Tishman Speyer Properties LP is putting 38-story One Federal Street on the market - bucking the consensus in commercial real estate that the roaring market for such big office properties has come to a halt, at least temporarily.
The offering comes less than two years after New York-based Tishman Speyer bought the 1.1 million-square-foot tower for $514 million, or about $471 a square foot, a near high for the time.
Trophy properties had been trading at rapidly escalating prices and with increasing frequency for several years.
But late last summer, the subprime loan meltdown in the residential sector chilled the lending climate, even for office properties. Sales of commercial properties fell dramatically in the last half of 2007.
Tishman executives would not comment, but their broker, Rob Griffin, president of Cushman & Wakefield of Massachusetts Inc., said the current conventional wisdom is wrong.
"Although pricing is off a bit from what it was, it's still high, with historically low interest rates," he said. "And the real estate fundamentals are as strong as they've ever been in Boston, with single-digit vacancy rates."
Griffin noted the General Motors Building in New York, which just went on the market, has drawn three strong bids and could sell for as much as $3 billion.
"Like the GM Building, great assets still garner the great pricing," he said.
Besides being nearly completely leased, One Federal has debt with good terms that can be assumed by its next owner, Griffin said. And some of the current leases are at rates that by current standards are low enough that the next owner could anticipate raising rents.
"Which is why Tishman feels so confident that this is a good time to sell," he said.
Current tenants include Bank of America, State Street Corp., Bear Stearns, Credit Suisse Group, and the law firm Bingham McCutchen LLP.
David I. Begelfer, chief executive of the Massachusetts chapter of the National Association of Industrial and Office Properties, said Tishman's decision shows confidence in the Boston market, despite general industry nervousness.
"I would call it location, location, location meets quality, quality, quality," Begelfer said. "There are buyers who have been on the sidelines for quite a while with no great alternatives, certainly not the stock market. This may be the start-up of a buying cycle in Boston."
Boston's office vacancy rates are as low as they have been in about six years, and there is little office space under construction. Construction prices have increased so much over the past several years that even though existing buildings are selling for near-record prices, they are still going for below replacement cost.
One Federal, built in 1976, has undergone at least two major renovations.
In mid-2006, Tishman Speyer bought One Federal, which occupies a full block, and was formerly Shawmut Bank and FleetBoston headquarters, from Jamestown, a German pension fund.
At the same time, Tishman bought out Jamestown's 76 percent interest in 125 High St. for an undisclosed price.
Tishman and Jamestown had jointly owned 125 High since 1999.
Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.
