With prices soaring, a big tower goes on the block
The roaring commercial real estate market is getting too hard for property owners to resist.
Rose Associates Inc. and MetLife Real Estate Investments, the original developers and longtime owners of One Financial Center, are the latest owners moving to cash in on the furious escalation in prices for office buildings. Today, they are putting the prominent tower near South Station on the market, and industry specialists estimate they could draw bids as high as $900 million.
The 46-story tower goes on the market at a time when prices for prime Boston office properties are rising rapidly, doubling even in a few years, and some top-quality buildings are selling and reselling in a similarly short span.
"This is confirmation of what has been the case for three years, and that is the investment market for first-class trophy properties in Boston is insatiable," said David I. Begelfer, chief executive of the National Association of Industrial and Office Prop erties' Massachusetts chapter.
If One Financial Center, at about 1.1 million square feet, sells at about the same price per square foot as the similarly sized State Street Financial Center tower did late last year, it would bring more than $900 million -- among the most ever in the city. State Street Financial Center sold for about $870 a square foot, a record, according to Cushman & Wakefield of Massachusetts Inc., which is marketing One Financial.
The current high prices are fueled in part by a strong and improving market for office rents in Boston, a shortage of new space, and growing mounds of capital looking to buy in an investment category that continues to outperform traditional equities markets.
Total sales of Boston-area office properties skyrocketed from $1.6 billion in 2002 to more than $10 billion last year, according to Real Capital Analytics, which tracks commercial sales. Prominent examples include the John Hancock Tower and adjacent properties, which Beacon Capital Partners LLC bought in 2003 for about $910 million and sold in December 2006 for almost double that. The tower alone fetched about $1.3 billion.
John Calagna, public relations director in MetLife's New York office, said his company, a 50-50 partner with Rose, may cash out some of its interests in the building and still retain partial ownership in One Financial Center, a six-sided glass and steel structure on Summer Street. Bids are expected to be due in about 30 days.
"It's a terrific property, and we think this is the perfect time to be gauging interest in this marketplace," said Calagna. MetLife has offices in One Financial Center and plans to stay, he said.
Rents at Boston office towers in the Financial District, and especially for first-class spaces such as One Financial Center, are moving up fast, after several soft years.
Average rents for top-quality space in the Financial District peaked at about $70 per square foot in 2001, then plummeted over subsequent years, to less than $40 through 2004 and 2005 -- about what the rent was for one of the top tenants in One Financial Center when it opened more than 20 years ago.
But now, with many downtown buildings filling up after several years of having empty floors, average rents for premium space in the Financial District exceed $50 per square foot, according to the real estate firm Jones Lang LaSalle.
Rob Griffin, president of Cushman & Wakefield, said the property is expected to bring at least $800 a square foot, or about $850 million. He attributed the high anticipated price to a number of factors, including the arrival of many new property owners in town that are aggressively pushing higher rents, fewer choices for prospective tenants, and the completion of the Big Dig, which is laying a set of parks at the building's front door.
One Financial is "one of the truly elite Class A towers in the city," Griffin said. "It's one of five or six buildings that outperform the market in rents and occupancy. It's in an absolutely unbelievable location in the city, in terms of getting in and out."
The building, which is slightly shorter than One International Place, cost $100 million to build and opened in 1984, with 1,065,607 square feet. Today, it is nearly 100 percent leased.
Another Boston tower developed by Rose, 99 High St., was sold about two years ago -- for the third time in five years.
Even the most iconic and newest properties in Boston, like the Hancock Tower and State Street Financial Center (formerly called One Lincoln Street), have had multiple owners over a few years.
"It's a great time to sell," Begelfer said. "The opportunity to buy at the historic high point in the market and to still show a healthy return is pretty much assured."
Thomas C. Palmer Jr. can be reached at tpalmer@globe.com. 
