

399 Washington was family-owned for decades, until 2017 when Chicago-based LaSalle Investment Management and L3 Capital bought it for $63 million. They then invested millions more into a full suite of upgrades: working bathrooms and elevators, new mechanical and HVAC systems. They stripped off the two-story gray slab that hung over the building’s entrance for years, replacing it with tall expanses of metal and glass windows. The owners started marketing the retail space shortly after buying the building, and completed upgrades in 2021.
But tenants never came. And earlier this year, with office demand still weak following the COVID-19 pandemic — and no rental income coming in — 399 Washington ended up in a real-estate owned sale.
The prospect of a freshly overhauled building at a big discount drew interest from several investors — including Celtics star Jaylen Brown — but the bid by Hudson and Assembly won. Now they plan to market the property at rents in the $40s per square foot, $7 to $10 less than the typical rent for Class B office space downtown, and around $20 less than what the prior owners would have had to charge, Papanastasiou said. Bringing in a ground-floor retailer, and resetting rents for offices up above, will bring an energy to the property that hasn’t been seen in decades, the new owners said.
“That will cast a wide net for tenancy,” Papanastasiou said. “Just lighting up this building is going to help tremendously.”

Ron and Papanastasiou aren’t alone. Amid a broad post-COVID reset in office values across the city that has long-reluctant owners resigning themselves to selling at a loss, investors and developers are spying opportunity, eager to snap up well-located spaces — and then offer them to tenants at lower rents.
One such opportunistic investor is Broder, a Boston-based real estate investment and development firm that recently bought 15 Broad St. downtown. It’s Broder’s second time owning the building, which it sold to Brookfield Properties in 2016 for $32.5 million. In late 2019, just a few months before COVID hit Boston, Brookfield sold it to TA Realty for $46.1 million. Earlier this year, Broder bought it back, for $13.5 million — $5 million less than it first paid to buy it 18 years ago.
Broder is privately funded with family wealth, and its portfolio has little debt, said managing partner Eric Svenson. (His and brother Ben Svenson’s father, John Svenson, passed from cancer in 2007 and was a prominent Boston real estate developer, philanthropist, and co-owner of the Boston Celtics.) TA’s underwriting was reasonable when it bought the property, Svenson said, but the market shifts since are inescapable.
These days, groups that bought buildings prior to the pandemic and with a five- or seven-year mortgage find themselves with little option but to sell for a loss. That means opportunity for firms like his; Svenson said he’d like to make several similar acquisitions this year.
“A lot of sellers are feeling like it’s time,” he said. “I wish we had ten times the available capital we have. … I’ve been doing this for three decades and I’ve never seen opportunities like this.”
Properties like 15 Broad St. and 399 Washington St. that have changed hands for significant discounts can give landlords flexibility to offer tenants space for a discount, or invest in modern amenities — a crucial factor in today’s leasing landscape, said Wil Catlin, a senior partner with Boston Realty Advisors. But these days, Catlin noted, many tenants consider offices more an asset than a requirement, and they prize amenities and places for employees to connect with peers. So while pricing is important, it’s not the only consideration.

“The question is pricing for what?” Catlin said. “For a lack of a better term, it’s got to feel good. You’ve got to want to be there. If the owner is saying they get a $7 per square foot discount, and the employees and staff are not getting a differential experience, they’re like: ‘Uh, why are we here again?‘”
Catlin and other experts expect more deals like this as sales activity increases this year after a long slow period since COVID-19. Some of those sales will come as deep-pocketed global real estate owners pivot away from commercial real estate in an effort to curb future losses.
Private equity behemoth Blackstone in 2023 told the Globe it would continue to pare back its office holdings. It paid around $156 million in January 2020 for a five-story brick-and-beam office at 179 Lincoln St. Last March, Blackstone handed both the building — and its $76.5 million in mortgage debt — over to Synergy Investments, according to Suffolk County records.
Meanwhile Swiss bank UBS Group has been shedding office properties across the United States. In September, a UBS arm sold 400 Atlantic Ave., a six-story brick office facing Boston Harbor, for $30 million to the development arm of French financier Jacques Chahine, Suffolk County records show.
That’s 40 percent less than the $50 million UBS paid to buy 400 Atlantic in 2014, and followed the departure of long-term tenant Goulston & Storrs. Chahine Investment Corp. plans to convert the office to a hotel and restaurant, which would newly open to hotel customers a deck facing Boston Harbor that had been private for over 40 years, attorney Jared Eigerman wrote in a January letter of intent to the city’s Planning Department.
Over in Downtown Crossing, Papanastasiou and Ron said they’re already in advanced conversations with several retailers to lease 399 Washington’s expansive first and second floor, which are connected by a striking brass staircase — a remnant of the Barnes & Noble days. They aim to sign an office lease soon for one of the upper floors. A fully built out office suite on the fourth floor, for example, is ready for a tenant any day.
“We’re confident we can lease that to an office tenant this year,” Ron said. “We’re bullish on the future of downtown, and on this building.”

Catherine Carlock can be reached at catherine.carlock@globe.com. Follow her @bycathcarlock.