fb-pixel Skip to main content

Liberty Mutual selling two Back Bay buildings

<?EM-dummyText [Drophead goes here] ?>

Liberty Mutual Insurance plans sell two office towers in the Back Bay and shrink its real estate holdings in Boston.

The Boston-based home, auto, and workers' compensation insurance company is putting its 10 St. James Ave. and 75 Arlington St. buildings up for sale.

The company moved many of its employees from those buildings to the new $300 million tower it built with public aid at 157 Berkeley St. in 2013. The state and the City of Boston kicked in more than $46 million worth of tax credits and property tax breaks for the building, after Liberty promised to add jobs and expand its investment locally.

Advertisement



After the new building opened, Liberty only needed about 40 percent of the 825,000 square feet in the James Avenue and Arlington Street buildings and rents out the remaining space, the company said.

The sale should have no effect on the company's employees or its investment in the city, said David Long, Liberty Mutual's chief executive officer. After the sale, Liberty Mutual will continue to lease space in the James Avenue and Arlington Street buildings.

The older buildings became investment rental property and the company wanted to focus on its core insurance business, said John Cusolito, a spokesman for Liberty Mutual.

"Those two buildings have become predominately rental space. That's not a business we're in," Cusolito said. "It's a good time to sell."

Liberty is selling at one of the hottest periods for Boston commercial real estate.

Top-tier office buildings in the Back Bay and the Financial District have fetched previously unheard of sums, as international investors looking for stable, long-term assets, buy in Boston. A year ago, the real estate arm of a Canadian pension fund paid $1.3 billion for 500 Boylston and 222 Berkeley streets, just around the corner from Liberty's buildings. At about $1,000 a square foot, that price set the record for large Boston office buildings, a record that was matched in April when a German investment fund bought a new office building in the Seaport for a comparable amount.

Advertisement



Liberty's building may not sell for quite that rich of a sum, said Rob Griffin, who leads the Boston office of real estate firm Newmark Knight Grubb Frank and is handling the sale for the insurance company.

He expects the sale price to come in at around $650 million, which equates to about $800 per square foot.

Still, with 96 percent occupancy and $30 million in recent rehabs, he expects interest in the building to be strong.

"We think there's going to be a tremendous appetite for these buildings from international buyers, and from domestic buyers" who've been crowded out of the market, he said.

Liberty is selling the buildings as its profits have faltered. In the first half of this year, Liberty Mutual's profits were down by one-quarter to $408 million, compared with $530 million during the same time in 2015.

Cusolito said the decision to sell is unrelated to the company's earnings results.

After the sale, Liberty Mutual will still own more than 1 million square feet of space in three other downtown buildings, including at 157 Berkeley St., 175 Berkeley St., and 30 St. James Ave. The company has 4,400 employees spread among its Boston buildings.


Tim Logan of the Globe staff contributed to this report. Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.

Advertisement