An 11-story neoclassical office building on Broad Street in Boston’s Financial District has sold for $110 million, the latest example of the surging commercial real estate market.
Financial services giant TIAA-CREF bought the 291,000-square-foot midrise from the Transwestern Investment Co. of Chicago, which had made significant interior upgrades after purchasing the property for $50 million in 2006. The sale closed on Wednesday. The deal was brokered by Frank Petz of Chicago-based real estate services firm Jones Lang LaSalle.
Prices on high-end commercial properties in Boston have shot up since the end of the recession. In January, the 12-story tower at 11 Beacon St. fetched $34.9 million — just three years after it sold for $16 million. Late last year, the rehabbed 11-story building at 2 Oliver St. went for $52 million. Its previous sale two years earlier was for $10 million.
“The investment property market has been extremely strong the last couple of years, and we’re seeing record prices,” said David I. Begelfer, chief executive of the Massachusetts chapter of the National Association for Industrial and Office Parks. “Boston is one of the strongest investment markets in the country.”
A TIAA-CREF spokeswoman declined to comment on the company’s plans for the building, which is nearly full of tenants. The lone vacancy is on the seventh floor, where about 25,000 square feet of office space is available.
The building, at 40 Broad St., occupies a full city block and is bordered by Broad, Milk, India, and Central Streets. Its location places it in close proximity to Faneuil Hall, Post Office Square, and the Rose Fitzgerald Kennedy Greenway.
Built in 1923, the building was originally known as the Boston Insurance Exchange Building and was designed by Coolidge & Shattuck of Boston (now Shepley Bulfinch), one of the nation’s leading architectural firms of the day. Under various names, the firm built Boston’s first skyscraper, the 13-story Ames Building (now the Ames Hotel), in 1893 and designed buildings for such landmark institutions as Massachusetts General Hospital and Logan International Airport.
‘The investment property market has been extremely strong the last couple of years, and we’re seeing record prices.’
Despite its historic charm, 40 Broad St. was mostly vacant when Transwestern bought it seven years ago. Other prospective buyers considered converting the office building into a hotel. Instead of repurposing the building, Transwestern poured millions into renovations, raising the ceilings, updating the lighting, and doubling the size of the lobby.
Upgrades helped attract the building’s anchor tenant, the Mullen advertising agency.
With the property stabilized by Transwestern, 40 Broad St. could make a low-maintenance investment for TIAA-CREF, said Raymond G. Torto, global chief economist at the CBRE Group, a real estate services firm based in Los Angeles.
“It’s a good investement, in part because the economy is picking up,” Torto said, “but also because returns on real estate investments have been better than bonds in recent years.”