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BOSTON-A quartet of leases has brought the Financial District’s 84 State St. to 100% occupancy, according to brokers for the landlord, Invesco Realty Advisors. Among the city’s cadre of so-called “jewel-box” office buildings, the Beaux-Arts style structure houses more than 40 tenants despite a moderate frame of 11 stories and 120,000 sf.

“That shows how much people love the building,” says Lincoln Property Co. broker Jeff Moore, who joined Boston office chief John Miller in negotiating the latest leases on behalf of Invesco. “It’s a class B building with class A amenities and location,” Moore tells GlobeSt.com of the building, an historic treasure revered as one of Boston’s first commercial properties. Lincoln has represented 84 State St. since Invesco acquired the asset approximately 10 years ago, and Moore says the fundamentals have remained superior on both occupancy and rent levels.

The home to such well-known firms as Colliers International, 84 State St. completed nearly 15,000 sf of transactions in the recent flurry to reach full occupancy. The largest deal was cemented by Brooke Private Equity Advisors, followed by Gelb & Gelb, Mad River Management and Abbott Real Estate Development. Tenant brokers included Andy McDonald for Mad River, and Chris Rogers and Bryan Sparkes of Grubb & Ellis assisting Gelb & Gelb. Brooke was represented by Andy Hoar and Taidgh McClory of CB Richard Ellis.

Specifics of the individual leases were not provided, but Moore did acknowledge rents have been exceeding $40 per sf at 84 State St. in many latter-day deals. Fit out allowances were said to be limited, and concessions such as free rent that were commonplace in Boston barely a year ago were reportedly non-existent. That should prevent the returns from becoming diluted.

These days, however, diluted returns are a diminishing concern in the Financial District, as the sudden dearth of supply and an improving economy hasten rent accretion. Rumors are abuzz that a lease at One Post Office Sq. that drove the rates above $90 per sf earlier this year will eventually escalate to $100 per sf, an elusive goal for Boston’s office market. That record deal, first reported by GlobeSt.com this spring, is among several that have reportedly hit over $80 per sf in recent months.

In Lincoln’s mid-year office market report, director of research Emily Schwartz estimates that the average asking rental rate in Boston has risen by $1.41 since the first quarter to $36.74. The level would likely be higher, she advises, except some landlords are no longer issuing quotes prior to the start of negotiations, a reflection of the rapidly changing paradigm. “The more likely range of asking prices for class A space in the Financial District and the Back Bay is now closer to $45 to $90″ per sf, according to Schwartz, noting that a new wave of landlords such as the Blackstone Group is aggressively pushing rates even higher to reflect the hefty price tag paid to gain entry. Blackstone arrived in Boston on the wings of its $39-billion buy-out of Equity Office Properties in February.

Whether Blackstone et al can regularly receive what they ask remains to be seen, but Lincoln’s mid-year results supported other data showing the fundamentals are moving in their favor. Tracking 32.3 million sf in the Financial District, Lincoln puts the direct vacancy there at just 6.6% after year-to-date net absorption of 126,000 sf. The 58.6-million-sf Boston office market overall posted 389,000 sf of positive absorption in the second quarter, Lincoln reports, to put the YTD level at 679,000 sf. That has dropped Boston’s vacancy rate to 6.1%, with only the Seaport District (10.1%) in double digits among seven submarkets.

Looking forward, Moore says the level of tenant activity does not appear to be slowing even as the summer season takes hold. That bodes well for the remainder of 2007, he says, especially for landlords with vacant space available. And while that is no longer the case for Invesco at 84 State St., with the rollover limited, Invesco does reportedly have space available at another Boston jewel-box building it owns nearby, One Liberty Sq. Richards Barry Joyce & Partners are leasing agents for that property, termed a jewel box due to an ornate design, compact size and consistent cache among tenants. One such Financial District asset, 45 Milk St., recently traded for nearly $500 per sf.

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