BOSTON-With a $38-million spec office project breaking ground this summer in the commercial real estate firm’s hometown of Waltham, Neelon Properties is demonstrating faith in the suburban market, but the firm apparently sees upside in the downtown sector as well after buying 2 Liberty Sq. in Boston’s Financial District. The 11-story, 60,000-sf asset traded for $23 million, or about $383 per sf.

Efforts to contact Neelon officials and brokers at Jones Lang LaSalle who handled the sale were unsuccessful, but Suffolk Country Registry of Deeds records confirm the deal has been consummated. Some industry observers that were spoken to also acknowledged Neelon’s investment, a move that caught at least one veteran broker off guard. “It was surprising, yes,” says the source, recalling Neelon as a firm focused on suburban Boston and its core Waltham property overlooking Route 128. It is there on Bear Hill Road that Neelon and Normandy Real Estate Partners are developing the 105,000-sf Overlook Center, one of several office projects now underway in that community.

Neelon is certainly not alone in seemingly anticipating upside in Boston, as the city experienced heavy investment sales through mid-year, much of it focused on small- and mid-sized properties similar to 2 Liberty Sq. The CRE market continues to buzz about the nearly $500 per sf recently fetched for 45 Milk St., while reported yesterday that the Flatley Co. traded its 141 Tremont St. for $333 per sf. “That’s right there” with comparable deals, says one broker. The sale represents a substantial return for ELV Associates, which paid $15.2 million for the building in February 2005.

ELV, a foreign investment group which has had a presence in Greater Boston for several years, acquired 2 Liberty Sq. during a period of turmoil for the asset. Sole tenant Putnam Investments was being battered by its market-timing role in the mutual fund industry, a scandal that led to a sharp reduction in the venerable company’s worth. While difficult to say how much of an impact it played on the firm’s decisions, Putnam later opted against renewing its lease at 2 Liberty Sq., and the space remains available.

Jones Lang LaSalle also negotiated the 2005 sale to ELV Associates. Members of the investment sales team in that deal, and reportedly involved in the latest transfer, include Catherine Daume, Michael Smith and Scott Jamieson.

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