Barely a month after losing the tenant for a massive South Boston office building, the Chiofaro Co. is reportedly close to losing its designation as developer of the 1.5-acre site, which is owned by the Massachusetts Port Authority.
Although principal Donald Chiofaro vowed last week that he will pursue the project, a Massport official acknowledged last Friday that the agency is debating whether to remove him as developer. The effort comes after Chiofaro announced that negotiations had broken off with State Street Global Advisors, a financial services firm, which had planned to occupy 475,000 square feet in the proposed 17-story building.
Chiofaro has advised us that State Street is not likely to be a tenant, which was part of his attractiveness [as a designee], said Massport official Lowell
Richards, adding that, We’re evaluating our plan right now in light of the fact that a major consideration of selecting him is no longer there.
When told of those comments, Chiofaro said he had just spoken with Richards, and that he remains confident he will be allowed to continue.
The Chiofaro Co. is the designated developer, Chiofaro said. We’re proceeding to complete the permitting so we can begin construction as soon as possible. His firm is in negotiations with several large users, Chiofaro added, although he declined to identify any of them.
Despite that, other industry observers familiar with the situation claimed Chiofaro’s removal is imminent, with one local developer saying that a Massport board member indicated as much during a recent conversation. Another Boston developer told B&T last week that his firm already has the property on its radar screen, stating that, We’d love to do Parcel F, and predicting that a new request for proposals will be issued by the summer. The Massport board is slated to meet next week, although it is unclear whether this matter will be on the table. Richards said he could not give a time estimate as to when a decision would be made.
If Chiofaro were de-designated, it would be just the latest blow for the charismatic developer, whose Midas Touch has become somewhat tainted of late. After beating all expectations with the construction of his opulent International Place office complex in Boston’s Financial District, built between 1986 and 1992, Chiofaro’s recent performance has been less impressive. Last year, he was removed as co-developer of One Lincoln St., a one million-square-foot office tower to be built near Boston’s South Station. Chiofaro reportedly did not meet certain performance deadlines, such as buying adjacent parcels on time. The Boston Redevelopment Authority ultimately replaced him with Gale & Wentworth, a New Jersey firm, which is now moving ahead with the $350 million project.
Chiofaro did score one victory last month when he and ACS Development were selected as joint venture partners to build a 200,000-square-foot office building in Chelsea. The team was picked following a year-long selection process to develop the 5.3-acre Emerald Block, a site located along Route One in Chelsea’s 65-acre urban renewal district.
Remaining Optimistic
Even following the loss of State Street Global Advisors, which was also supposedly unhappy with the pace at which Chiofaro was proceeding, the developer expressed optimism that he would still be able to build on Parcel F. One source said it is even possible that State Street might re-enter the negotiations. Chiofaro would only say that he is the developer for the project.
As far as I’m concerned, we’re going full-speed ahead, he said. We’re the designated developer, and that’s that.
Even if he were to lose his position, sources noted it is also possible that Chiofaro could bid on Parcel F a second time, but the competition would likely be much more intense given the growing success of the World Trade Center expansion. Two towers totaling more than one million square feet have seen extensive leasing activity, having wooed such downtown tenants as AEW, Cabot Corp. and the Foley Hoag & Eliot law firm. The project – recently renamed Seaport Center – supposedly is now close to signing another major law firm in Nutter, McLennan & Fish, which ironically is located in International Place.
Spaulding & Slye Colliers leasing broker James Hooper, whose firm is marketing Seaport Center, said last week the area is attracting considerable attention, and said he believes that momentum would likely transfer to the Massport project.
It’s a great parcel, Hooper said. I think a lot of people would be interested in it.
John Drew, whose company is developing Seaport Center in conjunction with Fidelity Investments’ Pembroke Real Estate, said he is unaware of Massport’s intentions, but admitted that the stalled progress is an issue for his company.
I’d like to know what is happening there, Drew said. The site should be developed.
From a demand standpoint, it is likely that Parcel F would generate considerable interest among tenants, with Meredith & Grew reporting recently that the overall vacancy for Boston’s office market fell from 2.9 percent at the start of the year to 2.1 percent at the end of the first quarter. Including Foley Hoag’s 175,000-square-foot lease at Seaport Center West, the city saw an impressive 433,000 square feet of absorption for the quarter, well ahead of the annual pace of one million square feet of annual absorption typical of the Hub.
Although it would likely be difficult to find another tenant to take all the space at Parcel F, there are several large users still scouring the market. Pricewaterhouse-Coopers is seeking 400,000 square feet, as is Level(3) Communications. Other top tenants include Brown Brothers Harriman, Agency.com, and HarvardNet.
