLUME ($) Former Reebok HQ Canton 28 State Street Bos

$374,173,554 67 S Bedford Street Burlington

$453,379,723 451 D Street Boston

$433,947,886 77 Huntington Avenue Boston

$385,172,081

$1,646,673,244

# OF TRANSACTIONS

76

78

82

60

296

4,045,511 AFL-CIO Building Investment Trust

CrossHarbor Capital Partners

TOTAL SF

4,779,432

6,394,205

4,243,774

19,462,922

Buyer Buyer

Spear Street Capital Heitman LLC

Buyer

Buyer

The Carlyle Group

Buyer

MEDIAN $/SF

$75 $276,000,000

$59

$103

$86

$90

$88,000,000 418, 0, 0

Price

$137,500,000

Price

Price

$55,500,000

Price

Total SF

206,837

Total SF

680,000 572 153

Total SF

176,886

Total SF

477,132

Price/SF

$665

Price/SF

$129 731

Price/SF

$314

Price/SF

$578

Cap Rate

4.7%

Cap Rate

-

Cap Rate

5.6%

Cap Rate

4.2%

7