A renewed interest in buying

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from Geoff Homer
Research Analyst
Jones Lang LaSalle

Notable sale transactions this year, with the exception of One Brigham Circle and 10 Brookline Place West, have been anemic. These two each sold in the $100 million range. Additionally, a number of investors placed bids on the Hancock Tower, which is reported to command over $900 million.

In the burbs activity has been centered on owner-occupier transactions. The availability of vacant and distressed buildings that can be acquired for significant discounts has spurred a renewed interest in buying. Tenants evaluating lease versus own strategies are unquestionably realizing the benefits of ownership.

In Westborough, eClinicalWorks purchased 2 Technology Drive for $4.6 million, or $45 PSF which is a 70% discount to the previous sale. The company was in the market for new HQ space and recognized that as a private company in this environment buying made economic sense. Also in Westborough, Kraft Group subsidiary Rand Whitney Container bought a 200,000 square foot industrial building at 125 Fisher Street for just over $3.7 million or $19 PSF.

A REO transaction in Chelmsford occurred when Hittite Microwave Corporation purchased 2 Elizabeth Drive for $3.3 million or $31 PSF. In 2006 the property sold for $12.1 million to an investor.

Looking ahead, well-capitalized users of single-tenant buildings need to consider the proposed FASB lease accounting rule changes. This will require companies to record the full value of leases on their balance sheets as a liability. Due to the myriad complications of carrying a lease as a liability on your balance sheet, it might make more sense from a business perspective to buy.

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