Why a big Kendall Square landlord is selling an apartment tower, even as it builds a
Boston developer BXP is selling off a portion of its real estate portfolio in Kendall Square and Needham.
BXP sold Proto, the 280-unit apartment complex at 88 Ames St. it opened in 2018, for around $170 million on Thursday. The property’s new owner is Pembroke, the real estate arm of financial giant Fidelity’s parent company.
The “unimpeachable” location in one of the country’s strongest employment bases made Proto an appealing prospect, said Jack Clark, Pembroke’s senior vice president and head of investments. Pembroke traditionally has focused on acquiring high-quality office assets, but is pivoting more toward residential amid the office market’s struggles since the rise of remote work following the pandemic.
“This decade is one in which we’ve seen the global real estate market profoundly change—people want more from the places where they live and work, and they want ease in transitioning between these places,” said Edward C. Johnson IV, president of Pembroke, in a statement. “We’re diversifying our portfolio to complement our office and mixed-use properties in leading metropolitan markets by investing in residential assets in the same locations.”
The Proto apartments are 95 percent occupied, and their average rent was around $3,200 last year, according to a recent securities filing.
Proto marks the fifth apartment acquisition in two years for Pembroke. What’s more, the firm has acquired sites in Munich, Germany and Melbourne, Australia where it intends to build apartments. The firm can make those housing construction projects work economically, Clark said, in a way that’s much tougher to achieve in Boston these days.
“It’s just math — the rents you can achieve on completion, relative to the cost to complete,” he said. “It’s really hard to make that math work in the Boston area right now.”
The Proto building is just across the street from two other BXP projects — a 573,000-square-foot life-science lab at 290 Binney St. that will be a research headquarters for drugmaker AstraZeneca when it opens in 2026, and a 439-unit apartment tower at 121 Broadway. At 37 stories and more than 450 feet, the tower will be the tallest building in Cambridge when complete.
BXP has previously tapped its Kendall real estate holdings to bring in additional cash and temper its development costs. In 2023, the real estate arm of Norway’s central bank agreed to a $1.66 billion investment in a 45 percent stake of the forthcoming AstraZeneca property and an adjacent lab. That deal closed in March 2024, and BXP said the investment will shave off $533.5 million in expected development costs over time.
The company intends to sell 27 land, residential, and nonstrategic office properties for $1.9 billion by the end of 2027. So far, BXP has nearly two dozen sales deals in the works or closed that would generate $1.25 billion, CEO Owen Thomas told analysts in October.
“BXP is selling select residential assets to reinvest in new development,” said Rich Ellis, BXP’s senior vice president for residential, in a statement. “The Proto disposition demonstrates the value creation contributed by BXP’s residential platform.”
Beyond Proto, another of those sales is 140 Kendrick St. in Needham. BXP recently sold the three-building, 400,000-square-foot office campus to a partnership between Cross Ocean Partners and Lincoln Property Co. for $132 million, brokerage Newmark announced on Thursday. The Needham office complex is home to tenants including Wellington Management, Clarks, CyberArk, and Focus Partners Wealth.
Catherine Carlock can be reached at catherine.carlock@globe.com. Follow her @bycathcarlock.