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An institutional lender has taken control of a major Back Bay office asset through a foreclosure auction, reflecting ongoing stress in the Boston office market. According to the Boston Business Journal, a 540,000-square-foot office property known as the Park Square Building is now controlled by LNR Partners after the firm submitted the winning bid at an auction held on Tuesday. The property is located at 31 St. James Ave. and had previously been placed into special servicing, with LNR Partners appointed as special servicer in 2024.
LNR Partners bid $95 million at the auction to assume control of the Park Square Building, the Business Journal reported. The building, a sizable office property in Back Bay, has been working through challenges tied to weakening cash flow and declining occupancy. The Business Journal previously reported that a $160 million loan secured by the property transferred to special servicing, with performance concerns emerging after a significant tenant departure.
Cash flow pressure at the property reportedly began in 2022, when WeWork Inc. exited the building. The coworking firm had leased 136,500 square feet at the Park Square Building prior to its departure, representing a substantial share of the asset’s rentable space. The loss of this tenant created a large vacancy, contributing to the financial strain on the property and the subsequent transfer of its loan to special servicing.
Further stress followed in 2023, when another tenant, Bay State College, closed. The departure and closure of these tenants left the building with a materially reduced rent roll. When the loan moved into special servicing, the Park Square Building was only 42% occupied, according to figures cited by the Business Journal. That occupancy level underscored the severity of leasing and income challenges facing the asset.
The loan backing the Park Square Building was originally provided by Bank of America, which extended a $160 million mortgage in 2017. At that time, the financing came roughly 20 years after the former owner, Capital Partners, acquired the property. With the loan now in special servicing and LNR Partners having credit-bid at auction to take control, ownership of the building has effectively moved from the prior borrower to the lending side of the capital stack.
The transition of the Park Square Building into lender control highlights the pressure facing large office assets in urban locations when major tenants consolidate or depart. While specific future plans for the building were not disclosed, the combination of reduced occupancy, a distressed loan, and a transfer to special servicing culminating in an auction underscores the evolving risk profile for older office stock in dense city submarkets.
The post LNR Partners Takes Ownership of Boston’s Park Square Building in Back Bay appeared first on CRE Market Beat.
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