The new Institute for Contemporary Art in Boston, which opened last year, has impressed just about everyone.
While Vice President Dick Cheney dealt with the fallout from shooting a friend in a hunting accident and “newlyweds” Jessica Simpson and Nick Lachey separated, Boston was in the midst of a building boom.
It was the year for green skyscrapers, a steel-and-glass cultural landmark with stunning harbor views, a controversial bio-lab and perhaps Boston City Hall’s last hurrah.
An informal survey of real estate executives and city officials found common ground in what was considered the most significant commercial real estate news of 2006. At the top of nearly everyone’s list was the opening of the Institute for Contemporary Art.
The 4-story glass, wood and metal building overlooking Boston Harbor brought nearly universal praise. The New York Times described it as “a startling expression of public-spiritedness Â… its ability to interweave art and civic life makes it the most important building to rise here in a generation.”
At $50 million, the ICA is the first new art museum built in Boston in nearly 100 years. It features a 325-seat performing arts theater with walls that can be made transparent, revealing a view of Boston Harbor. The project dates back to 1999 when the city of Boston selected the ICA as the recipient of a waterfront site for a museum that would be the cultural cornerstone of the Fan Pier development.
Mayor Thomas M. Menino told Banker & Tradesman last week that he already is seeing the benefits of the ICA. “I talked to the owner of Anthony’s Pier 4 and he said since the ICA opened, business has picked up,” said Menino referring to the venerable eatery, a fixture on the waterfront since the 1960s.
The $178 million Boston University bio-lab where scientists will work on deadly germs also is considered a major accomplishment. Residents had filed suit to halt construction of the lab at BU’s medical school campus in Boston’s South End, arguing that the school had failed to consider the facility’s potential health hazards. But in December, a federal judge ruled that construction could continue on the lab.
“The bio-lab puts us on the global stage as the world leader in studying the most dangerous diseases in the world,” said Mark Maloney, director of the Boston Redevelopment Authority.
Menino dropped a bombshell last year when he told a gathering at the Greater Boston Chamber of Commerce that he intended to move City Hall from Government Center to a city-owned site on South Boston’s waterfront.
Under Menino’s plan, the city would sell City Hall and use a 13-acre parcel near the World Trade Center as the site of the new $300 million facility. The mayor said since his speech, “several” developers have talked to him abut the possibility of purchasing the building and transforming the plaza.
Turning Green
Green became the color of the year as the city of Boston proposed green building zoning regulations. If approved, Boston will be among the first U.S. cities to require adherence to the U.S. Green Building Council’s Leadership in Energy and Environmental Design Certified standard as part of the development review process.
Proponents say that green buildings decrease negative effects on the environment, generate cost savings for building owners and tenants, reduce dependency on imported energy and enhance worker health and productivity.
Menino grabbed headlines with his call to transform a parking garage in the Financial District into the Hub’s tallest skyscraper. Boston-based Trans National Properties was the sole developer to respond to a Request for Proposals to build a 1,000-foot tower at the site of the Winthrop Square parking garage in the city’s Financial District. If approved at 80 stories, it would rise above the John Hancock Tower’s 62 stories.
The development team led by Steven Belkin envisions a mix of uses, including 1.3 million square feet of office space, 40,000 square feet of retail and restaurant use, and 55,000 square feet of public space including a 1-acre town green complete with public art and a rooftop garden.
Last year also brought an end to the Filene’s name and an opportunity to redevelop the area that comprised the storied retail site in Boston’s Downtown Crossing. Plans for the $600 million One Franklin will contain a 38-story tower including 1.2 million square feet of retail, hotel, office and condominium space.
In October, Gale International, a New York-based global commercial real estate developer and investor, and Vornado Realty Trust, a New York-based real estate trust, signed a joint agreement to redevelop the Filene’s site. Vornado purchased the buildings from Federated Department Stores Inc. for $100 million. Expected to open in 2010, the project will be the largest historic renovation in the city’s history.
Under the plan submitted to the BRA, the original Filene’s building will be restored. A pair of nearby buildings will be razed to make way for the tower. The project is expected to benefit the city and Downtown Crossing with office space, 250 hotel rooms, 130,000 square feet of new retail and 132 housing units.
“This is a phenomenal accomplishment,” said Maloney. “It was well reviewed by many people early on and we expect it to move forward relatively smoothly. It’s a phenomenal opportunity that will make that corner extraordinarily busy.”
Frances Shifman, chief operating officer of the Massachusetts chapter of the National Association of Industrial and Office Properties, said the biggest accomplishment last year was passage of the Appeals/Permitting bill. The legislation, signed by Gov. Mitt Romney, allows developers to move forward on controversial projects at their own risk while a court appeal is pending.
NAIOP, a trade association for developers, owners, investors and asset managers in industrial, office and mixed-use commercial real estate, had championed the measure.
“For years, development was blocked for years pending an appeal despite the fact that about 98 percent of appeals are ruled in the builder’s favor,” Shifman said. “This is a major streamline for the industry.”
On the eve of a new year, Boston’s John Hancock Tower has been sold to the New York firm Broadway Real Estate Partners for an undisclosed price. The tower, previously owned by Beacon Capital Partners, is 790 feet tall and was designed by architect I.M. Pei in the 1970s.
The transaction includes two smaller properties: the smaller Hancock tower at 200 Berkeley St. and a building at 197 Clarendon St. Beacon Capital purchased the John Hancock Tower and three other buildings in 2003 for $910 million.
But not every project moved forward. Columbus Center, the controversial mega-development slated to be built above the Massachusetts Turnpike in Boston’s South End, failed to get a shovel in the ground.
Construction was expected to begin in 2005 on the $650 million air-rights project that would be built “in the air” on a 7-acre deck over the highway and railroad tracks near the Back Bay MBTA station. When completed, it would connect the Back Bay, South End and Bay Village neighborhoods, which are separated by the Turnpike’s giant chasm.
But funding problems have plagued the massive development as construction costs have soared since its approval from the BRA in 2003. Financing the project continues to be the major stumbling block.
John Rosenthal, president of Meredith Management Corp., said delay of Columbus Center raises the question of whether air-rights developments are economically viable.
“The jury is still out,” said Rosenthal, who is planning an air-rights project in Boston’s Kenmore Square, near Fenway Park. “Are air rights feasible? When the cost to create land on a deck is more expensive than buying land, you have to wonder.”
