NEWTON, MA-After assembling, revamping and divesting a 300,000-sf portfolio of class B office buildings in Boston over the past decade, local investment group Fairlane Properties LLC is back on the prowl for product, as evidenced by the $7-million purchase of an 80,000-sf office/flex building in this inner-suburban community.

President Michael Grill tells that Fairlane is eyeing similar assets as part of a plan to accommodate office and industrial tenants seeking to escape rising rental rates.

“We’re out buying again,” stresses Grill, who relays that the path has not been easy, particularly because the crush of institutional capital has abandoned its core-centric mantra in a desperate quest for yield. That has driven pricing for the sort of buildings Fairlane specialized in buying during earlier cycles to unreasonable levels, he explains, requiring the pursuit of properties way off the institutional radar screen. “My options in Boston are extremely limited,” says Grill, who secured the Newton property in an off-market deal orchestrated by John Nealon of W.J. Nealon Commercial for the buyer and Warren Brown of Boston Commercial Realty on behalf of Fairlane.

Value-add was a consistent component of previous Fairlane investments such as 98 North Washington St. in Boston’s North Station and buildings on Broad and Water streets that were harvested earlier this decade, hut the latest campaign essentially takes that challenge up a notch. “Properties with serious due diligence issues are the ones I want to look at,” says Grill, anticipating those lacking fatal flaws can be repositioned given the proper attention. Grill says likely prospects may have been owned indefinitely by a user who has deferred maintenance and would entertain a buyout, as in the case of the Newton property at 59-83 Chapel St.

The properties must, of course, possess certain enduring qualities, and Grill voiced confidence that his first conquest has the underpinnings to attract office and flex tenants being priced out at more modern buildings. “It’s a great building physically,” Grill says, citing 14-foot clear ceilings and “outstanding” brick-and-beam space, plus access to the Massachusetts Turnpike and several public transit lines. Compared to rents above $40 per sf seen elsewhere along Route 128 Central, the newly recast Chapel Business Center can do a deal in the high teens to low $20′s, adds Grill, whose firm has retained the Codman Co. as exclusive leasing agents. “They know this market very well,” Grill says in announcing the selection of Codman. The team will be led by Codman brokers David Campbell, Drew Nelson, Brad Bevis and Richard Robinson.

Fairlane has already begun a capital improvements program, one that will include site work, a new roof and gutters, signage and other cosmetic enhancements. About 35,000 sf is immediately available, and Grill says he is “encouraged by the response” initially of the tenant community. The intention with Chapel Business Center and other investments is to retain a long-term ownership, according to Grill, whose firm acquired the first property through an affiliate, Fairlane Chapel LLC. The group has retained Lincoln Property Co. as manager of Chapel Business Center. Eastern Bank provided financing for the acquisition.

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