KKR JV Closes $235M Acquisition in Boston’s Seaport

Two Drydock. Image courtesy of Skanska

In a $235 million deal, KKR has acquired Two Drydock, a Class A office building in Boston’s Seaport District. Skanska was the property’s seller and developer. Synergy Investments, KKR’s partner in the transaction, will act as property manager.

Newmark negotiated the sale on behalf of Skanska. The deal was completed through KKR’s Real Estate Partners Americas III (REPA III) fund, which recently closed at $4.3 billion. REPA III is an opportunistic fund that predominantly focuses the U.S. market.

Two Drydock is a 235,000-square-foot office mid-rise, located at 2 Drydock Ave. Skanska completed the $128 million, 13-story development in 2020, focusing on sustainability features. These include optimized water and energy use, low-emitting materials, rainwater reclamation and a recycling system. Two Drydock is LEED Gold certified. Tenants also have access to a 10,000-square-foot outdoor plaza, as well as bike storage and a parking ratio of 0.6 spaces per 1,000 square feet.

The building’s 7,000-square-foot ground-level retail space was recently leased to Render Coffee and Lord Hobo Brewing Co. Office tenants include Interpublic Group’s MullenLowe and Mediahub, two marketing agencies which agreed to prelease 114,620 square feet in 2019. Hill Holliday also occupies space in the building.

Two Drydock offers immediate access to multiple transport options, such as MBTA’s Silver Line, the ferry to North Station, as well as interstates 90 and 93. Corporate neighbors include a variety of pharmaceutical and biotech companies.

Life Science Investments Not Slowing Down

KKR and Synergy’s acquisition comes on the heels of another recent deal in Boston’s Seaport District, which continues to attract investment as a tech and life sciences hub. In September, KKR announced its investment stake in 400 Summer St., a 635,000-square-foot life science project under development by WS Development and the Public Sector Pension Investment Board. The building is expected to come online in 2023 and is fully leased to Foundation Medicine, a subsidiary of Roche Pharmaceuticals.

Two Drydock traded at roughly $998 per square foot, more than double the market’s average ($409), recorded in year-to-date office sales through November, CommercialEdge data shows. For office sales volume, Boston came in third this year, with a total of $4.9 billion generated in sales through November.

Life sciences attracted massive investments this year, with Boston continuing to shine as a major market for the sector. In Cambridge, Alexandria Real Estate Equities is developing a 462,000-square-foot laboratory and office project for Moderna.

In April, IQHQ and Meredith Management started work on a $1 billion life science campus named Fenway Center. Located along Brookline Avenue and Beacon Street, the project will feature two towers totaling 960,000 square feet of life science space.