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Developers of Dorchester Bay City will partner with Boston and state officials on a sea wall designed to divert flood waters from inundating thousands of properties in Dorchester, Roxbury and South End. Image courtesy of Stantec
Transformative projects reshaping the Dorchester waterfront and streets surrounding Fenway Park cleared their biggest hurdles at Boston City Hall in 2023, but a challenging development climate points to a reduced presence of cranes on the skyline.
Rising interest rates and project costs prompted developers to delay groundbreakings and stalled progress on a once-historic life science development pipeline.
The pace of multifamily housing construction in Greater Boston declined, prompting predictions of further apartment rent increases in one of the nation’s priciest housing markets.
State officials rolled out their prescription for alleviating the housing crisis: a historic new mandate requiring suburban communities with MBTA service to rezone districts near transit stops for multifamily development.
And as potent demand drivers such as biotech waned, commercial developers turned to emerging sectors such as clean energy for the next generation of tenants.
Leasing Wanes Amid Lab Space Boom
Life science companies hit the brakes on aggressive, pandemic-era real estate expansion plans to conserve cash as venture capital inflows slowed. The pullback created a widening supply-demand gulf, with nearly 16 million square feet of lab development and conversions under construction in Greater Boston, CBRE reported.
Through the first three quarters, the lab markets in Boston, Cambridge and the suburbs all recorded negative absorption.
Projects in six communities – Boston, Cambridge, Lexington, Somerville, Waltham and Watertown – account for 14.3 million square feet of the current construction activity, including high-profile projects such as 10 World Trade in the Seaport District in Boston, US2’s 10 Prospect St. in Somerville’s Union Square, 74M in Somerville’s Assembly Square and Forum at Boston Landing in Brighton.
The negative absorption is driven in large part by rising sublease listings, which reached 2.4 million square feet in early fall according to CBRE.
Many developers are responding by building out speculative lab shell space that is designed to appeal to cost-conscious tenants wary of fitout costs. Others are marketing space to incubators or offering to break up floor plates for multiple tenants to reflect the lack of big space requirements.
MBTA Communities Spurs Suburban Change
As home prices and rents shattered records, a new state law chipped away at Massachusetts’ tradition of local land-use control and suburban zoning that restricts multifamily housing development.
After lengthy debates, inner suburbs that have MBTA rapid transit service including Brookline, Malden, Milton and Newton agreed to redraw zoning maps to allow higher-density buildings by-right. In Brookline and Newton, supporters overcame warnings about the potential loss of local neighborhood businesses when retail buildings are redeveloped as multistory apartments and condominiums.
As a Dec. 31 deadline for rapid transit communities neared, Gov. Maura Healey made it clear the administration would take a hard line enforcing penalties for non-compliance. Cities and towns that fail to meet the deadline face withholding of state funding for a wide range of programs including downtown revitalization and brownfields redevelopment.
Supporters acknowledge that the rezoning won’t lead to a massive housing boom overnight. In the meantime, transaction data illustrates that rising mortgage rates have done little to dent home prices. The statewide median condominium sale price rose 4.4 percent to $500,000 in October, according to data compiled by The Warren Group, publisher of Banker & Tradesman. Single-family home prices hit an all-time high for October of $575,140.
Elevating a New Neighborhood on the Waterfront
A 36-acre site on Dorchester’s Columbia Point is slated for a 21-building redevelopment including 2,000 housing units, office buildings and labs.
But perhaps the most notable element of Accordia Partners’ 6.1 million-square-foot Dorchester Bay City project is a commitment to address the specter of rising seas and projected flooding in Boston neighborhoods far from the immediate coastline. Developers agreed to contribute $18 million toward a 23-foot-tall flood barrier extending north of the property line along the Dorchester Shores Reservation to South Boston’s Moakley Park. Coordinated with the city of Boston and state Department of Conservation and Recreation, the sea wall would block a major flood path threatening thousands of properties in Dorchester, Roxbury and the South End, according to city climate studies. An additional $52 million is needed to elevate the Dorchester Bay City site above projected storm surges, developers estimate.
The project would be built on parking lots and vacant land once occupied by the Bayside Expo Center. In a statement, Accordia Partners said it’s awaiting final approval by the Massachusetts Environmental Policy Act office before submitting plans for individual buildings to the Boston Planning & Development Agency in 2024. The first phase will include nine buildings totaling 2.1 million square feet.
The first of eight buildings in the Fenway Corners project could break ground in 2024, in a 2.4 million project bringing new high-rise offices and housing overlooking Fenway Park. Image courtesy of Sasaki
Developer Envisions a Tech Cluster Around Fenway Park
A partnership between the Boston Red Sox’ owners, WS Development and a sports souvenir vendor will change the cityscape surrounding Fenway Park in the coming decades. Eight office, lab and housing buildings ranging up to 19 stories will replace low-rise industrial buildings in four development blocks on Brookline Avenue and Van Ness Street.
In July, BPDA directors approved the first 1.6 million square feet of the 2.4 million-square-foot Fenway Corners project. WS Development has hired architecture firms Morris Adjimi, Jaklittcsh Gardner and Herzog & DeMeuron to design several of the initial buildings, WS Senior Vice President Yanni Tsipis said, with hopes of beginning construction of the first building in 2024. The developers have promised architecturally diverse building styles to resemble a neighborhood built over time by various owners.
Decarbonization Push Creates Leasing Demand
Developments once positioned as new life science clusters turned to emerging sectors such as clean energy and “tough tech” advanced manufacturing as a back-up source of leasing demand.
Startups specializing in solar, geothermal, hydrogen power and battery production have the potential to pick up the slack amid the life science leasing lull.
Steve Adams
The Inflation Reduction Act will deliver $369 billion in federal funding to support alternatives to fossil fuels, and Massachusetts companies are lining up for their share. Ascend Elements, a Westborough-based battery manufacturer that’s already raised $680 million in venture capital and federal funding, will relocate to a new 101,000-square-foot headquarters and R&D center in King Street Properties’ Pathways campus at the Devens business park. The 4,400-acre property is also home to the headquarters of power-generation researchers Commonwealth Fusion and Electric Hydrogen, which manufactures electrolyzers that can generate clean-burning hydrogen from water.
The sector’s requirements for a combination of office, research and manufacturing space created demand for suburban flex buildings. Brokerage Hunneman tracked nearly 1 million square feet in leases by the sector since early 2022.
Clean energy startups graduating out of Somerville’s Greentown Labs, home to more than 100 early-stage companies, have expanded into their own dedicated spaces at properties such as Charlestown’s Schrafft Center. Properties in Somerville’s Inner Belt, Burlington’s Blue Sky Drive and the former Sasaki headquarters in Watertown also have inked leases with clean energy tenants in the past year.
