AREA Property Partners, Commonwealth Ventures Plan $225M Office Project in Boston
- Jun 15, 2012
By Gail Kalinoski, Contributing Editor
An 11-story Class A office building along the South Boston waterfront is moving closer to construction now that the Boston Redevelopment Authority has approved the approximately 500,000-square-foot project planned by AREA Property Partners and Commonwealth Ventures.
One Channel Center is fully leased to financial services firm State Street Corp., which has agreed to a 15-year lease. The $225 million project is slated for the last development site in the Channel Center complex, a 1.5 million-square-foot, multi-phase, mixed-use development of rehabbed and new buildings with commercial, office and residential space in the Fort Point neighborhood. Commonwealth Ventures paid Beacon Capital Partners $21.5 million for the property in December 2007. The site is located near the Seaport and within Boston’s Innovation District.
Now we’ve assembled all of the key government approvals, development expertise and capital to bring this project to a successful completion, and look forward to breaking ground, said Richard Galvin, president and founder of Fairfield, Conn.-based Commonwealth Ventures.
The building is expected to be finished by February 2014. It will also include a 980-space parking garage and some retail space. State Street employees will use most of the garage but some will be available to the public. The development team will also be including two public parks.
AREA’s investment is being made through its current U.S. Opportunity Fund. Lee Niebert, global CEO of AREA, said the deal was sourced through AREA’s previous role in another Channel Center project.
Our partnership with Commonwealth Ventures on One Channel Center exemplifies AREA’s ability to directly source premier investment opportunities, he said. We already have significant familiarity with this sub-market and with Commonwealth as sponsor. This project-specific knowledge further increases our confidence in the new office development.
State Street is expected to move into One Channel Center in 2014 when leases are up at other premier office buildings in the city, including the Prudential Tower and the John Hancock Tower. The firm is retaining its headquarters at One Lincoln Street, according to several media reports. The Boston Herald and the Boston Globe are both reporting that State Street is expected to receive $11.5 million in tax breaks to make the move to One Channel Center. The BRA could vote on the tax issue as soon as next month.
Andy Hoar of CB Richard Ellis N.E. Partners, L.P., arranged the transaction. Colliers International represented State Street on the leasing deal.
AREA, headquartered in New York City, was formerly known as Apollo Real Estate Advisors. It is an international real estate investor and fund manager for pension funds, sovereign wealth funds, insurance companies, foundations, endowments and high-net worth individuals. Its funds have invested in over 570 transactions worth more than $65 billion. Through various real estate funds and joint ventures, the firm has made over $13 billion in equity commitments for investments in the United States, Europe and Asia. Many of its U.S. investments have been in multi-family, though last month it joined a group led by MB Real Estate to acquire a Class B+ office property at 200 West Jackson Blvd. in Chicago for $58.5 million. In November, AREA and the Adler Group formed a joint venture to purchase a 3.1 million-square-foot industrial portfolio in the metro Washington, D.C., area for $70.6 million from the Washington Real Estate Investment Trust.
In addition to the Channel Center project, Commonwealth Ventures’ current investments include Gateway Center, an 114,000-square-foot Class A office building in Providence, R.I., and Davol Square, an 113,551-square-foot building and contiguous two-acre site in Providence’s Jewelry District.