Proposed Pappas Business Park expansion/Image courtesy of Skidmore, Owings & Merrill and Arup
Massport is sounding out landlords who ground-lease its properties about modifying terms, reflecting the difficult commercial real estate climate in Boston.
“We’ve got some parcels that are sitting empty and our partners are working hard to lease those, but there is a lot of competition in Boston right now for those assets,” Massport Chief Development Officer Andrew Hargens said at today’s board of directors meeting. “We’ve been thinking about tweaking their ground lease terms to make their properties more accommodating to new lab tenants, for example.”
The lab availability rate in the 5.8 million-square-foot Seaport District, including non-Massport properties, was 38 percent at the end of the third quarter, according to CBRE.
Lincoln Property Co.’s Seaport Circle lab project, has received a two-year extension to close on its ground lease until October 2026.
A 327,000-square-foot vertical addition to the 88 Black Falcon building by The Davis Cos. was postponed in 2023 as lab leasing started to wane.
“In light of the lab market, they are reassessing their options right now,” Hargens said.
Developers operate commercial buildings in Charlestown, East Boston and South Boston through ground lease agreements with the authority.
Massport’s first income-restricted housing project in Boston’s Seaport District isn’t expected to be completed until 2030 as developers pursue multiple public subsidies to make the economics work.
The mixed-income housing project would be built on a 0.6-acre site known as parcel D-4 next to the South Boston Waterfront Transportation Center garage on D Street.
In 2023, after two years of internal discussions, Massport awarded the development rights to The Community Builders of Boston. The project was designed for households earning 30 to 120 percent of area median income, under the terms of a Massport request for proposals.
Five final proposals for mixed-income housing, including TCB’s plans for the 15-story, 200-unit all-affordable project, were studied by Massport executives before TCB’s selection.
Massport real estate executives now are in discussions with the development team on changes to the unit mix and construction techniques to make the project viable, Hargens said. The project also will require multiple state and local subsidies, which are expected to take several years to assemble.
Groundbreaking now is estimated in 2028, with completion in 2030.
Hargens said the agency is approximately halfway through its real estate development buildout, with 10 million square feet of projects completed in Charlestown, East Boston and South Boston.
One major development is under review in South Boston, where Pappas Enterprises and Oxford Properties Group are proposing an eight-building, 1.7 million-square-foot project with an R&D focus.
Editor’s note: This report has been updated to correct the name of Lincoln Property Co.’s lab project.
