Well, so much for the more interesting uses of the site. The Atrium will become yet another medical office building, the Herald reports. Though, one with a high-profile past.
The floundering Atrium Mall is under agreement to be sold for $50 million and converted into medical offices, according to a source close to the deal.
The Bulfinch Cos., a Needham real estate investment and development firm, is buying the Simon Property Group-operated mall in a deal expected to close late this month, the source said.
Told ya. Partners, among others, has been looking for medical office space, which is also being built at the nearby Chestnut Hill square. I will wait to see whether the buyer will need to come in for a special permit.
Most unusual looking medical office building in the Boston area – should make an interesting first impression on new patients 😉
This makes a lot of sense. The corridor bounded by Boylston St./Rte. 9, Florence St./Heath St., and Hammond Pond Parkway will be dense with residential, medical office, and retail. Every effort should be made to unify these uses, to the extent possible given missed opportunities at Chestnut Hill Square.
If it is really sold for $50,000,000 at the assessment value of $59,230,100 (or 15.6% less of the assesment), then that will be one more “black eye” to the City Hall.
Again, Board of Aldermen and Mayor would look like “ducks sitting and quacking in the swamp of illusions”.
Re, I just gotta ask. How is this a “black eye” for City Hall when it is the building’s owner that is losing money on it? The assessed value was based on comparable sales from calendar 2011. the value has gone down while stores emptied out. And it had nothing to do with City Hall. The owner was losing its tenants to more attractive sites, including its own Chestnut Hill Mall (the upper mall).
@Ted Hess-Mahan;
“Black eye”, because the City Hall does not make Newton to be more attractive for businesses and residents than other places, to where the money is running to – thus the City Hall undermines the money flow to the city, two third of which is the real estate tax return – now the City Hall is losing the competition for the money of the city’s citizens and businesses but dreaming in illusion that nothing bad is goind on, whereas Newton is going into the unsustainable debt.
Re:
The decline of the Atrium can’t be pinned on the city. (Although, I would have liked the city to have required more connectivity between the Atrium and Chestnut Hill Square as a condition of the latter’s special permit application.) There are a number of outside factors that led to this transaction.
Presumably, the new owners are going to spend a sizeable hunk of cash to repurpose the building. So, expect the assessed value to go up.
@Sean: “The decline of the Atrium can’t be pinned on the city.” If this optimistic point of view is completely true, then there is nothing to worry about.
But, let’s look at the worst case scenario, which is that this supposed transaction reflects the current real estate market in Newton, or that the real estate prices have got down by 15.6%. That means that aggregated assessment value real properties in Newton will go down 15.6% in 2013, or Newton will receive about $32,000,000 less in real estate tax return in 2013, whereas 2.5% preposition may add about $5,500,000.
Of course, in the real life there is no only optimistic or worst case situations, but always some superposition of them. So, now the question is how much (in %) of optimistic situation and how much of worst case situation (in %) is present currently?
For example, if 50%/50%, then projected loss of the 2013 real estate tax return to the City will be about $16,000,000.
Folks, it is a commercial asset that is less than 20% full. As such, there is no way it would sell close to its accessed value. This isn’t a black eye to the city. It is commercial real estate 101. It is being repurposed to a less valuable use for accessing purposes as well (at least that is my guess).
And unique assets do not a market make.
I suppose this is good from a property tax perspective. A little depressing though that we as a society need increasing amounts of medical office space, as health care takes up an ever higher percentage of GDP. Are we getting sicker or just older? Or should we be happy this is outpatient stuff rather than hospital beds?
I disagree with Sean. The assessed value of the Atrium will very likely be the same as it’s sale price, unaffected by any alterations. The new owner will pay a hefty fee for a building permit to repurpose the building, but the assessed value of this property should drop based on the sale price.
Personally, I’m very disappointed this building will likely be turned into medical offices. It’s a prime location, that’s not the best use, and the city is going to take a long term financial hit as a result. This property would have been worth more money as a hotel, and would have spun off much more revenue to the city. Unfortunately [as Alderman Hess-Mahan pointed out on a previous thread], the city’s zoning regulations made it a very difficult property to convert for that use. We missed a great opportunity here.
I yield to Mike on the assessment point, because he knows this area better than I do.
Assessors do have their own formula for determining value. They factor in square footage, type of construction materials and so forth. But there’s nothing like an arms-length transaction on the open market to establish actual value. And [in theory] assessed value should reflect actual value.
@Re, during my tenure on the Land Use Committee as chairman, we have approved a mixed use development that will bring in a few million dollars in tax revenue a year, a renovation of a shopping center that will feature the HQ of a developer and opened the door to the Macy’s makeover, and we are about to embark on consideration of the largest mixed use development in the history of the city. And, not for nothing, we have approved a raft of parking waivers for new and improved restaurants in various villages. The first thing I did after Greg Reibman was chosen to head the Chamber of Commerce was to ask for a meeting with him to discuss ways to promote Newton as business friendly. So I reject your reality and substitute–the reality that Newton is a good place for business.
@Sean, the owners of the Atrium rejected any attempts at connectivity between the two sites and the upper mall at Chestnut Hill (which is owned by the same group). You may recall, the Atrium’s owners also appealed the Chestnut Hill Square special permit to stop it from going forward after being totally absent from the public discourse on the project. Eventually, they dropped their lawsuit.
Ted – is there any chance of the city encouraging the owners of the Chestnut Hill mall, Chestnut Hill Square, and the Atrium redux to work together to support some sort of shuttle service from the Chestnut Hill T stop? It seems like it would be helpful to all of them to enable carless employees and customers to easily access them plus get from one place to another (go to your doctor at the Atrium then have lunch and shop at the mall).
@Ted Hess-Mahan
The acts you described above was and is a Good Formal Invitation by the City Hall for businesses to come to Newton. But is it enough for businesses really have come to Newton? Seems, it is not.
Current owner Mayflower Atrium LLC bought Atrium Mall on September 14, 1999 for combined $74,951,542.00 (44.3343% interest for $33,229,269.00; and 55.6657% interest for $41,722,273.00), whereas the 1999 assessment of the place was $42,981,300. Or in 1999, the current owner paid 74% more than the assessment of that time.
Today in 2012, the next owner is going to pay 15.6% less than the current assessment. Why? Because, the current business atmosphere in Newton became substantially worse that that in 1999.
I am sorry to say that, but this is the Reality.