A 187-unit residential project that Boston Properties has been planning in Kendall Square for the better part of a decade will have to wait a while longer.
Cambridge city officials granted the development firm an 18-month extension on its permits for the project last week. It’s the second permit extension Mortimer Zuckerman’s REIT has been granted. The 205,000-square-foot building proposed for 7 Cambridge Center was originally permitted in mid-2005, and it had been on the planning boards for several years prior. The firm owns a number of office buildings in the area.
Boston Properties has served as an interesting case study for navigating the post-bust real estate markets. In December, it nabbed permits for a 422,000 square foot office tower at 888 Boylston St. in Boston. That project is on hold, though, as the developer searches for an anchor tenant for the building. It recently halted another tower project in New York after losing that building’s anchor.
Russia Wharf, the 854,000 square foot tower that’s rising along the Rose Kennedy Greenway in Boston, recently took a prolonged dip in the nation’s troubled finance pool, emerging with a tough $215 million construction loan on the $550 million project. It took five lenders, and a harsh recourse provision, to make the deal work.
“We had banks that dropped out, not because they didn’t like the project, but because they had managers telling them, ‘Don’t get involved in real estate loans,’” Boston Properties CEO Edward Linde recently told Banker & Tradesman. “They didn’t care what the credit was or how good the product was. It was, ‘Don’t make loans on real estate projects.’”
The REIT is currently awaiting responses to an RFP for construction loans on Biogen’s new 356,000 square foot build-to-suit Weston headquarters, Linde said. In the meantime, it’s funding construction on that project off its balance sheet.
The firm’s stock is currently trading at more than half its 52-week high.
Cambridge city planners have been chasing down dreams of activating Kendall Square’s dense office and educational corridors with residential development for some time now. Those endeavors have been met by mixed results. Two notable rental projects have opened their doors in recent years – the 23-story, 321-unit Watermark tower, and a 292-unit building by Extell Development and Equity Residential at 285 Third St.
Extell and Equity have hit a wall with the second phase of their Third Street project, though. The developers’ 190-unit building at 303 Third St. was intended to be a condominium co-op that would be marketed to retired MIT and Harvard professors. When that plan failed to gain sufficient traction, Extell and Equity changed gears and pursued an open condominium strategy. Twelve university faculty members are now suing Extell and Equity, claiming that the developers have pocketed their condo deposits while refusing to schedule a closing or to file the building’s condominium master deed; they suspect the developers are now contemplating switching the building from condos to apartments. A Belmont-based contractor, James W. Flett Co., is also suing the developers, claiming that they’re owed for more than $3.3 million in unpaid work.
