Eastdil Selling 150,000 SF Portfolio in Hub for KS Partners

BOSTON — Terming them “jewel box” buildings might be a stretch, but a portfolio of downtown properties being put up for sale by KS Partners could be coveted enough to approach $300 per sf, or approximately $45 million, according to market watchers tracking the fresh opportunity. The assets at 225 Friend St. in North Station and the conjoined 85 Devonshire St. and 262 Washington St. in Downtown Crossing are being offered through Eastdil Secured.

Efforts to contact KS principal Kambiz Shahbazi were unsuccessful by press deadline. Eastdil Capital Markets member Christopher Phaneuf confirms “we are in the market” with the listing, but declined to provide further details on the opportunity that some observers maintain could attract institutional funds that are increasingly comfortable with all levels of Boston’s office market, and not just the trophy or highly stabilized assets so popular in shakier times. The city’s resurgent economy and rebound in the Class B office market has both investors and tenants clamoring to grab a stake in the dwindling inventory.

Eastdil would certainly be familiar with that trend, having kicked it off earlier this year in helping an Irish investor yield $300 per sf for 45 Milk St., a jewel box building around the corner from Devonshire Street that was purchased by Deutsche Asset and Wealth Management despite being nearly empty. A few blocks away, TIAA-CREF paid $110 million for 40 Broad St., a 291,000-sf Class B property sold by JLL and Clarion Partners has reportedly agreed to buy One Liberty Square for an estimated $53 million, or more than $340 per sf.

One Liberty Square is ornate enough that it once was featured in a Steve Martin movie, and 40 Broad St. is also considered architecturally enhanced, putting both among five jewel box buildings in the Financial District that are beloved for their design and stable of credit tenants. If they do lack in star quality, the KS buildings are seen by some market watchers as being likely to attract suitors thanks to efficient layouts, ground-floor retail and being in two rapidly improving districts. North Station is coming to epitomize the Live/Work/Play environment favored by employers such as Converse who are moving their headquarters there, with 225 Friend St. long considered a steady performer for KS even in more difficult periods such as post-2008 recessionary days. Practically overnight, depression of the Central Artery viaduct and a wave of new multifamily construction has turned the situation around. “This used to be all about the Bruins and Celtics, but now there’s so much more going on the rest of the time, it is really coming into its own,” says one Boston CRE veteran who notes the brickand- beam constitution of the district favors technology firms and other startups seen as key to the new millennium economy.

Constructed in 1905, 225 Friend St. has 60,000 sf on eight levels, including the first floor retail. KS Partners has owned the building since paying $12.3 million in June 2006. KS calls the other two properties “85 Devonshire at 262 Washington St.,” with 92,160 sf available between the pair of buildings. The retail is especially valuable, says one source, especially in the improving Downtown Crossing through which 100,000 people already traverse through daily. Even more crowds are expected when Arnold Advertising moves next door to the Filene’s Basement redevelopment complex a few doors down from the KS assets, while several residential high-rise towers are also underway. “There is definitely going to be a need for more retail in the area,” says the market veteran.