Old City Hall Boston Hits Sales Block; Could Fetch $30M Via CBREOctober 06, 2016 - By Joe Clements
BOSTON—The newest listing by CBRE/NE’s Capital Markets team here is a Hub icon by every measure and materials pitching its leasehold interest describe Old City Hall as “an architectural masterpiece” which was Boston’s municipal nerve center from the Civil War until 1969 when its much larger and less revered replacement was erected a few blocks away at Government Center.
By some estimates, value of its ground lease that runs to 2069 could eclipse $30 million, or $358 per sf at that starting point. Held by the Boston Planning and Development Agency, aka Boston Redevelopment Authority, the ground lease is controlled by the non-profit Architectural Heritage Foundation. The nine-story, 83,700-sf property whose address is 45 School St. was repositioned in 1972 as a mixed-use property and today is 98 percent leased to 18 office tenants and Ruth’s Chris Steakhouse, the eatery in where popular French restaurant Maison Robert was a fixture for decades serving Boston’s elite.
Calls to CBRE/NE’s brokerage team to discuss the fresh listing were not returned by press deadline, but the informational package in circulation confirms availability of a building lauded for its infill location sandwiched between two major corridors on Cambridge and Washington Streets. Team members on the assignment include principals David J. Pergola and Brian Doherty, Vice President Bruce Lusa plus Jenna Skaar and Sara Forino. Downtown leasing broker Jonathan Freni is offering insight on that arena and Jeremy Grossman is doing the same regarding Boston’s urban retail sector, with 45 School St. at the gateway to the Downtown Crossing district that is among New England’s busiest shopping areas.
CBRE/NE also has its structured finance division on hand to assist prospective bidders, with those services provided by principal Kyle Juszczyszyn and Chris Coutts. Old City Hall is being offered to investors free and clear of existing debt.
In terms of prospective suitors, one market watcher notes the anticipated pricing “fits in” with the capabilities of many Middle Market investors. “Lots and lots” of investors will take a gander, that source maintains, predicting bidders will likely include established local players, institutional monies and overseas capital. The latter constituency has a proven predilection for Boston’s extensive lineup of historic Class B office properties scattered in and around the centerpiece at 45 School St.
“It is a beautiful building with a ton of history to it,” remarks one CRE veteran familiar with the asset, a professional active downtown who praises 45 School St. for having an efficient layout catering to modest-sized companies, citing it as one reason for being 98 percent occupied in hitting the sales block.
CBRE/NE’s brochure does indicate there is no formal asking price on the property, at which tours will commence in the coming weeks, according to the brochure. One benefit for the contingent is the brokerage shop’s location barely a two-minute walk from School Street. They and prospective bidders will join a throng 500,000 strong who traverse Old City Hall annually for what is considered by preservationists vibrant testimony to repurposing older structures. It would seem to qualify in the “jewel box” category popular for their modest scale and intricate designs hearkening back to the 1860s when 45 School St. was conceived by architects Gridley J.F. Bryant and Arthur Gilman on a 26,500-sf parcel alongside such historical cornerstones as the King’s Chapel Burial Ground and Boston’s peripatetic Freedom Trail.
Still, for all its old world charm and historic surroundings, observers stress bidders will be looking beyond the unique architecture such as high ceilings and focus more on the bottom line at 45 School St. In that regard, CBRE/NE has a few factoids in its presentation, including in-place rents averaging $35.18 per sf set against a market where similar space is averaging $45.66 per sf. That, the materials declare, is one reason Old City Hall is deemed “an undeniable upside opportunity,” as is a chance to reposition the retail element, not to mention the prospect of creating a hotel or residential project from a structure featuring windows on all four sides and not too deep layout-wise.