Consider New York-based Street-Works’ plan to redevelop Quincy Center the company’s twist on the old saying that no man is an island who has friends – no one entity alone can operate a downtown, not without joint venture partners to help build that new city center.
The firm has master planned a $1.6 billion redevelopment of the city’s downtown that will include more than 1 million square feet of office space, two hotels, more than 1,200 residential units and about 700,000 square feet of retail space.
And now that New York-based National Realty and Development Corp. has agreed to invest about $125 million to construct, buy and manage 400,000 square feet of the retail slated for the area, the project is closer than ever to becoming a reality, even though the private construction will not begin for another two years after infrastructure work is complete in 2013. The first portion of the project being built, including two residential buildings, two blocks of retail and one or two blocks of office space, should open in 2015.
“You will see in the next year, more announcements of that sort – partners for residential and office, added to this mix very carefully,” said Ken Narva, a partner in Street-Works.
“Retail is first in the series because, more than any other component, you can pre-lease retail far in advance because they’ll lease three four years down the line for the bigger tenants. Retail is the activator of the streets for mixed-use projects.”
After all is said and done, once tenant improvements are approved and completed, the investment in the project will be closer to $2 billion, Narva told Banker & Tradesman. Although he would not identify what retailers are currently being courted, a quick study of National Realty’s properties includes space leased to the TJX Cos., Target and Kohl’s. The firm owns the Lord & Taylor department stores.
Public/Private Partnership
Street-Works has already spent between $30 million and $40 million to acquire and approve the approximately 50 acres of land it needed to purchase from about 40 different landowners. Plus there’s the man hours logged building awareness of the project and trust in the developer from politicians and the public. All told, that process took about five years. That alone probably turns off a lot of large scale urban development, Narva opined.
The project will require $1.6 billion in private investment. Then, an agreement struck with Quincy officials has Street-Works paying out of pocket for tens of millions of dollars in road and other public improvements that are necessary for the project. When the redevelopment begins pumping out tax revenue, the city will repay the infrastructure costs through 30-year bonds for up to $289 million already approved by the City Council.
Gov. Deval Patrick has already proposed at least $5 million in funds to pay for the relocation of the Quincy Town Brook, a stream that has largely been built over as it travels through the city center. The developer anticipates a total $100 million in state and federal funds.
“We had to deal with the costs and relocations of assembling the land from the landowners, because in today’s world you can’t use eminent domain for these projects,” Narva told Banker & Tradesman.
“Over and above the cost of that is the amount of time and energy and risk involved. It’s just gigantic. The key ingredient is public money to build the infrastructure and a lot of structured parking.”
Next, the firm will identify an operator and developer for the office and residential aspects of the project. He said an operator such as Equity Office or Residential, or Avalon, are the kinds of national firms with very strong local bases the company wants to see providing funding and operating those portions of the project.
“I want a really good Boston-based operator of the office space,” Narva said.
And even though other entities will fund, build and own the office, retail and residential properties, Street-Works will retain bites of each piece of the pie.
“We’re responsible for it to meet all the criteria we agreed on with the city and other stakeholders,” he added.
And with the company acting as conductor of the many-instrument orchestra, it will be the one to set the tone, the rhythm, to make it all come together.
Vested Interest
With 40 years of being located in downtown Quincy Center, Sullivan Realty Co. has a vested interest in the success of the project, said Greg Sullivan, owner of the family-owned business.
“We hope the city can get rejuvenated, because that’s what it needs,” Sullivan said. “When my dad started here there was actually thriving downtown retail, and, of course, with the advent of the South Shore Plaza in the 1960s we saw a lot of that go away. [Quincy Center] has been struggling … with a lack of a cohesive downtown, so you have more vacancies, which give the opportunity for crime and drugs that were a real problem downtown.
“[Quincy Center] has really been struggling since the 70s and 80s and really up to now,” Sullivan added. “So, when Street-Works came along we were excited about the possibility of really transforming the downtown in a 21st century, urban environment. I’m very excited about seeing Quincy resurrected. With their commitment, I think you’re going to see other investors coming into the downtown.”
