December 4, 2023

The Boston Globe

186 Lincoln Avenue. Courtesy of Newmark

Boston-based Metropolis Realty Group final week mentioned it has acquired a nine-story Leather-based District workplace constructing for $11 million, little greater than half what the property final offered for in 2015.

The 73,000-square-foot constructing is situated at 186 Lincoln St., simply south of South Station. It’s roughly half leased, with tenants together with CozyKin, SmartSense by Digi, Full Contact Promoting, and Mightier.

“Our aim is at all times to be the best choice for tenants searching for area in our neighborhoods,” mentioned Steve Whalen, managing accomplice at Metropolis Realty, in an announcement. “By being versatile and conscious of tenants’ wants, we search to type long run, mutually helpful partnerships.”

The sale is one other instance of a Class B downtown workplace promoting for a deep low cost from its prior buy value. Citywide workplace valuations are down about 20 % to 30 %, in accordance with latest analysis from brokerage Newmark. Smaller, older workplace buildings have usually seen steeper declines in occupancy for the reason that onset of the COVID-19 pandemic than extra fashionable towers.

“Challenged market fundamentals and an elevated rate of interest surroundings are driving workplace valuations down,” Newmark’s latest analysis report states.

At 186 Lincoln, Metropolis Realty plans round $1 million in upgrades, together with bike restore and storage amenities, a health room with lockers and showers, and tenant frequent area. One change the agency just isn’t contemplating: changing the property to residences.

“It’s very deep. The size don’t lend themselves to conversion,” mentioned Cliff Kensington, Metropolis Realty’s director of acquisitions. “The prevailing layouts simply wouldn’t work very nicely.”

Town of Boston has a short-term office-to-residential pilot program open for candidates. Gov. Maura Healey’s administration can be contemplating assist for conversions through its $4.12 billion housing bond invoice, whereas the federal Division of Transportation and Division of Housing and City Improvement reportedly plan to unencumber sources for conversions.

Actual property agency Brickman final bought 186 Lincoln St. in 2015 for $20.7 million. The constructing was extra absolutely occupied then, Kensington mentioned, although he couldn’t recall a selected occupancy price. However all through the COVID-19 pandemic, a number of leases cycled out, leaving the property’s backside 4 flooring empty.

Lately, as Brickman seemed to promote the property, the agency requested for “a minimum of” $20 million, then $18 million, Kensington mentioned, reflecting a disconnect between what homeowners thought properties had been price and their worth. Brickman representatives couldn’t be reached for remark.

“The worth of those properties are pushed by the money circulate that both is there, or you possibly can venture to be there after you refill any vacancies,” Kensington mentioned.

The property has about 30,000 sq. ft to lease, with out there workplaces beginning round 1,500 sq. ft.

Newmark brokered the sale of 186 Lincoln, and Mechanics Cooperative Financial institution financed the deal. The constructing “provides a mix of in-place revenue and value-add alternative,” Newmark’s Samantha Hallowell mentioned in an announcement.