The 480,000-square-foot building at 451 D St. in Boston is being eyed for partial conversion to residential use. The facility housed military personnel a half-century ago.
Boston’s 451 D St. could soon be returning home to its roots – in a way.
The hulking Seaport District structure, which housed military personnel a half-century ago, is now being eyed for partial conversion to residential use, joining a slew of Hub office properties being weighed for such uses. “They are clearly taking a look at it,” a source acknowledged last week of HypoVereinsbank, the German financial institution that took the 480,000-square-foot building back from Yale USA Investment Corp. in 2004 after the office market was devastated by the technology downturn. Although Boston’s economy is now on the mend, skeptics claim fringe buildings such as 451 D St. will be among the last to benefit from a sustained recovery, perhaps prompting Hypo-Bank to pursue alternative strategies.
Both apartments and condominiums are being considered in the feasibility studies, sources said, with some maintaining that the extensive 60,000-square-foot floor plates would allow the owners to keep the rear portion of 451 D St. as office and telecommunications space, satisfying several existing leases. Even so, one broker claimed Hypo-Bank allowed at least one tenant to depart early in anticipation of a conversion. A hotel also had reportedly been pondered for the front of the building, but one source said it appears the residential concept is now the favored option. The opening across the street of Boston’s $800 million convention center has created a need for hotel rooms, but the rapid construction of an abutting hotel might be enough supply to curb excess demand, one source opined.
Calls to Hypo-Bank officials and 451 D St.’s leasing agents at Meredith & Grew Oncor were not returned by Banker & Tradesman’s press deadline. Nonetheless, sources insisted the idea is being pursued, including one broker who predicted a positive outcome should Hypo-Bank go the conversion route, partly due to favorable lighting and other physical aspects of the building that could accommodate a housing layout. The property’s 500-vehicle parking lot would be another attraction, according to the observer, who also cited the emerging popularity of the Seaport area as a residential destination for the optimistic view.
“That’s a pretty strong market [for housing] right now,” said the source. A few blocks from 451 D St., for example, developer Joseph Fallon is under way with a 449-unit multifamily project, while Beacon Capital Partners is investing millions of dollars into a mixed-use venture on A Street anchored by high-end condominiums. On the other side of Broadway in South Boston, developer James Pappas is said to be moving ahead on the second phase of his Court Square Press condominium after a favorable outcome on the original building.
A Hot Trend
Not all multifamily endeavors in the district have proceeded apace, however, with another D Street parcel still choked by weeds and debris more than five years after AEW Capital Management and the erstwhile Cathartes Investments announced plans for 650 apartments. Elsewhere in the Hub, conversion to residential has become among the hottest trends in the office arena, and there appears to be little slowdown in that approach. Besides the conversion of Lincoln Plaza near South Station, 360 Newbury St. in the Back Bay and 441 Stuart St. into residential space, Spaulding & Slye Colliers is marketing 40 Broad St. in the Hub’s Financial District as another potential office-to-residential opportunity.
If 451 D St. does indeed become a residential address, it would hearken back to the days during World War II when the structure served as an induction center for soldiers attached to the nearby South Boston Army Base. Also known as the Fargo Building, 451 D St. was recast in the 1980s as an office destination by Boston real estate owner Harold Brown, then acquired in 1997 by AEW and Cathartes for $15 million.
A Munich-based institution, Hypo-Bank became involved in 451 D St. five years ago when it provided a $67 million acquisition loan to Yale USA Investment Group, an offshoot of a Canadian firm which foresaw the building as a prospect for technology based requirements such as data centers. As a result, the tenant’s roster added high-tech firms such as AT&T, MCI and CoreComm, and 451 D St. is also said to feature substantial data infrastructure. Even with such modern capabilities, the 95-year-old building suffered enough during the recession that the owners gave 451 D St. back to Hypo-Bank last spring.
