Dec 30, 2010
Where do you think 2010’s biggest real estate investment in the United States was? California? Florida? Springfield? Nope…Boston, home of the Celtics!
The John Hancock Tower was just sold to the highest bidder, Boston Properties, for $930 Million! But is the building worth it, even though it has an up-and-down past?
The John Hancock Tower is located in the lovely Back Bay area in Boston, towering over the city, 62-stories up. The predominantly glass skyscraper, built in 1975, has become a Boston landmark and a dimmer switch to Boston’s real estate market.
The property value of The Hancock Tower has always followed the ups and downs of the real estate market in Boston. In 2003, the Hancock tower and three other properties sold for just over $925 Million, which was the initial surge to power the real estate industry for the next 3 years. The property values increased and real estate market boomed which resulted in more financial and economic gain for the Boston market. Commercial buildings retained their value and investors were generous to spend money on quality properties.
With The Hancock Tower’s good karma, more foreign investors entered the market, pension funds were advantageous, and cheap debt from Wall Street helped aid the market. With the real estate industry roaring, the Hancock Tower had a worth of over 1.35 Billion dollars in late 2006.
In 2008, a dark cloud appeared over Boston’s real estate industry as the Lehman Brothers collapsed in September, causing the market to collapse as well. The property values dropped by a third not only in Boston, but surrounding areas as well. With the market taking a vacation down south, the Hancock Tower’s rent increased causing companies like Hill Holiday to jump ship and move out of the building.
A year later, Normandy and Five Miles took over The Hancock Tower, bought 200 Million dollars worth of mezzanine loans and revamped the building, investing $40 Million dollars into a new underground parking lot for executives, a revamped lobby, and other improvements. With this extreme makeover: financial edition, it enabled The Hancock Tower to reduce its rent and allowed new businesses and previous customers to move in.
Wednesday, The Hancock Tower was bought from Normandy and Five Miles for $930 Million by Boston Properties. If history repeats itself, then 2011 will be a great year for real estate in Boston, and more investors will be ‘putting their John Hancock’ on the dotted line for larger real estate projects.