Boston real estate firm pays $35M for one of Portland’s ‘most significant’ office properties

As reported in Mainebiz Main Real Estate Insider by Dylan Martin

PORTLAND, ME – A Boston-based real estate investment and management firm has purchased what brokers are calling one of Portland’s most significant high-quality office properties. Albany Road Real Estate Partners bought 100 Middle St., a 195,000-square-foot property consisting of two towers, for $35.3 million, according to brokers involved with the deal. The property also includes an on-site parking garage for over 250 vehicles.

Drew Sigfridson of CBRE|The Boulos Co. represented the buyer in the deal, which closed on March 19.The property was sold by Middle Street Office Tower A Associates and Middle Street Office Tower B Associates, respectively. The two entities were represented by Greg Boulos and Joe Porta of CBRE|The Boulos Co.

“The barriers of entry into the office market in Portland are quite high due to the overall stability of office occupancy, rent levels and the high costs of new construction,” Sigfridson said in a prepared statement. “Office building owners rarely sell these assets because the returns are solid and predictable.”

Albany Road is planning to invest $2.5 million into capital improvements for the building, which includes tenants like Berry Dunn, Bernstein Shur and Morgan Stanley. The brokers said the improvements — such as upgrading the property’s common area and HVAC system — will help 100 Middle St. maintain its status as a Class A office property in Portland. The building is fully occupied right now, but a 24,000-square-foot space is expected to become available by the end of the year, according to the brokers.

The deal comes after CBRE|The Boulos Co. announced earlier this month that two other high-quality office buildings in Portland had been sold for a total of $66 million. The brokers said the most recent sale is one of the largest transactions for a down-town office property on Portland’s peninsula. Together, the brokers said they point to healthy market.

“What we’re finding in the market is a lot of investors are coming into the area [from out of state] because they’re finding the yields and returns they get in Boston and [New York City] are lower than what they can achieve in this marketplace,” Boulos told Mainebiz.

Beyond the perception that there are better returns in Portland, Boulos said, Portland also has generated a lot of favorable press over the past few years, mostly because of its vibrant restaurant scene and the high quality of life that the area has to offer.

“Anyone I talk to out-of-state knows about the restaurant scene in Portland in particular,” he said. “They also hear about [the Portland area’s] quality of life. All of these things build a great story [saying] that Portland is a great place to live.”

In a statement provided by CBRE|The Boulos Co., Chris Knisley, president of Albany Road, expressed confidence in Portland’s market.

“In the past decade, a tumultuous time period by anybody’s definition, the Portland Class A market, and 100 Middle St. in particular, have performed extremely well and averaged very healthy occupancy levels,” he said. “The property boasts a commanding presence in downtown Portland, just two blocks from the waterfront, and it is surrounded by the city’s vibrant retail and restaurant scene. We are excited about the prospects for 100 Middle St. in the years to come.”

Knisley did not respond to a request for comment by press time, but his real estate firm’s website provides some insight into Albany Road and its history.

Founded in 2012, Albany Road owns 23 properties on the East Coast, with a majority of them located in New England, according to the real estate firm’s website. Four of its properties are located in Nashville, with one in Atlanta. Combined, they amount to 3.1 million square feet, with a gross asset value of about $340 million.The property types include urban office, suburban office, industrial/research and development, storage and retail.

Albany Road said it seeks investments in the $10 million to $40 million range that generate annual cash-on-cash yields between 11% to 15%, according to the website. On its “investment thesis” page, Albany Road explains the underlying philosophy of those investments.

“This is inefficient and fertile space to operate in, as the deal size is typically too small for major institutional players to focus on and too large for the typical private operator to tackle,” the website says. “We feel that the risk-return metrics found in this pricing range are notable.”