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28 State St. Tower Trades in Largest Boston Office Sale This Year

Heitman's $418 Million Purchase of 40-Story Financial District High-Rise May Not Hold Title for Long
June 7, 2018
Heitman has struck a deal to acquire 28 State Street in downtown Boston in the largest office trade in the city this year.

An investment vehicle affiliated with the Chicago real estate investment manager paid $418 million, or slightly more than $730 per square foot, for the 40-story, 572,000-square-foot tower in the city's financial district. The sale price is the highest in terms of both total dollars and per square foot price recorded for a large office building in Boston this year.

Boston’s TA Realty, which is headquartered in 28 State Street, served as the asset manager for the owners, a joint venture between the Rockefeller Group of New York and Mitsubishi Estate New York, the U.S. arm of the Japanese conglomerate. The Rockefeller joint venture acquired the tower from Blackstone in early 2014 for $343.3 million, according to CoStar data.

It’s unclear if Heitman is taking the tower through one of its own investment funds or if the company is acting as an advisor or asset manager for a third party.

The Emory Roth & Sons-designed tower was built in 1968, with renovations targeting the building's infrastructure and lobby completed in 1997. 28 State Street, one of only eight buildings in Boston to stand at least 40 stories tall, is 95 percent leased to a couple dozen major financial and law firms. In addition to TA Realty, major tenants include Citizen's Bank, Morgan Stanley, Santander Bank, McDermott Will & Emery and Hinckley Allen. The property also includes 7,000 square feet of retail space.

While the sale price sets this year’s high-water mark, Boston has a handful of big-ticket office properties on the market, including the 1.2 million-square-foot 1 Exchange Place at 53 State Street. That 40-story tower could beat 28 State’s square foot price and total value.

TA Realty, which sold a majority stake in itself to Rockefeller in 2014, arranged the 28 State Street sale.

Please refer to CoStar Sales Comp #4285097 for additional information regarding this transaction.

John Doherty, Multifamily Reporter  CoStar Group   
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