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Back Bay office complex fetches $1.3 billion

Price of $1,000 per sq. foot tests records; Values surge as cash from abroad arrives

 Earlier this year, the owner of 500 Boylston filed plans to fill in the courtyard (above) with six stories of retail and office space.
Earlier this year, the owner of 500 Boylston filed plans to fill in the courtyard (above) with six stories of retail and office space.Pat Greenhouse/Globe Staff

A pair of prominent Back Bay office buildings are selling at one of the highest prices the Boston market has ever seen.

Blackstone Group LP has a deal in place to sell 500 Boylston St. and 222 Berkeley St. to Canadian-based Oxford Properties Group and JPMorgan Chase for $1.3 billion, according to people familiar with the transaction. The sale was first reported on Thursday by Bloomberg News.

That price for the 1.3 million-square-foot complex works out to about $1,000 per square foot, one of the highest prices on record for Boston-area office space, which historically has topped out at around $700 per square foot.


Prices for top-tier buildings here and in other big-city markets have surged lately as the economy has improved and foreign capital has washed into the US commercial real estate market. Earlier this week, TIAA-Cref said it is buying a majority stake in Biogen Inc.’s new headquarters at 225 Binney St. in Cambridge, at a price that would value the Kendall Square building at nearly $900 per square foot.

For Oxford, which invests in real estate for the Ontario Municipal Employees Retirement System, the deal is the latest of several big investments in Boston. Last year, the firm led a group to buy four Class A buildings in Boston and Cambridge from Blackstone for more than $2 billion, or roughly $650 a square foot. In June, Oxford said that it had purchased 745 Atlantic in the Leather District for $114.5 million.

An Oxford spokeswoman did not return messages seeking comment Thursday. A Blackstone spokesman declined to comment. People who have been briefed on the deal said it will close this fall.

Blackstone, the world’s largest private equity firm, has been steadily selling off properties it acquired with the 2007 purchase of Equity Office Properties Trust. Meanwhile, JPMorgan’s asset management unit runs the country’s biggest fund for core real estate — high-quality, well-leased properties such as Class A office buildings.


Interest in the Back Bay complex, which Blackstone put on the market in June, was substantial, with bidders including real estate trusts and sovereign wealth funds of foreign governments, according to people familiar with the deal.

The high interest and the price reflect the continued strength of Boston’s core office markets as jobs and residents move into the city, said Rob Griffin, president of the New England office of the brokerage firm Cushman & Wakefield.

“It continues to be a positive sign about people’s belief in Boston as a sort of live-work-play environment,” he said. “There’s phenomenal city-centric investment going on right now. People are making long-term bets on that, and I think it’s a good one.”

There are also plans to change the look of 500 Boylston. Earlier this year its longtime manager, Equity Office Properties, filed plans with the Boston Redevelopment Authority to fill in the building’s courtyard on Boylston Street with six stories of retail and office space. The BRA is set to hold a public hearing on the plan next month.

It was unclear how the building’s sale might affect that project.

Material from Globe wire
services was used in this report. Tim Logan can be reached at tim.logan@globe.com.