Intercontinental Harvesting Lincoln Street GarageFebruary 13, 2017 - By Joe Clements
BOSTON—Twenty years after buying 125 Lincoln St. in the city’s Leather District, Intercontinental Real Estate Corp. is putting the multi-pronged assemblage up for sale through Newmark, industry sources are telling therealreporter.com. Originally erected in the 1950s as a three-level parking garage, the structure today at five stories features ground-floor retail and office space grafted on top via a design from Boston architect Brian Healy. Observers predict the building set on a full city block could approach $40 million via an exchange, well above the $6.0 million Brighton-based Intercontinental spent in August 1996.
Calls to Intercontinental CEO Peter Palandjian and Newmark Capital Markets team members were not returned by press deadline, the brokerage group led by Robert E. Griffin Jr., Edward C. Maher Jr. and Matthew E. Pullen. Whlie it appears 125 Lincoln St. is being pitched minus an asking price, informational materials obtained by therealreporter.com show the asset is being trumpeted as “an exceptional redevelopment opportunity” in an “unparalleled location” just two blocks from the South Station transportation complex where legions of buses, commuter rail trains and the MBTA Red Line provide connections for tens of thousands of commuters daily.
“You can do many things” with the asset, one downtown CRE veteran says of a fully leased property officially known as 109-151 Lincoln St. Its 27,800-sf lot is across from the ornate gateway to Chinatown on the other side of the Rose Fitzgerald Kennedy Greenway that replaced the Central Artery viaduct between North Station and Dewey Square. Already a 27-acre swath along the southern flank has seen a rash of new construction by multifamily and office developers and the Leather District has enjoyed rising acceptance among institutional capital sources missing in the old millennium. Invesco, Lincoln Property Co. and Canadian pension fund Oxford all have Leather District holdings today, and 125 Lincoln St. should also draw consideration from Tier One capital groups, observers maintain.
Suggestions in play for 125 Lincoln St. include keeping the status quo and enjoying predictable cash flow from 70,675 sf of office and ground floor retail, with upside anticipated in both of those pieces thanks to an improving Leather District streetscape and the booming office market fueled by companies embracing an urban setting, hyper-sensitivity favoring public transportation and a migration away from antiseptic, pricey tower space into “character” Class B buildings which the Leather District is comprised of primarily, albeit offset by newer buildings including 745 Atlantic Ave. that do have first-class formats.
Newmark tracks Leather District office space as part of the South Station submarket whose 2.97 million sf is a scant 3.2 percent vacancy. For the little product available, it can be had at a discount to other areas, averaging $40.54 per sf for Class B versus $45.06 citywide and $44.50 per sf in Class A product compared to $62.65 overall. Given zero new construction underway there, the South Station/Leather District submarket provides “a lot of room for growth” in office rental rates heading into the next decade, according to one market expert. Specifics about the rent roll for 125 Lincoln St. office tenants were not available in the materials obtained as to amount of lease term remaining and in-place rents.
Besides vast capital markets acumen for office and retail buildings, Newmark has also handled a number of commercial garage listings of late, in 2016 overseeing the sale of a 826-stall Back Bay facility harvested by the group which had in December 2014 acquired it along with the attached Revere Hotel for $260 million. The parking facility yielded $105 million. A 965-space garage developed in conjunction with State Street Corp.’s new Seaport District headquarters contributed to the $316.5 million owners ARES Management and Commonwealth Ventures earned in the 2015 sale of both to Tishman Speyer, that another Newmark exclusive.