- Blackstone sold 399 Boylston St. for $125M, one of the few Boston office deals this year to close above its original purchase price.
- The 13-story tower is 90% leased, making it a standout in a city where office vacancies remain elevated—27% downtown vs. 18% in Back Bay.
- Office demand in Boston remains soft, with long-term remote work trends and rising rates suppressing deal flow and city tax revenues.
- DivcoWest sees opportunity, citing Boston’s long-term resilience and location fundamentals as drivers for the acquisition.
A Rare Premium In Boston
Blackstone has sold a 13-story building at 399 Boylston Street to DivcoWest for $125M, reports Bloomberg. The sale marks a rare bright spot for Boston’s office market. The deal narrowly exceeded Blackstone’s 2014 purchase price of $117M. At over $500 PSF, it is one of the few in Boston this year to close above original pricing.
The deal stands out in a market hit by falling values and low activity since interest rates began rising in 2022.
Why It Sold
The tower’s Back Bay location—one of the city’s strongest office submarkets—and a 90% lease rate made the asset particularly attractive. Vacancy in Back Bay was 18% in Q3, far lower than the 27% seen in Boston’s central business district, per CBRE.
DivcoWest called Boston “one of the most resilient and desirable office markets in the country,” a sentiment increasingly limited to high-occupancy, well-located assets.
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Context: A Market In Flux
It’s only the second 200K+ SF office sale in Boston this year, highlighting a sharp decline in deals since the pandemic. Ongoing hybrid work patterns and elevated borrowing costs continue to chill investor appetite.
Boston’s municipal budget is particularly vulnerable. Roughly one-third of its tax revenue comes from commercial real estate—far more than most major US cities. Mayor Michelle Wu has pushed to raise commercial property tax caps to make up for declining assessments, but efforts have stalled at the state level.
Blackstone’s Shifting Office Strategy
While Blackstone has scaled back its office exposure in recent years, it has selectively re-entered the market. The firm recently acquired stakes in offices in Bellevue and Midtown Manhattan. Through its BioMed Realty arm, it also expanded in Cambridge’s Kendall Square life sciences hub.
Still, it continues to prune legacy holdings—last month offloading Park Avenue Tower in Manhattan to SL Green.
The Bottom Line
The 399 Boylston deal is a rare example of an office sale closing at a premium in Boston’s challenged commercial market. For Blackstone, it’s a strategic exit; for DivcoWest, a bet on location and occupancy outperforming broader market trends.
Office utilization is still lagging, with September visits at less than two-thirds of 2019 levels. Expect continued caution, but also opportunistic plays on trophy assets in prime submarkets.
