Category Archives: Local News

Seaport, the hottest neighborhood in Boston – Part Two

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In yesterday’s post I looked at the history of Boston’s Seaport Area and the new Innovation District, with insights from last week’s “Windows on the Waterfront” program. Today I finish up with a closer look at residential and retail activity, Liberty Wharf, and what to expect next as projects make the move from drawing board to construction site.

The Silver Line helped Boston's Seaport become a viable destination to work, shop, play, and live.

Interest in residential use dates back to artists’ lofts in Fort Point Channel, which  eventually led to Beacon Partners’ development of Channel Center with over 200 new condominiums.   Then came the award-winning FP3 residences and restaurants developed by Berkeley Investments.

It was Liberty Wharf, though, that brought a whole new group of visitors to the Seaport with its 70,000 sq. ft. office and retail development that includes Legal Harborside, Del Frisco’s, Temazcal Tequila Cantina, and Jerry Remy’s Sports Bar & Grille. Two-hour waits and a vibrant neighborhood buzzing with excitement are the result. Ed Nardi, working with Massport and the Jimmy’s Restaurant family was able to produce a concept that not only satisfied stakeholders, but far surpassed their expectations.  Hot off this success, Cresset recently committed to purchasing another property in the area for redevelopment.

In an excellent overview of the neighborhood’s history and future promise, architect David Manfredi gave the NAIOP audience a summary of the last 10 years of development in the area:

  • Work:    2.3 million square feet of new office space
  • Live:       750+ new residences
  • Play:      +4.7 acres of new public park and the extended Harborwalk
  • Visit:      1,639 guest rooms
  • Learn:   ICA & BCEC
  • Dine:     40 restaurants, cafes, food venues
  • Shop:    Louis

What’s coming next?

  • 1,160,000 square feet of innovation space
  • 1,500+ residences
  • BCEC expansion
  • More restaurants, cafes, food venues
  • 360,000+ square feet retail

New apartments are arriving with John Drew and HYM Development at Waterside Place, Steve Karp with Hanover Company at Pier 4, and John Hynes at Seaport Square. Innovation centers for start-up companies will be built by Drew and Hynes. And retail is finally on the drawing board for Waterside Place and a major joint venture with W/S Development at Seaport Square.  Who will get the first supermarket?  Both companies report they are currently in talks with grocery chains.

The hotel question still lingers.  With the Waterfront Renaissance Hotel in foreclosure, it is clear the market is not ready for a new hotel right now.  Some feel the elephant in the room is the BCEC expansion and that new hotel(s) will be dependent on the deal cut with the convention center.

As for the office market, as Charles Reid from Boston Global Investors indicated, there are a lot of parking lots right now and it will take some time before the Financial District feels the pinch as the Seaport lots get transformed into new development.  Other than build-to-suits (e.g. Vertex), spec development is highly unlikely in the near future.  However, there are some large blocks of space coming up for renewal in downtown – it’s possible one of those businesses could decide to relocate to a new state-of-the-art building in the Innovation District.

The bottom line is that the Innovation District has come a long way from the days when Anthony’s, Jimmy’s, and the No Name were the only major draws to cross the Fort Point Channel.  And while it may be a long way from its final build-out, there is no doubt this hot new neighborhood is here to stay.

Seaport: The Hottest Neighborhood in Boston

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If attendance is any indicator, the record-breaking 700 registrants at NAIOP’s “Windows on the Waterfront” event confirmed that the newly-rebranded Innovation District in the Boston Seaport district is indeed hot.  This is the year when the long-awaited neighborhood became a reality, spurred in large part by two key events – Vertex’s initial commitment to lease two buildings ( 1.1 million sq. ft.)  on Fan Pier, and Cresset’s opening of Liberty Wharf to the wild acclaim of restaurant and bar aficionados.

Windows on the Waterfront

An aerial shot from David Manfredi's presentation

However, as the NAIOP audience learned, that is just the beginning for development in this area. In an outstanding overview of the neighborhood, David Manfredi described the “promise” of this new district as:

  • A vibrant, new mixed use neighborhood
  • A neighborhood driven by innovation
  • A place to live, work, play, shop, dine, learn and visit

Helping developers fulfill that promise are several massive infrastructure improvements over the past decade, including: access to a redeveloped highway system that includes the Big Dig; an upgraded Logan Airport; expanded water transit; and the construction of the Silver Line.  Add to that the Boston Convention and Exhibition Center (BCEC), the Federal Court House, the beginning of a local park system and Harborwalk, the ICA relocation, and the city’s energetic branding of the Innovation District, and it’s hard to imagine why anyone wouldn’t want to be there!

At the event, Mayor Menino indicated that the city did not want the development of this area to be rushed, avoiding a cold, uninviting commercial zone.  He wanted, and now sees forming, a 24-hour, mixed use area that will attract both families and entrepreneurs.

Despite the large amount of available, buildable land adjacent to downtown (rare for most cities), the redevelopment of this enormous land mass has taken quite a while to get moving.  Early in the last decade, Seaport Place developed 1 million sq. ft. of office space and a full service hotel.  Another 600,000 sq. ft. came along with Manulife’s headquarters.  The next few years were fairly quiet for commercial development, until Joe Fallon built the first office building on Fan Pier, a speculative 526,000 sq. ft. tower at One Marina Park Drive.  Fallon had previously developed the 465 unit Park Lane apartments and partnered on the convention center’s Westin Waterfront hotel.  Soon after, the 470 room Renaissance Hotel was built.

Read more about the city’s hottest neighborhood in Part Two tomorrow – use the buttons at right to subscribe by email or RSS.  Among the topics: residential and retail uses, Liberty Wharf, and what’s next for the Seaport/Innovation District.

Filene’s Site Back in Play?

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In today’s Boston Globe, it was reported that Peter Meade, Director of the BRA, indicated a willingness to work with the REIT, Vornado, to move forward on the stalled Filene’s Franklin Street development.  This is good news for the Washington Street corridor and the city. 

The reality is that the problem with this project has never really been the developer; it has been the deep recession that put a freeze on all speculative commercial development in the country.  There was a thought that the city could permit a downsized project for a new buyer.  The problem with that is two-fold.  First, it was unlikely from the start that Vornado was going to sell the site at a deep discount.  They are not being pressed by a lender to sell –it’s their own money sitting in this hole (all $200 million of it!) Secondly, the city would be shorting themselves of substantial real estate taxes that would have eventually come from the office and hotel towers when the market returned.

This location is a premium one and when office vacancies start to fall and rents rise, this will be one of the first sites to see a crane.  In the meantime, there is demand for retail, parking, and apartments.  It sounds to me like the approval for a phased project allowing for a future tower could be a win-win for the city and the developer.

Let’s just hope the talks continue.

Floods and Hope in Vermont

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I was in Vermont when Irene hit and the devastation that resulted is hard to fully comprehend.  We have certainly had our share of storms and Nor’easters, but it wasn’t the high winds that were the problem – it was the flooding of most every river in the state.

Waitsfield, VT Begins Clean Up

Rivers became lakes, overflowing across roadways, through homes and businesses, hitting owners – few of them with flood insurance.  Flooding is not a normal event here – they call this a “500 year” storm!

Bridges were washed away and roads disappeared.  In our town of Waitsfield, the river rose almost 20 feet and undermined the historic covered bridge.  A key historic building that lost its foundation may be condemned.  The flood ran through the local stores, leaving behind 4-6 inches of sludge and an unhealthy film on everything inside.

But on Monday morning, under a bright sun, hundreds of volunteers in Waitsfield and Warren lined up to help.  (And I know that this was the case throughout the state.) Fulltime residents and vacationers joined together to help by emptying homes and businesses of endless buckets of sludge and all sorts of debris.  People worked to scrape away the muck from the streets.  This work has continued and a headquarters has been established in the center of town for volunteers to find out where they are needed next.

It is frustrating to see so many suffer through a natural disaster like this, but it is also inspirational to see the unrestrained community response of neighbors, friends, and visitors.  I don’t know if all of the businesses will be able to recover from this setback, but for those that do,  it would not have been possible without the help they received from these generous volunteers.

Development Opportunities May Arise Out of Anglo Irish Sale

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As I discussed in today’s Boston Herald, the announcement of the sale of Anglo Irish Bank’s portfolio to Lone Star Funds, JP Morgan Chase and Wells Fargo, means that some of the Boston market’s premier development projects will be changing hands.  Although the bulk of the performing loans will be acquired by the two traditional banking companies, much of the action will come from Lone Star’s share of the nonperforming loans.

Anglo Irish was the go to bank for much of the development action over the past decade.  It provided funding to the region’s top developers for some of the best located projects.  Unfortunately, the 2008 downturn and the continuing recession put a chill on all speculative developments across the country.

The big question is who will get the rights to start these developments when the market begins to improve?  Will it be the existing borrower negotiating a deal to stay with the project or will it be a new player?  It seems clear that Westwood Station will be the latter with a transfer that came close before the whole portfolio was put on the market.

The Greater Boston market has not recovered, but there are pockets of demand that will justify some new development occurring over the next 12-24 months and it is very likely that some of that product will come from this newly sold portfolio.

The Risks and Rewards of Waterfront Development

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On August 17th, NAIOP had its first “Boston by Sea” Harbor Cruise along the waterfront, featuring commentary by Barry Hynes of FHO Partners, Lowell Richards of MassPort, and Kairos Shen of the BRA.

Besides the unique view of the many waterfront development projects, what stood out for me was the extreme difficulty of permitting and building projects on the water, as exemplified by the many projects that have failed financially, in some cases bankrupting the developers.

Attendees get the scoop on the Boston waterfront of the past, present and future

For all its benefits (views, access, etc.), waterfront development has plenty of obstacles and costly surprises for those who want to build.  There is the Chapter 91 law that regulates most of the city’s coastal areas, the Municipal Harbor Planning process, Boston’s Article 80 permitting process, input and review from neighborhood Impact Advisory Groups, pier piling replacement, and, frequently, costly hazardous waste issues.  To top that off, there is the developer’s dilemma of timing the project to match market demand.  With all of the uncertainty associated with getting a project financed and approved in a timely manner, it is difficult to know in advance if there will be the necessary demand for the completed product at a price that will justify the costs.

That can result in prime development locations lying fallow.  During our waterfront tour, we saw a number of development sites in East Boston that have still not started, even though they were planned for construction 5-10 years ago.  Portside at Pier One, New Street, Clippership Wharf, and Hodge Boiler Works have languished for years.  Most were fully permitted.  However, there is talk that Portside at Pier One, proposed by Roseland Property Company, may begin a first phase.

Many properties have changed hands numerous times before being developed.  Prime examples are Fan Pier and the former McCourt assemblage, both having remained primarily parking lots for three decades until the current owners purchased the land.

Clearly there have also been several successful projects.  Without question, Rowes Wharf stands out as one of the premier mixed use development projects in all of Boston.  It also looks like the “tide has turned” for Boston’s Seaport/Innovation Zone, which has many development projects underway.  With one office building up, Joe Fallon and Cornerstone are now starting construction on two more buildings for Vertex.  A hotel is in the works for Pier 4 with New England Development, and an adjacent apartment project is being proposed by Hanover.

Liberty Wharf has transformed the neighborhood with its restaurants – making it the new place to be any night of the week.  In addition, The Drew Company’s project is getting closer with a key residential component and Seaport Square is expected to move forward with a major retail development handled by John Hynes and WS Development (developers of the enormously successful Legacy Place in Dedham.)

Despite the uncertainties in the financial markets, the Seaport area seems to have found the necessary momentum to attract businesses, residents, shoppers, and tourists.  If the developers and the city can keep up the pace, soon the Seaport will no longer evoke memories of failed developments and abandoned plans.  Instead, it can stand as an example of what can be achieved with vision and persistence.

(Editor’s Note: Hear more about the Seaport at NAIOP’s “Windows on the Waterfront”, Sept. 21, featuring Seaport developers John Drew, John Hynes III, Stephen Karp, along with David Manfredi, John P. Fowler, and special guest Mayor Thomas Menino.)

Air Rights Over the Mass Turnpike

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Could this be the right time to finally heal the remaining gashes to the Boston cityscape caused 45 years ago by the construction of the Mass Turnpike?  I am optimistic that the answer is yes. The Boston Redevelopment Authority has reopened the process to review certain air rights project proposals. Although the focus is on the sites at the corner of Boylston Street and Massachusetts Avenue, there are also two other major development sites that could and should move forward: the Kenmore Square project proposed by John Rosenthal and the former Columbus Center project.

There are no redeeming features to having a highway canyon in the middle of one of the most historic and architecturally vibrant cities in the country.  The neighborhoods that were split by this chasm deserve better and the city certainly could use some new, exciting, revenue enhancing developments.

There is no question that residents should have input into the process.  However, the city needs to be a strong advocate for these complex and costly developments to become realities.  Set guidelines that offer sufficient density to allow these projects to work financially and give investors sufficient confidence that they will get through the approval process in a timely fashion.

It’s time to heal the traffic wound and create a thriving community.

NAIOP Brings the Heat to End Homelessness

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Records were certainly broken at NAIOP’s Annual Golf Tournament benefitting Heading Home, held Wednesday.  Not just the 90+ degree temperatures or the countless number of water bottles consumed on the course, but a record that matters – money raised. This was the year that NAIOP passed $1,600,000 in total donations to Heading Home, raised over the tournament’s 23-year history.   

It was a proud moment when I presented Tom Lorello, Heading Home’s Executive Director, a super-sized check in the amount of $122,000, an amount I know represents their largest corporate donation, and which they have come to count on each year. 

David Begelfer (far right) and Tom Lorello (third from right), joined by volunteers and staff.

This money will help Heading Home fulfill its mission to end homelessness in Greater Boston by providing housing in conjunction with effective support services to help change the conditions that create homelessness. Tom and his staff have been pioneers in the Housing First movement, and they are seeing great results despite the continuing housing crisis that grips our state.

At the tournament, we shared a few facts about Heading Home and their clients that help tell the story about why we support their work:

Did You Know?

  • Average age of a Heading Home client is 8 years old
  • In Massachusetts each night there are 3,000 families without a home

In 2010, Heading Home:

  • Served 2,134 at-risk and homeless people
  • Placed 112 families and  58 individuals into permanent housing

The Heading Home Formula:

  • Housing + Job Training + Matched Savings Plans = Self Sufficiency
  • It works: 90% of Heading Home clients have remained permanently housed

Heading Home was the day’s big winner, of course, but tell that to the winners of NAIOP’s new Super Raffle, which offered over 30 prizes donated by local firms. Congratulations to John Bryer of DiMella Shaffer Associates, Inc. who won the grand prize of a Mini Cooper lease, Dante Angelucci of Leggat McCall Properties who won an entertainment center, and Steve Daley of AEW Capital Management who won a vacation cruise package!  (See photos, press release, and other resources)

None of this could have happened without the hard work of the Charitable Events Committee, led by Bob Hayes at KeyPoint Partners and Steve Brodsky at Synergy Investment & Development, along with the dedicated staff at Heading Home, NAIOP’s Board and staff, and of course, our many generous donors and sponsors.  Thank you to all who helped make this day truly one for the record books!

Commercial Real Estate Icons on the Leading Edge of Philanthropy

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Bill and Joyce Cummings

In an age when many Wall Street and other corporate leaders take such pride in reaching even greater heights of personal wealth, it is refreshing to hear about a different type of competition. There is a growing group of the wealthiest individuals in this country who are now competing to see who will become members in a new club of billionaires – those promising to give away half or more of their wealth before they die.

The “Gates/Buffet Giving Pledge” already has nearly 70 members in this prestigious, exclusive club. And now they have two new members – Bill and Joyce Cummings, the founders of Cummings Properties, headquartered in Woburn, Massachusetts.

Not that this should come as a surprise to anyone that knows this couple and their history of giving. Over the past 25 years, the Cummings Foundation has grown to be one of the largest philanthropic foundations in the state.

Bill and Joyce are shining examples of local entrepreneurs who believe in a strong economy that does not forget about those amongst us who are less well off. They have long been leaders, even in an industry that prides itself on its charitable giving and community service, and they certainly have raised the bar with this pledge. (Globe article here)

NAIOP Massachusetts is proud to have Cummings Properties on our Board of Directors, and we offer our heart-felt congratulations to Bill and Joyce for the well-deserved recognition they are receiving.

If You Zone It, They Could Come

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In order to spur new development in a place not widely known for its commercial activity, the City Council of Leominster is considering rezoning sections of the city.  The goal is to add flexibility to its land use controls in order to attract new businesses into Leominster while encouraging existing companies to expand.

This is not the first local government to realize that growing its tax base starts with rethinking how it zones and permits development.  Two other recent examples illustrate the importance of this self-appraisal process.

For many years, the town of Westwood had an anti-development reputation.  While virtually all of the land along the 128 Technology Highway bustled with new development activity, countless properties along University Ave in Westwood sat vacant or underutilized. This area, starting at the commuter rail station and continuing throughout a large industrial park – with direct access to the highway, was frozen in the 1960’s.

Recognizing that the town had to make significant changes to attract economic development, Westwood officials invited businesses, developers, consultants, and site selectors to tell them what changes were needed.  As a result of this process, the town’s economic development committee went to Town Meeting and changed Westwood’s zoning by-laws.  Soon after, a massive area of the park was purchased and one of the region’s largest mixed use developments was approved.  Unfortunately, the Grand Recession put the project on hold for the time being.  However, there is no doubt this will be one of the first projects to move forward once the recovery is in full swing.

The other municipality to undertake this self-critique was Lexington.  Its Board of Selectmen started a visioning process that brought in a wide range of experts to see what it would take to encourage further economic development in a town with limited growth areas.  As a result of the town’s new commitment to attracting businesses, Lexington passed a remarkable “up-zoning” at Town Meeting, which more than doubled the commercial density in the Hartwell Avenue area, allowing for a potential 2.9 million square feet of development.

With municipal budgets being slashed, more communities are realizing that they need to compete for new business growth, but they are ill prepared to attract development due to archaic zoning and permitting regulations.  While towns may not be able to guarantee new growth if they follow Lexington and Westwood, if they do not bring predictability, timeliness, and clarity to their permitting, most businesses will be looking elsewhere.