While Big Dig construction continues around Boston’s South Station, plans by developer Rose Assoc. to construct a building nearby are proceeding and work permits for Hines Interests’ development of an 840-foot-high office building over the station could be secured as early as next summer.
The business climate may be dreary, and the future outlook remains cloudy, but that has apparently done little to dampen enthusiasm for developing office space in Boston.
Despite a sudden surge of subleasing, the declining national economy and lingering concerns over terrorism, developers of several office projects in the Hub pipeline continue to push ahead with their proposals. The activity belies growing predictions that projects could fall victim to the eroding market conditions, or that the popularity of downtown office buildings would be threatened by the Sept. 11 incidents.
Not everyone is going to move to a three-story building in the suburbs, said Michael Vaughan, spokesman for the developers of a proposed 12-story office building near Boston’s South Station. In fact, Vaughan said the developer, Rose Assoc., is eager to begin construction of Two Financial Center as soon as a legal maneuver by abutters is resolved. The action challenging the Boston Redevelopment Authority’s approval of the project could be wrapped up as early as this week, Vaughan estimated.
We think that this is finally going to happen, he said. We think it is imminent.
Boston Redevelopment Authority Director Mark Maloney was equally optimistic, maintaining there is enough spillover demand from Rose’s adjacent One Financial Center to get the building underway once the legal matter is concluded. Vaughan agreed that most of the pre-leasing has occurred from tenants in that property, adding that the 200,000-square-foot building would be completed approximately 18 months after construction commences.
The interest in the building is very strong, even post Sept. 11, he said, although he declined to provide pre-leasing figures.
In Boston’s Seaport District, meanwhile, Manulife Financial has already begun site preparation for its 14-story, $135 million office building to be developed on land owned by the Massachusetts Port Authority. The 95-year ground lease was inked by the Toronto company just days after the terrorist attacks, and Maloney said the project is quickly being moved forward. Efforts to contact Manulife officials by Banker & Tradesman’s press deadline were unsuccessful.
Momentum is also on the rise a few blocks down at Fan Pier, where the Pritzker family has revised its schedule to develop residential and office space ahead of a planned Hyatt hotel. The massive project has been altered considerably since it first was proposed, but Maloney said he believes the scale and mix of uses in the latest version will pass muster when it is presented to the BRA board on Wednesday, Nov. 14.
We have an absolutely outstanding project that will receive the board’s support at that meeting, he said. State officials have already given their go-ahead for the development.
Fan Pier is located so close to Logan International Airport that the Federal Aviation Administration demanded that the Pritzkers cut the height of their project, but neither that proximity nor the economic downturn have tempered the developer’s interest in moving forward, Maloney said.
If anything, we’ve seen an increase in their activity, he said. They are quite anxious to get going.
Calls to Fan Pier officials were not returned by press deadline.
Market Absorption
Maloney said he is encouraged by the level of interest in Boston in light of the recent difficulties, attributing the activity to the city’s diverse economy and relatively strong fundamentals on the supply/demand equation. The Hub continues to be a leading recipient of monies from the National Institute of Health, he noted, while the presence of several major universities has also contributed to the area’s resiliency.
We have these other engines of growth that help balance us, and for that, Boston is very fortunate, he said.
With that as a base, Maloney said developers can feel comfortable about the city’s future, helping them to take short-term glitches in stride.
The buildings are so [well-conceived] that they are able to move them forward knowing they are going to have users for them and that their market absorption will be there [upon completion], he said.
Plans are also proceeding to develop what would be one of Boston’s highest office towers, with Hines Interests principal David Perry estimating that the ambitious project over South Station could be completely permitted by next summer. In a best-case scenario, construction would start in early 2003, he said.
Hines and its partner, the Tufts University Development Corp., have acquiesced to concerns over height by cutting the 47-story tower by five floors, Perry said, while other changes are being considered to better coordinate construction with the movement of buses and trains through the inter-modal facility.
We’re still working on the details, he said of a revised version, but Perry stressed the development team is committed to seeing the project through to completion. Our hope and expectation is the economy will have rebounded long before our space gets delivered, he said.
