Massport’s approach to development of prime real estate that it owns in Boston’s Seaport District could serve as a case study in lost opportunities.
The port authority this month selected a consortium of developers to build an 800,000-square-foot, 1,054-room hotel on Summer Street opposite the Boston Convention and Exhibition Center. The 2-acre property vastly increased in desirability when the BCEC opened in 2004.
Massport in 2014 sought proposals for a 1,000-room hotel on two parcels. After Gov. Charlie Baker scotched a $1 billion convention center expansion in 2015, Massport sought fresh proposals for as few as 250 hotel rooms on a single parcel. That process dragged on until this month’s selection of Omni Hotels & Resorts for 1,054 rooms and 40,000 square feet of retail space.
The project appears to offer many benefits: $550 million in private investment without public subsidies, up to 1,000 permanent full- and part-time jobs and an ambitious minority-owned business participation program from the design stage through construction and hotel operations.
So what’s the problem? The damage to the local economy is already done.
The Massachusetts Convention Center Authority hired CHMWarnick to prepare a study which said the region lost $163 million in convention business from 2012 through 2016 because of difficulty assembling room blocks near the BCEC. Meeting planners don’t want to book rooms in downtown Boston and Back Bay given the lack of convenient and affordable transit to the BCEC on the Seaport’s windswept fringes.
The report concluded the Seaport District needs another 2,000 reserved room blocks or BCEC bookings could decline up to 41 percent through 2021 – the year the Omni is scheduled to open. An Omni spokesman said the hotel expects to set aside 800 rooms for convention business, although it’s not required to do so absent a formal agreement with the MCCA.
Meanwhile, the BCEC faces new competition. Casino developer Steve Wynn in March dropped the bombshell that he plans to aggressively pursue meeting business at his billion-dollar casino in Everett.
It’s disappointing that Massport has given Boston residents zero opportunity to comment on this project. The entire process was conducted behind closed doors, throwing fuel on a growing debate about the Seaport’s sparse public realm and sterile commercial developments.
Contrast that with the Boston Planning and Development Agency’s transparent approach to its Winthrop Square garage property redevelopment. The BPDA posted on its website all six developers’ detailed submissions, and hosted an open house at Faneuil Hall for them to present plans and answer questions from the public. The Massachusetts Department of Transportation likewise held a series of community meetings last spring before seeking proposals for its 5.5-acre Kneeland Street development site.
Mention Massport to members of Boston’s brokerage community, and you’re likely to hear tales of bureaucratic inertia. We’re in a mature real estate cycle, and hotels are among the riskiest commercial property types to finance. Any shocks in the financial markets could torpedo the Summer Street hotel long before the first jackhammer breaks the pavement.
As a veteran commercial broker commented on Massport’s track record with South Boston development: “It’s nice to have no competition.”
