An office building Skanska USA Commercial Development wants to construct in Boston’s Seaport area could be home to the city’s newest speculative office development, built without an anchor tenant guaranteeing the building will be at least somewhat occupied.
The international real estate developer is planning to purchase its third parcel, known as L2, from Boston Global Investors and Morgan Stanley, master developers of Seaport Square. There are plans to turn the 23-acre swath of Boston’s Waterfront into 6.3 million square feet of new office space, retail, restaurants and hotels are in the works.
There is already interest in the site from prospective tenants, so Skanska could decide to put shovels in the ground without significantly pre-leasing the property at the corner of Seaport Boulevard and East Service Road, according to company officials. Interest is coming from life sciences and tech-based firms, among others, located inside the city and out in the suburbs, according to Shawn Hurley, the regional manager for Skanska.
"There’s a lot of optimism from activity in the Seaport," said Paul Hewins, an executive vice president for Skanska USA Building who works out of the Boston office. "There’s a chance we could move ahead without a tenant."
The firm must be optimistic about the Seaport. Along with Boston Mayor Thomas Menino and other dignitaries, Skanska just spent $126 million on a 17-story office tower that PricewaterhouseCoopers will move into in the fall of 2015. PwC will occupy 75 percent of the 450,000-square-foot building.
The property contains 20,000 square feet of ground floor retail space, but currently no tenants have leased it, Hurley said. Even so, he said, starting construction will create a buzz around the project.
The PwC building will be neighbors with another parcel Skanska purchased last year, along with Twining Properties, to create a 350-unit apartment tower called Watermark Seaport. As Hurley noted, the firm builds its projects with its own funds, and is not beholden to the terms a lender might impose.
That, in turn, would make it even easier for the firm to build an office building with the hopes someone will pay to lease the space.
David Begelfer, CEO of the NAIOP Massachusetts commercial real estate lobbying group, thinks they will likely have no problems there.
"Skanska has been, as far as I know, the only company to de speculative development in Boston. They did a lab in Cambridge, and it worked out for them," Begelfer said, referencing a Kendall Square project where Skanska embarked on a $70 million project to build 150 Second St., a 120,000-square-foot lab and office building. Skanska paid for the whole thing. The firm put the finishing touches on the project earlier this year, and in the spring, Foundation Medicine Inc. agreed to lease half of the property.
"They’re been pretty aggressive by using their balance sheet to go forward speculatively, without having to deal with a lender’s criteria to give a loan," Begelfer offered.
There’s motivation for Skanska to start construction. When a firm has a project and isn’t building it, potential tenants can worry whether it will become a reality, Begelfer added.
"That lead tenant has to believe they’re not wasting their time with your project. If you can start construction, you have a lot more credibility, especially with a tenant that has a timeline to keep to," he said.
