Hines Interests and Calpers Buy Pair of Riverfront Office Buildings

CAMBRIDGE, MA-In a deal expected to exceed $200 million, Hines Interests and a California pension fund have purchased a pair of Class A office buildings lining the gateway to the booming East Cambridge office market. Hines joins the California Public Employees Retirement System (Calpers) in acquiring One and 101 Main St. from Blackstone Real Estate Advisors.

“It’s a significant [complex] in a fantastic market,” says Hines vice president David Perry. While acknowledging that the deal has closed, Perry declined to provide details, citing an ongoing confidentiality agreement. He adds that a press release will be issued within a few days on the purchase of the complex, which is also known as the Riverfront Office Park. Calls to Calpers and New York-based Blackstone were not returned by press deadline.

Despite that, industry sources estimate that the buildings sold for about $325 per sf, or in the $215 million range for the 667,000-sf complex. If accurate, that would reportedly be a new record for Class A office space in Cambridge, which has been a popular target among investors given the city’s tight vacancy rate and rents that now average above $50 per sf. At present, for example, Beacon Capital Partners is entertaining offers from buyers angling to acquire its Technology Square office development a few blocks from the Riverfront site, while several other Cambridge office buildings have already changed hands this year.

The sale of Riverfront has created a domino effect as well, with Blackstone’s property management team migrating across the river from Cambridge to One Boston Place. Blackstone and Walton Street Capital of Chicago recently purchased that 41-story, 770,000-sf office tower in Boston’s Financial District for an estimated $180 million. Meanwhile, CB Richard Ellis/Whittier Partners has been hired to lease One Boston Place, which has a number of tenants rolling over during the next few years. Jones Lang LaSalle had managed One Boston Place for the previous owners, Lend Lease Real Estate Investments.

Riverfront, which comes with 200 parking spaces, is just the latest real estate deal done by Hines and Calpers. The pension fund selected Texas-based Hines two years ago to manage its office investment program in the eastern and northwestern United States. Earlier this year, for example, the two entities announced they will develop a 31-story office tower in San Francisco.