Image courtesy of Pelli Clarke Pelli

The second phase of the South Station air rights development will likely include life science space and multifamily housing, rather than a planned hotel.

As it marked a milestone in construction of the 678-foot-tall office-condo tower scheduled for completion in 2025, developer Hines is planning to propose changes for the next phase of the landmark air rights project at New England’s busiest transit hub.

David Perry, senior managing director for Hines’ Boston office, said the developer hopes to begin construction of the second phase before completion of the first tower, which is now rising behind the station headhouse and scheduled for completion in 2025.

Uncertainties about future demand for hotel development prompted the Houston-based developer to consider a change in the future phases of the project, Perry said after a ribbon-cutting ceremony marking a milestone in the first tower’s construction.

Currently, the second phase, to be built east of the office-condominium tower, is approved for a 473,000-square-foot hotel-condo building. 

Gov. Charlie Baker and Boston Mayor Michelle Wu attended Tuesday morning’s ceremony acknowledging progress on the long-envisioned transit-oriented development.

Hines began site work in 2020 after receiving $870 million in construction financing for the project, which had been envisioned since the 1970s. The 678-foot-tall tower includes 768,000 square feet of office space and 347,000 square feet of residential condo space. 

Discussions about building above the commuter rail tracks behind the station headhouse started after the city of Boston acquired the property in the 1970s.

“Over the course of 30 or 40 years that this project has been around, part of the reason it didn’t get done is because it’s enormously challenging and with that comes all kinds of financial risk, operating risk, construction risk, name it,” Baker said. “There was frankly a lot of doubt whether anybody would be willing to take the chance associated with building this.”

John Fish, CEO of Suffolk construction, called the project the most complex one that his firm has worked on in 40 years.

State transportation officials spent approximately three years drawing up plans to keep the commuter rail, subway and bus station operating during construction, Baker said.

The office portion of the tower, occupying the 12th through 34th floors, is being marketed by Cushman & Wakefield and is 100-percent available. Perry said developers are willing to entertain proposals to lease as little as a single floor, or approximately 29,000 square feet.

Vacancies and sublease offerings shot up in 2020 as companies emptied downtown Boston offices at the onset of the COVID-19 pandemic.

Boston’s office availability rate hit 15.6 percent in the second quarter of 2022, according to Colliers research. There are 3.6 million square feet of new construction under way including the 1-million-square-foot One Congress tower, which is fully leased.

MP Boston has signed three tenants at its Winthrop Center skyscraper at 115 Federal St., which contains over 800,000 square feet of office space.

Developers of two other downtown Boston office towers are updating them with new amenities such as outdoor terraces to fill major existing vacancies.

Fortis Property Group this month refinanced its One Lincoln office tower and announced a $200 million capital improvement program for new anchor tenant HarbourVest and future tenants.

One Post Office Square is adding a new facade, roof terraces, new restaurant and retail space and an automated parking garage.

Labs, Housing Could Come Next at South Station

by Steve Adams time to read: 2 min