BioMed Realty Trust Inc.’s presence in the Boston/Cambridge life sciences market will soon surpass 3 million square feet, now that the life sciences real estate REIT has entered into an agreement to purchase the 287,000-square-foot Cambridge Place in Cambridge, Mass. The property comes with a price tag of $119 million.

“The Cambridge life science market is what we think is the preeminent market in the world really,” Rick Howe, director of corporate communications with BioMed, told Commercial Property Executive. “There are a large number of life science companies and organizations that are looking for space — some office, some lab — and we want to be able to handle both types of users’ requirements in the market.”

Cambridge Place consists of three structures and is presently 80 percent occupied. Heading up the tenant roster are Idenix Pharmaceuticals Inc. and engineering and construction firm CDM Smith Inc., which has called the property home since the complex’s first building, One Cambridge Place, opened its doors in 1998.

The life sciences market in the Boston/Cambridge area is booming, so prospects for leasing up the remaining space at Cambridge Place and other industry-related office and laboratory properties are positive.

“The demand is strong,” Angus G. McQuilken, vice president for communications with the Massachusetts Life Sciences Center, told CPE. “Massachusetts continued to lead the nation in biotech-related construction in 2011 and that’s a trend we expect to accelerate in 2012.”

The U.S. is home to some of the world’s leading life-sciences clusters. New York/New Jersey, the San Francisco Bay Area and San Diego are among them, but Boston leads the pack, as per statistics from commercial real estate services firm Jones Lang LaSalle. And industry experts believe the Boston/Cambridge area will continue to lure life sciences businesses for the foreseeable future.

There are a few big reasons why the area is such a draw for life sciences companies ranging from large global corporations down to small entities and startups. “Companies are locating here and expanding here because they want proximity to our world-class academic institutions, our R&D, and they want proximity to partners in the industry and you’ll find all of the major global players in life sciences here in the Massachusetts cluster,” McQuilken said. “Also, they’re looking for talent. The talented workforce is the number one reason why companies choose to locate here. Then there’s the government role. Massachusetts’ 10-year, $1 billion life sciences initiative continues to be a magnet for private investment.”

Alas, the call for life sciences office and laboratory space accommodations is only going to grow louder. The average occupancy level at these properties is in the 13 percent range, according to a recent report by Richards Barry Joyce & Partners, but numbers can be deceiving. “One of the top biotech real estate concerns going into 2012 is the lack of tenant choice in the market and resulting constrained growth,” Brendan Carroll, senior vice president of research for Richards Barry Joyce & Partners, noted in a statement on the report. “It’s the downside of having such a strong biotech cluster in the region.”

An artist's rendering of the Air Rights development.

Cassidy Turley becomes part of a landmark development in Washington, D.C., with Property Group Partners’ selection of the firm to serve as the exclusive leasing services provider for the I-395 Air rights Development. The premier mixed-use project, which will be erected on a platform above I-395, will produce 2.2 million square feet of commercial space with a focus on office accommodations.

“It’s going to have retail, it’s going to have restaurants, it’s going to have roof decks,” Art Santry, senior managing director with Cassidy Turley, told Commercial Property Executive. “It’s going to have everything that you’d ever want to have in an office environment.”

I-395 Air Rights will span three city blocks, sprouting up on what is the largest contiguous undeveloped site in downtown Washington, D.C. But it’s not your typical site. While the project’s five buildings will be anchored on terra firma, its pathways and roads will be above it all, above the Center Leg Freeway of I-395, to be precise. “You’re creating a space, you’re creating seven acres of land that don’t exist and that’s pretty unique,” he said.

The project’s office offerings will include four 12-story structures, among them, the 546,700-square-foot, tower at 250 Massachusetts Ave.; 200 Massachusetts Ave., featuring 407,000 square feet; the 297,300-square-foot 201 F St.; and 200 F St., a 685,400-square-foot building.

The development will also encompass a residential tower, the 180,400-square-foot, 13-story building at 600 Second St., as well as ground level retail and thousands of parking spaces. Additionally, I-395 Air Rights will be able to lure occupants with what has become a coveted feature for tenants: LEED Platinum certification by the U.S. Green Building Council.

Cutting-edge technology, top-of-the-line amenities, and buildings designed by prominent architects — as Kevin Roche John Dinkeloo & Associates, Kohn Pedersen Fox Associates and Skidmore, Owings & Merrill — will distinguish the project, as will another major factor. Size. Size does matter, and I-395 Air Rights will have it. Businesses seeking large accommodations and room for growth will be able to find a home there. Today, such users have limited options in the city. At the close of 2011, according to a Cassidy Turley report, there was only one new property with a large contiguous block of space available: the Capitol Hill submarket’s 414,200-square-foot building at 1015 Half St., where approximately 200,000 square feet is up for grabs.

The first office building at I-395 Air Rights could come online in roughly three years. In the meantime, tenants seeking anchor spaces can make their needs known to Cassidy Turley — and have them met. “We can modify the design, nothing is set in stone,” Santry affirmed. “Property Group Partners has been very specific about that. They’ve made it clear that, ‘Hey, we’ll do what the market demands.’”

And the demand, he believes, will certainly exist when the massive, multi-phase project, makes its debut. In the last few years, the Washington, D.C., office market has been buoyed by government agencies’ growth and their accompanying need for additional space. However, the government is unlikely to be a lead tenant at the state-of-the-art development. “Given the rental rates for this asset, it’s hard to make the government wok on this site, because the government has a ceiling on rent. It’s not our initial marketing focus.”

Service companies, medical industry businesses and law firms are the practical target market. “Twenty-five years ago, a big law firm deal was 100,000 or 150,000 square feet and that was a monster deal,” Santry explained. “Now they’re 350,000 and 400,000 and if you look at the average building in Washington D.C., it’s 200,000-plus square feet. So if you’re a big law firm it’s hard to get under one roof. The buildings at this development can provide a campus. It’s not crazy to think that a law firm will be 500,000 or 600,000 square feet in 10 years. So we can say, ‘Here’s your campus,’ and that is pretty unique.”

And with a low level of new product scheduled to deliver in the near future, demand is on track to increase in what is already one of the best-performing office markets in the country. According to the Cassidy Turley report, currently, new supply in the District is at its lowest level since the late 1990s and construction completions will likely remain light. It appears that I-395 Air Rights’ office towers will stand out, literally and figuratively. “They will be very high-end, forward-thinking, sustainable buildings,” Santry said. “The quality will be second to none.”

*This story was updated at 8:45 a.m. EST on Feb. 7, 2012.

Image courtesy Flickr user laverrue

It’s good to buy when opportunity presents itself and, capitalizing on one of those opportunities, a consortium including affiliates of Starwood Capital Group, the LeFrak Organization and Invesco Ltd. have purchased a beachfront, mixed-use property in Miami’s South Beach, including a hotel formerly known as the Gansevoort.

While the terms of the deal were not disclosed, the partners announced a $100 million renovation project for the property, which already includes 334 hotel rooms, 255 condo units across 294,000 square feet and 90,000 square feet of retail space. The hotel rooms will be renamed The Perry South Beach until its re-launch in 2013, when a new brand will be unveiled after the renovation. The partners also anticipate improvements to the condos, which will put the units on the market in late 2012.

Barry Sternlicht, chairman & CEO of Starwood, said that “global interest in the Miami marketplace is close to surpassing an all-time high,” noting that his firm has the opportunity to “create an outstanding destination resort and residences in this outstanding city.”

According to a report by Marcus & Millichap Real Estate Services Inc., Miami saw a 9 percent increase in demand for hotel rooms year-to-date in August of 2011, as compared to the same period a year prior. Additionally, the sector as a whole performed well into the fourth quarter of last year, with Florida as a whole seeing occupancy rise by 4 percent on a 6.7 percent jump in room demand. And, to Sternlicht’s point, not all of the spending has been from domestic sources: “A weak dollar relative to the euro has also boosted international travel to leisure markets such as Miami and Orlando,” the report noted.

As Commercial Property Executive previously reported, a Jones Lang LaSalle Inc. report sees hotel investment volume to hold steady in 2012, reaching the same $30 billion range as last year.

The property was sold by entities controlled by Credit Suisse, which had acquired it through foreclosure in 2010. Jones Lang LaSalle Inc.’s hotels group brokered the transaction for the financial-services company.

“Debt” is going to be the name of the game for the European real estate markets in 2012, according to Emerging Trends in Real Estate Europe 2012, the industry forecast published by PwC and the Urban Land Institute. With daily reminders that interest-rate cuts on Greek bonds are still in limbo and debt-rating decreases for Euro-zone nations are on the rise, a turnaround looks to be tied directly to banks’ willingness to make commercial loans and whether the financial industry could face another collapse. The survey took responses from more than 600 commercial-property professionals across Europe to determine the overall course of the industry.

“The profound instability is affecting the providers of equity and debt,” Joe Montgomery, chief executive of ULI Europe, said. “We are operating in an environment that is very difficult to model. The uncertainty over the level of banks’ exposure to sovereign-debt default, coupled with uncertainty over the regulatory changes introduced as a result, has caused significant elements of the capital markets to be reduced to a state of near paralysis.”

In general, lenders are facing a level of pessimism over debt at levels not seen in years, according to John Forbes, the report’s author. Only 6 percent of lenders think that debt will be as available this year as it was in 2011, and a full 52 percent feel it will be substantially less available.

But not all news is gloomy, however. “The good news is that the view of respondents regarding the availability of equity is much more positive,” Forbes wrote. “Most promising is the response from institutional investors: 65 percent believe that equity will be moderately more available, with a further 10 percent believing that equity would be substantially more available.” And those lenders will play a significant role in the economy’s health, as all the players are interconnected. Mezzanine lenders need senior lenders to push debt into the marketplace, and insurance companies need time to build the right infrastructure to deploy capital.

With such uncertainty, it was difficult for the survey’s respondents to make sweeping generalizations about market sectors, but geography will certainly play a role in how investments will roll out from city to city. Istanbul, the report noted, has been the top market for commercial real estate investment for the past two years, “but that ranking is more a reflection of its long-term economic future than a sign that investors are about to rush to place their capital in the market.” And, while debt concerns continue to plague Spain and Italy, opportunistic investors may still see possibilities as banks begin to release assets later this year.

Overall, 2012 could be a turning point, the year that investors have been waiting for – or it may turn out to be a bust. Pressures from all directions could make finding funding solutions for banks an imperative, but whether investors get the bargains they would like is still very much an unknown. In general, the report’s bearish mood reflects the larger overall picture, and the coming months will certainly tell a clearer story.

CoSentry, an Omaha-based provider of data center, cloud computing, co-location and managed-Internet services, has purchased a 57,500-square-foot former light industrial building in Lenexa, Kan., for use as a data center, the company announced late last week. Construction on the $31.6 million rehab project, at 14500 W. 105th St. in Lenexa, is expected to begin next month.

After a two-year evaluation process, CoSentry chose the Kansas City region out of 21 markets, based in part on competitive energy prices, said Doug West, vice president and general manager for CoSentry’s south region. Colliers International led the real estate search.

A CoSentry spokesperson told Commercial Property Executive that the new facility will likely be a Tier 3 data center. Such centers typically have redundant power for all IT equipment and guarantee more than 99.98 percent availability.

The Kansas City Area Development Council, Kansas Department of Commerce, and Lenexa Chamber and Economic Development Council worked together to bring CoSentry to the KC region. The data center reportedly will create more than 60 jobs.

The two-state Kansas City region reportedly ranks among the nation’s top three for IT workforce availability and is a focal point for both long-haul fiber and transcontinental fiber networks.

Earlier this month, CPE reported on Digital Realty Trust’s purchase of major data centers in San Francisco and Atlanta, for $85 million and $63 million, respectively.

And in late December, we reported that Hines Global REIT had acquired, for $160 million, Fisher Plaza, a two-building complex in Seattle that includes a multi-tenant data center in addition to office, retail, broadcast and telecommunications space. As of the purchase, Hines already owned the 661,500-square-foot One Wilshire Building in Los Angeles, which houses more than 300 telecommunications and data carriers.

The past year saw a surge of interest in data centers. “There is an insatiable amount of demand happening around the globe,” Bo Bond, co-lead of Jones Lang LaSalle’s data-center solutions team, told CPE last month. “As speculative development commences, we will begin to see a new crop of winners and losers in the data-center arena.”

In a $66 million deal that completes the second phase of the Scottsdale Promenade sale, Lucescu Realty has sold the Promenade Corporate Center to Excel Trust, a publicly traded REIT. In July of last year, the San Diego-based Excel Trust purchased The Promenade, a 730,000 square-foot shopping center in Scottsdale, Ariz., in a $110 million transaction.

Scottsdale Promenade, a 1 million-square-foot, mixed-use project, is one of the largest commercial properties in the Phoenix metropolitan area, located on 84 acres of land. The office component of the space consists of two four-story Class A buildings that total 256,176 square feet.

In July, Mark Lucescu, president of Lucescu Realty, told Commercial Property Executive that the Promenade is “a flagship property” that is outperforming most other mixed-use centers in the area. “If there are a handful of properties like this to invest in Phoenix, this is the one you’d want to buy,” he said. At the time of the transaction, “the property was 100 percent leased [and] had plenty of equity,” he noted.

According to NAI Horizon, the Phoenix office market, though in the doldrums through most of 2011, is starting to see some upward moves. A three-year run of continued unemployment, coupled with a flight to quality – which left many properties empty – left the market battered. But the fourth quarter of 2011 saw the office-vacancy rate drop 40 basis points from the previous quarter, finally resting at 20.7 percent. Rental rates, at year’s end, sat at $20.29 per square foot on average.

The center’s retail component is anchored by Lowe’s, PetSmart and Trader Joe’s.

A spate of media reports over the past two or three days have speculated about whether Silverstein Properties Inc. will build the 3 World Trade Center tower to its planned 80-story height, or will cap it at seven, and what this indicates, or doesn’t, about the Class A office market in Downtown Manhattan.

Here’s the deal: The original master development plan agreed to in August 2010 specifically stated that the construction of the 3 WTC tower, as opposed to its retail-oriented podium, would be conditioned on the extent of office pre-leasing. In a statement released Tuesday, presumably to clarify the situation, Silverstein Properties president & CEO Larry Silverstein said, “We are 100 percent committed and determined to build 3 World Trade Center to the top as quickly as possible. We agreed to a plan in 2010 that requires us to pre-lease 10 floors of office space before moving forward with the full tower.”

”We are currently speaking with a number of potential tenants and remain fully optimistic that we will sign a lease in time to complete the tower as scheduled in 2015. That agreement, which anticipated the completion of the podium in 2013, in no way prevents us from moving full steam ahead as soon as we secure a tenant.”

In plain English, the development agreement provided substantial flexibility down the road, so that the pace of building could be adjusted to demand for space. While Silverstein, obviously, would like to push the tower to its planned height, the leasing environment may prove to be the roadblock that impedes his progress.

Amid the hubbub, progress continues on several fronts at the World Trade Center site. As of this week, the steel skeleton of 1 WTC has reached 90 floors (of 104) and is now the tallest building in Lower Manhattan. The tower will top off in late spring, according to a Port Authority of New York & New Jersey spokesperson, and is slated for completion in 2013. The plan for 2 WTC is to build to street level and erect the tower (100 percent conventionally financed) later. The initial phase will be completed this year.

At 3 WTC, the concrete core is at the fourth floor. Steel will start to arrive in May, and the building will rise at least to the 7th floor initially.

Four WTC is up to the 61st floor and will top out this spring.

Finally, the transportation hub that’s being built around the interim facility that opened in 2003 is heading for completion in 2014.

The town of Quincy, Mass., has taken the next step in its future plans. A partnership with the city’s Street-Works Development L.L.C and The Beal Cos. of Boston has committed to drive forward a $1.6 billion redevelopment of that city’s Downtown area, the companies announced Tuesday. Touted as “the largest historic redevelopment in Massachusetts,” the project will eventually cover 20 blocks, or about 50 acres, in this city of 92,000 population.

As Beal/Street-Works, the two companies will be co-managing partners on the 3.5 million-square-foot Quincy Center, a transit-oriented, mixed-use project that will encompass 1.1 million square feet of new office space, 700,000 square feet of retail, two hotels, and more than 1,400 new rental and condo residential units.

Street-Works co-founder and managing partner Ken Narva told Commercial Property Executive that the office component will consist of two buildings of up to 20 stories with up to 35,000-square-foot floor plates and the possibility of connections between them. Based on the Boston area’s economy, he said, target tenants will be in the wellness/medical, higher education and corporate office areas.

Last September, it was announced that National Realty and Development Corp. would help develop up to 400,000 square feet of the retail space. Taking the omni-channel retailing concept into account along with the project’s six- or seven-year timeline, Narva said, this three-level community-focused retail component is intended to give major retailers the flexibility to choose smaller spaces than they traditionally have taken.

Consumers these days are “not coming to the store for price or selection,” he said. “They’re getting that online.” He notes that with most suburban areas already over-retailed, the growth in retail space will increasingly be in urban environments. The remaining 300,000 square feet of retail, Narva said, will be about half restaurants and half convenience/service retail. Additionally, the developers envision the project’s two hotels to be smaller boutique properties, with one focused on business travelers and the other on visitors and tourists.

Finally, he said, the project will include Adams Green, a four-acre interpretive center and tourist site centered on John Adams, the second President, and and John Quincy Adams, the sixth President, both of whom were born in Quincy.

Narva emphasized that the site’s access to public transit is crucial. “Without mass transportation, we wouldn’t be doing this project,” he said. The Boston rapid transit system’s Red Line, which carries a quarter-million people each day, has a station in the middle of the property, and several commuter rail lines also meet at the same station.

Quincy Center’s funding was kicked off in part late last year, when the Commonwealth of Massachusetts allocated $50 million from the Infrastructure Investment Incentive economic development program. Under I-Cubed, the state, municipality and private developer share the costs and risks of building the public infrastructure needed to support a project. In the overall arrangement, Quincy will invest public funds only after the project produces new tax revenues, so repayment of the city’s bonds will be carried by Quincy Center, not by taxpayers.

Pointing out that the developers have already invested half a dozen years in Quincy Center, Narva added with evident pride that the site was assembled without recourse to eminent domain.

Street-Works has completed mixed-use projects across the country, including Santana Row in San Jose, Calif.; Bethesda Row in Bethesda, Md.; and Blue Back Square in West Hartford, Conn. The company is currently also leading major urban redevelopments in Detroit and Dallas.

Adding to its stable of properties in Midtown Atlanta’s Atlantic Station project, CBRE Global Investors has acquired 201 17th St., a 349,400-square-foot, 17-story, Class A, LEED Gold–certified office tower built in 2007, the company announced Wednesday. The Atlanta offices of CBRE will manage and lease the building, which is currently 48 percent leased.

The acquisition was made through a note purchase and simultaneous deed conveyance and was made on behalf of the CBRE Strategic Partners U.S. fund series. The purchase price was not disclosed.

Built on a former steel-mill site, Atlantic Station began to open in 2003 and now encompasses 138 acres near the I-75/I-85 intersection north of downtown Atlanta. The mixed-use, master-planned development won the 2004 Phoenix Award for brownfield redevelopment from the National Brownfields Conference, whose sponsors include the U.S. Environmental Protection Agency.

In December 2010, CBRE Strategic Partners U.S. Value 5 Fund bought two trophy multifamily communities in Atlantic Station: Icon (242 units in four buildings) and Park District (231 units in five buildings). In January 2011, the same fund acquired from AIG a 534,000-square-foot office building at 271 17th St., a parking garage with nearly 7,000 spaces and 14.25 acres of land. At the same time, a joint venture including the fund and North American Properties, Atlanta, acquired Atlantic Town Center, a 586,000-square-foot retail property.

201 17th St. will be repositioned, and part of that will be the application of Strategic Partners’ 5-Star Worldwide amenity suite. Todd Frye, principal with CBRE Strategic Partners U.S., explained to Commercial Property Executive that this is “a scalable suite of amenities.” Although plans for the new building aren’t yet final, he said, a shared conference facility is likely, and an available first-floor space might become a fitness center.

In addition, a “spec suite” program will offer fully built-out space for tenants seeking a turnkey office option. Frye estimated that five to seven such spaces will be created, all with high-end finishes and likely ranging from 1,500 to 4,000 square feet. Target tenants include technology-oriented or creative-services companies.

Tishman's The Springs Development in Shanghai

Following increased demand for its products in China, Nike Inc. has just announced plans to build a 600,000 square foot corporate campus in Shanghai. The sports-equipment maker has selected Tishman Speyer’s new mixed-use development in the city’s Yangpu District, The Springs, as the campus’ future site. Nike expects to move into the new campus by the first quarter of 2014 and will be the first office tenant in the $2.5 billion development.

According to the company’s financial documents, revenue for all Nike products in China increased from $1.7 billion in fiscal 2010 to $2.1 billion in fiscal 2011, making the country one of the company’s highest-growth markets.

Calling the move “a strategic investment in our continued growth in China,” Craig Cheek, Nike’s vice president & general manager of Greater China, said that the move will unite all Shanghai employees into one central location.

Nike has signed a long-term lease with Tishman for the developer to create more than 587,227 square feet of space in a multi-building campus. When complete, the campus will have up to three buildings, a five-story conference center, basketball court and soccer field. The development is located between Shanghai’s two airports, Hong Qiao and Pu Dong, and will be built along a subway interchange.

According to Nike’s most recent SEC filing, the company creates 33 percent of its footwear in China, making the move one of consolidation. Additionally, Nike saw a 24 percent increase in future orders from the June-to-November quarter when comparing 2010 to 2011.

The Springs is Tishman Speyer’s largest project in China and follows the development of previous successful commercial projects in Tianjin and Chengdu. The Springs broke ground in June 2011 as a 9.7 million-square-foot green community that will, at completion, feature residential units, commercial, hotel, office and retail space.