Long-Held Office Asset Yields $4.2 Million in Somerville Trade

SOMERVILLE — With nearby East Cambridge rents on the rise and available space predicted to begin disappearing, value add investors like Brian R. Iammartino are exploring opportunities in Boston’s so-called Inner Suburbs—such as the 49,000-sf office building at 35-37 Medford St. which the cofounder of btcRE just acquired for $4.2 million. Enticed by its close proximity to New England’s life sciences Mecca, btcRE picked up the 60 percent-leased asset in an off-market deal brokered by Cushman & Wakefield’s Scott Gredler and financed by The Property & Casualty Initiative, a statewide community loan fund that committed $4.9 million. “This is our first deal, and we’re looking at non-CBD, inner core, peripheral markets,” Iammartino tells the Real Reporter this week. “We saw the chance to bring our active, handson ownership to an overlooked building in an overlooked area less than a mile from Kendall Square.” Boston-based btcRE was able to pry the 110-year-old asset—which the Khadari family has held since 1965—from their Continental Family Trust. Iammartino says significant upgrades are in store for the prominent brick structure that is close to the Twin Cities Shopping Plaza. “Brian and his partner had been talking with brokers about this particular submarket, and I dedicate 100 percent of my time to the inner suburbs, especially Somerville and Charlestown,” recounts Gredler. The property had received “a few” offers before btcRE’s winning bid. Major tenants include HKT Architects, Redfin and VinFen, along with recycling concern Earthworm and a cadre of smaller tenants. Gredler reports that leasing velocity in the Somerville/Charlestown market has been “very strong” and that “since the deal closed, we’ve had half-dozen showings in that period from users ranging from 2,000 to 6,000 sf.” Year-end figures issued this week by Cushman & Wakefield peg the Inner Suburbs inventory at 15.1 percent vacancy for 7.6 million sf in such communities as Allston-Brighton, Arlington, Everett, Malden, Medford, Somerville and Watertown. The survey shows that despite an impressive 420,000 sf of leasing velocity in 2012, net absorption was in the red by 13,025 in 2012. At $22.76 per sf, the district outpaces suburban Boston overall and its average of $19.91 per sf, and joins Route 128 North ($21.10 per sf) and Route 128 West ($27.82) as the only suburban enclaves averaging more than $20 per sf.