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QUINCY, MA-State Street Corp. is apparently going to remain at 200 Newport Ave. longer than anticipated, with industry sources claiming that the financial services giant is extending a short-term lease at the eight-story, 146,000-sf building. The three-year renewal follows State Street’s sale of 200 Newport Ave. in early 2007 to ING Clarion for $17.5 million.

“It has been executed,” one source tells GlobeSt.com of the extension, a deal that has caught many off guard given State Street’s previous intentions to vacate the structure within two years of its sale. “It was very unexpected,” one source accedes of State Street’s last-minute commitment. The firm has been in 200 Newport Ave. since it opened in 1984, part of a substantial presence of State Street’s back office operations on the South Shore. Several brokers say ING Clarion had actively been offering the space to the general market in anticipation of State Street’s departure, but that opportunity apparently is no longer in play. Cushman & Wakefield is exclusive leasing agent for 200 Newport Ave.

Thus far, the parties involved have yet to acknowledge any agreement. Richards Barry Joyce & Partners principal Michael Frisoli, said to have represented State Street along with RBJ principal John Barry, referred inquiries to ING Clarion. Calls to that firm and 200 Newport Ave. agent J.P. Plunkett of Cushman & Wakefield were not returned by press deadline. The C&W senior director is handling the 200 Newport Ave. assignment along with senior director Catherine Minnerly and associate Jason Bryer.

Despite the silence, sources insist State Street is staying at 200 Newport Ave. into the next decade. “That’s real good news,” says one broker, especially for South Shore landlords who saw a difficult end to 2007 for the submarket. According to Jones Lang LaSalle, the South region posted negative net absorption of 60,000 sf in the fourth quarter, finishing the year at a vacancy rate of 16% for 12.5 million sf. In its annual review, JLL notes that the vacancy rate actually dropped 1% from the previous year despite the torpid fourth quarter. One of the bigger deals was State Street renewing for 100,000 sf in Milton, and JLL reports encouraging velocity in the early going of 2008.

One broker says many of the prospects circling the market had considered 200 Newport Ave. a serious target. “It’s a gorgeous building,” says the industry professional, citing views of Boston Harbor and a range of first class amenities among the building’s high points, as well as access to Boston via Interstate 93 and the Red Line subway.

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