Blackstone Group LP (BX) agreed to buy a 13-story office building in Boston’s Back Bay district for $117 million, seeking to increase income by re-leasing space in a strong market, said two people with knowledge of the deal.
The seller of 399 Boylston St. is Shorenstein Properties LLC, which has owned the building since 2007, said the people, who asked not to be identified because the deal isn’t set for completion until September. The brick-and-glass property, built in 1983, has about 230,000 square feet (21,400 square meters). The asset-management unit of France’s Natixis SA, which rents more than half the space, has said it will move to a new Boston Properties Inc. development down the street in 2017.
Blackstone typically buys assets it can improve by filling vacancies or renovating. The New York-based company already owns two buildings, 222 Berkeley St. and 500 Boylston St., a block away from the one it’s buying. Boston, with its concentration of health-care, financial-services, education and technology employers, was eighth out of 79 major U.S. markets for office-rent growth last quarter, according to researcher Reis Inc.
Peter Rose, a spokesman for Blackstone, and Tim Gallen of San Francisco-based Shorenstein declined to comment on the Boston deal.
The Back Bay area had office vacancies of 7.7 percent in the second quarter, the lowest among Boston’s nine submarkets, according to Reis. That compared with a 13.6 percent rate for the entire metropolitan area.
In a similar plan to boost income with new tenants, Blackstone on July 31 bought Manhattan’s Park Avenue Tower from Shorenstein for about $750 million. Law firm Paul Hastings LLP plans to vacate the building when its lease for 16 of the 35 floors expires in 2016, two people with knowledge of that transaction said last month.
The company also may expand the retail portion of 399 Boylston, said the people familiar with the company’s plans.
Blackstone agreed in May to sell five Boston-area buildings to a venture led by Toronto-based Oxford Properties Group for about $2.1 billion in its largest sale of U.S. office assets since the real estate market crash, two people with knowledge of the deal said at the time.
Blackstone’s Equity Office unit, based in Chicago, has about 45 million square feet of Class A office space in the U.S., according to its website. The country’s biggest office landlord is Bermuda-based Brookfield Property Partners LP (BPY), which owns about 65 million square feet in the U.S.
Shorenstein bought 399 Boylston for $90.8 million close to the peak of the commercial-property market, when the building was fully leased to 14 tenants.
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