MIT has signed a contract to purchase Technology Square in Cambridge from Beacon Capital Partners, Inc. The closing is expected to take place in early February. Terms of the transaction were not disclosed.
The purchase will include Technology Square's three existing buildings totaling approximately 541,000 square feet and four new commercial office buildings totaling approximately 617,000 square feet. The four new buildings are currently under construction, with the first (175,000 square feet) expected to be ready for occupancy this spring.
MIT has long paid commercial rents in one of the buildings, which houses the Laboratory for Computer Science (LCS) and the Artifical Intelligence Laboratory and is known at MIT as Building NE43. The space will continue to be rented at commercial rates because MIT will hold the property in its investment portfolio. All MIT investment portfolio properties in the city rent space at market rates to all tenants and pay real estate taxes to the City of Cambridge.
Beacon Capital Partners Inc. is a real estate investment company formed in January 1998 by Alan M. Leventhal, chairman and CEO, and Lionel P. Fortin, president and COO. The company is based in Boston and has a regional office in Los Angeles.
Beacon has owned Technology Square since June 1998 when it was purchased from the Prudential Insurance Company of America. Under Beacon's ownership, two of the original buildings have been fully renovated to accommodate the technology community. Tenants of the complex include Akamai Technologies, Inc., Forrester Research, Inc., and MIT's LCS and Artificial Intelligence Lab, among others. Beacon's portfolio also included the adjacent 475,000-square-foot building that was sold in April 2000 to the tenant, the Charles Stark Draper Laboratory, Inc.
Technology Square will be completed under Beacon's plans, which the City of Cambridge approved in July 1999. The plans include redesigned common areas and the new office buildings.
"This is an investment in the City of Cambridge," said MIT Treasurer Allan Bufferd. "MIT intends to hold Technology Square in its commercial tax-paying portfolio for the foreseeable future. The Institute has allocated a significant portion of its private endowment and other funds towards investments in noncampus commercial properties in Cambridge for more than 20 years."
MIT's other commercial tax-paying investments include 640 Memorial Drive, One Broadway, and the current rehabilitation of 28 Osborn St. MIT also owns the land on which Forest City Enterprises has developed University Park at MIT, a mixed-use development featuring affordable and market-rate housing, a hotel, parkland, and research, office and retail space. Collectively, these projects have increased the value of the city's commercial property base by approximately $700 million.
Executive Vice President John Curry said, "MIT recognizes its special role in Cambridge. We are committed to continuing our work with the city government and Cambridge residents as a responsible member of the community."
Following the request of Mayor Edward Crane in the 1960s, MIT and Cabot Cabot & Forbes took on the urban redevelopment task of converting a former soap factory site into Technology Square, one of Cambridge's first large-scale commercial real estate developments. MIT remained involved in Technology Square until selling its interest in 1973.
MIT's impact on the Cambridge economy was documented in a 1997 economic study, MIT: The Impact of Innovation. MIT students and faculty have founded 150 companies in Cambridge, generating 14,000 jobs and $700 million in sales, as well as millions of dollarsin real estate taxes on commercial and residential property and in sales taxes.
A version of this article appeared in MIT Tech Talk on January 24, 2001.