WHEN 2011 BEGAN, Boston Properties was coming off a buying spree that turned heads in the slow-to-recover commercial real estate market.
Its biggest purchase was in Boston’s Back Bay, where it snapped up the John Hancock Tower for $930 million, taking ownership of the city’s most prized office property just as rents were beginning to rise - a perfect example of the company’s ability to seize an opportunity at a critical moment.
“A lot of people look at the Back Bay now and say, ‘Wow, it’s really heating up,’ ’’ said Greg Vasil, head of the Greater Boston Real Estate Board. “Well, Boston Properties saw the strength of that market a long time ago and made investments with a long-term vision.’’
That ability to catch a market on the way up helped make Boston Properties the best-performing real estate company in this year’s Globe 100 survey. Its 2011 revenue was up 16 percent from the previous year to $1.85 billion, and it showed a whopping 71 percent rise in net income to $273 million. As of Dec. 31, the company was building seven projects across the country.
Boston Properties was among the few real estate firms to move forward last year with construction of new office projects. As risky as that may have seemed, the company almost never builds on a speculative basis. Its practice is to sign up major tenants before construction begins.
The company is also among the nation’s largest commercial real estate investors, owning $14.8 billion in assets in four markets across the country - Boston, New York, Washington, and San Francisco (with some additional properties in New Jersey). It owns many of the most prominent towers in those cities, including the General Motors Building in New York and the Embarcadero Center buildings in San Francisco. The company’s strategy is to buy the best buildings in the best locations, and to develop new properties for such large office tenants as the US government and search giant Google Inc.
In addition to trophy properties, it also seeks out fixer-uppers where it sees opportunities to spark a financial turnaround. In late 2010, the company snapped up Waltham’s Bay Colony Corporate Center, a 985,000-square-foot office complex that had fallen into foreclosure. A sweeping renovation will bring more natural light into the complex and maximize views of the adjacent Cambridge Reservoir. “It was another opportunity to buy in a great location,’’ said Boston Properties president Doug Linde.
In Boston, the Hancock Tower gave the company a virtual lock on the Back Bay market, where it also owns the Prudential Building and the crown-shaped tower at 111 Huntington St. Since the Hancock deal, rents in that part of the city have risen about 2.5 percent, according to the real estate firm Cushman & Wakefield.
The company has started construction of a new headquarters for Biogen Idec Inc. in Cambridge’s Kendall Square, and is moving forward with plans to expand Google’s nearby offices into a campus, connecting existing buildings with new glass corridors.
One benefit of the company’s foresight is its ability to revive projects. In midtown Manhattan, the company struck a deal last May with the law firm Morrison & Foerster that allowed it to resume work on a stalled $1 billion tower on West 55th St. The planned 39-story office tower is one of the first major projects to move forward in the city since the recession.
For Boston Properties, Linde said, it’s all about the opportunity: “We’re aggressive about putting our capital to work in the right circumstances.’’