The operator of Faneuil Hall Marketplace since 2024 promises to attract a mix of new local and national tenants, but a Boston real estate attorney envisions a scenario where the city of Boston could play a direct role in the landmark’s reimagining. Photo by James Sanna | Banker & Tradesman Staff

Two Boston city councilors have suggested government-run supermarkets could fill the void created by food deserts, but a Boston real estate attorney envisions a different municipal investment to revive a declining retail property: Faneuil Hall Marketplace.

R.J. Lyman, an attorney at Dain Torpy, estimates the city could buy back the once-acclaimed “festival marketplace” for as little as $10 million before turning it over to an experienced local retail operator, bolstering downtown revitalization efforts.

“We have a bank that has this little real estate company,” Lyman said of New York-based J. Safra Real Estate, which acquired the ground lease on Faneuil Hall Marketplace in early 2024. “It’s not the core of what they do as a business.”

$10M for the Asset

The $10 million figure assumes the value of the 19th century warehouses-turned-retail buildings have depreciated 75 percent over the past 49 years, and other estimates of its current gross revenues and net operating income.

Lyman has some inside knowledge of the finances at America’s first festival marketplace. He represented the previous leaseholder, Ashkenazy Acquisition Corp., when it turned over the property to its lender’s real estate arm, J. Safra Real Estate, in 2024. Safra Real Estate’s parent, New York-based J. Safra Group, provided $130 million in financing for Ashkenazy Acquisition Corp. between 2011 and 2024. J. Safra assumed the existing debts when it acquired the property, Lyman said, leaving it with big liabilities for a deteriorating, tired asset.

“In 2013, it was making a lot more than it is now. They’re not going to throw good money after bad,” he said.

A 2021 report compiled by the then-Boston Planning & Development Agency amid clashes between City Hall and Ashkenazy claimed the property had at least $40 million in deferred maintenance.

Real estate attorney Larry DiCara compares the current ownership arrangement to a lender taking back the keys to a vacant building.

“Nothing against bankers, but they don’t necessarily know how to manage buildings,” said DiCara, who was on the City Council when it approved the original lease agreement. “It’s pretty obvious that Quincy Market has become just another folder on their laptop, and I don’t think they think about it a lot.”

The 99-year ground lease called for an annual rent of $10 plus a payment in lieu of taxes that is tied to gross sales. The property’s annual property tax currently is $1.3 million, according to Boston property tax records. In 2020, when Ashkenazy fell behind on its payments during the COVID shutdown, the annual payment was $2.1 million.

Even if a new potential owner with ambitious revitalization plans materialized, legal clauses in the ground lease pose hurdles.

J. Safra Real Estate can’t sell to another company willing to reinvest in improvements. The ground lease prohibits it from selling its interest for a profit.

National chains currently dominate tenants at Faneuil Hall Marketplace, but the current operators are promising to add businesses that reflect the “culture, vibrancy, and diversity” of Boston. Photo by James Sanna | Banker & Tradesman Staff

What Would Wu Do?

But there’s a third way that Lyman sees as an attractive exit ramp for the current owners – and opportunity for the city.

Under the 99-year ground lease signed in 1975, the city has the ability to recapture the property, through an offer to the current operator and two-thirds vote of the City Council. That would enable it to bring in an experienced retail operator with local knowledge and connections to unique merchants.

A new operator selected by the city would function like a property manager, receiving incentives tied to financial performance, Lyman said.

“I’m not predicting what Mayor Wu would do, but it’s an embarrassment. It’s the people’s property and it could be fixed,” he said.

Such a fix would also require a substantial fundraising campaign by private donors, however, to fill the gaps caused by deferred maintenance over the decades. Lyman estimates the cost of upgrades at $100 million, which could be offset by private donations.

A statue of former Boston mayor Kevin White stands in Dock Square next to Faneuil Hall Marketplace, whose redevelopment he pushed forward after watching what was then a decaying wholesale market from the City Hall mayoral office suite, visible next to his chin. Photo by James Sanna | Banker & Tradesman Staff

Shared Stake for New Tenant and Ownership

Marcus Hamblin found a receptive audience in J. Safra Group when he sought a higher-traffic location for his home decor store, Flourish & Foundry, previously located at 30 Tremont St. near Government Center.

Faneuil Hall Marketplace offered him a one-year lease requiring a percentage of gross sales, but no base rent.

“That’s inherently attractive,” Hamblin said. “We are part of this new crop of businesses that they are trying to attract, and it seems there’s something at stake for both me and the ownership to create a sense of place.”

Traditional triple-net retail leases also require tenants to pay for property taxes, property insurance and a share of common area maintenance costs.

Steve Adams

“What’s been interesting is that people in their 50s and 60s remember this as a place where there used to be all small businesses,” Hamblin said. “It’s evolved over the years, and it’s trying to evolve again.”

Hamblin heard about the opportunity at Faneuil Hall Marketplace through a broker at Graffito SP, a Boston-based brokerage which specializes in helping commercial landlords find quirky and unique retail tenants.

J. Safra Real Estate declined to make an executive available for comment, but provided details on some of its efforts to reinvigorate the property in the past year. The overarching strategy is to attract both local entrepreneurs and national brands, with additional store openings promised in coming months.

Along with Hamblin’s store, recent arrivals include Beantown Flair, a locally-owned souvenir shop, and Faneuil Hall Beer Garden in the South Marketplace. The latter is owned by Franklin-based brewery 67 Degrees.

And in August, owners partnered with the city’s Office of Nightlife Economy on a “late night” food truck pilot bringing vendors and a DJ to the property on Friday nights beginning at 8 p.m.

“We are committed to honoring the legacy of Faneuil Hall Marketplace while creating a thriving gathering place that reflects Boston’s culture, vibrancy, and diversity,” J. Safra Real Estate said in a statement.