Gillette/P&G Redevelopment | South Boston

Charlie_mta said:
What then is it? Just that the development would change the neighborhood? I'm genuinely curious what the problem is.
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Parking is part of a larger NIMBY toolkit. While it may well be the top motivation for some NIMBYs, it is mostly just used, along with shadows, tree loss, traffic, "character", etc., to prevent any kind of change whatsoever. I am quite convinced that making free parking available to every single NIMBY would leave us with 95% of NIMBYs still complaining about the other issues. Such an offer would obviously add to the price, making the whole project more unlikely, but it would not eliminate pushback, far from it.
 
Ugh, disappointed. I liked the renders for the development that was supposed to replace it, even if they had too much lab space
 
It might not end up so different. If designs and engineering were already mostly complete, they could easily swap it from lab to office, maybe fit a few more floors. Don't forget the opposite happened at the Lilly building on Necco street after GE walked away. It was originally rendered for the GE office space and was adapted to the current Lilly lab/office. Compare renders below.

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Learning that P&G is electing to build their own building instead of taking space in an existing one must feel like the biggest slap in the face to the developers of 10 World Trade, which has 255,000 sf of unspoken for office space on top of 290,000 sf of unspoken for lab space in their entirely vacant building that is just down the street. 🥲
 
Yea it seems crazy... I think a lot of holders of office/lab space would do an incredible amount of backflips for a tenant
 
awood91 said:
Learning that P&G is electing to build their own building instead of taking space in an existing one must feel like the biggest slap in the face to the developers of 10 World Trade, which has 255,000 sf of unspoken for office space on top of 290,000 sf of unspoken for lab space in their entirely vacant building that is just down the street. 🥲
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A few thoughts:
  1. There's likely value to Gillette of moving directly next door as opposed to moving even one mile away. Employees' commute patterns (and parking!) won't have to change at allfor many years until the old campus is torn down and redeveloped.
    1. For this reason I expected Gillette to take the old State Street building that's also directly abutting their current building 🤷‍♂️
  2. With a new build Gillette gets to customize the space exactly to how they want it. This is easier (and potentially cheaper!) than retrofitting a generic lab-space built on spec.
  3. It'll take a couple years to build out their new building, and that may fit better with their overall timeline for the move. They don't necessarily want to move tomorrow; they want to move on a multi-year timeline in sync with the expected timeline of redeveloping their current facility.
 
They also stated they want something they can stay in for 125 years so owning your own building vs leasing makes sense there.
 
awood91 said:
Learning that P&G is electing to build their own building instead of taking space in an existing one must feel like the biggest slap in the face to the developers of 10 World Trade, which has 255,000 sf of unspoken for office space on top of 290,000 sf of unspoken for lab space in their entirely vacant building that is just down the street. 🥲
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Gillette's lab space needs are pretty bespoke -- it is not generic bio lab space. They are not a biotech, they are very high volume precision consumer products player.

They are going to get much more of what they need building their own building to spec than trying to do a build out on a lease.
 
JeffDowntown said:
Gillette's lab space needs are pretty bespoke -- it is not generic bio lab space. They are not a biotech, they are very high volume precision consumer products player.

They are going to get much more of what they need building their own building to spec than trying to do a build out on a lease.
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Thats moving to andover though, I’m pretty sure this is just going to be office space.

“In 2023, P&G Gillette announced it would move manufacturing operations out of its longtime South Boston site to its Andover campus, while finding a new place in the city neighborhood for its roughly 750 corporate and research workers.

P&G Gillette considered leasing other spaces, or staying on its 31-acre existing campus, which is in the early stages of being redeveloped. In the end, though, the company said it would build a brand new building at 232 A St. on an already-permitted site that it sold to Breakthrough Properties, a Tishman Speyer-Bellco Capital joint venture, in 2021.”
 
stick n move said:
Thats moving to andover though, I’m pretty sure this is just going to be office space.

“In 2023, P&G Gillette announced it would move manufacturing operations out of its longtime South Boston site to its Andover campus, while finding a new place in the city neighborhood for its roughly 750 corporate and research workers.

P&G Gillette considered leasing other spaces, or staying on its 31-acre existing campus, which is in the early stages of being redeveloped. In the end, though, the company said it would build a brand new building at 232 A St. on an already-permitted site that it sold to Breakthrough Properties, a Tishman Speyer-Bellco Capital joint venture, in 2021.”
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Remaining manufacturing is moving to Andover. But the announcement said R&D functions stay in South Boston. R&D for Gillette products still means robotic manufacturing development, metallurgy and specialty coating labs, as well as more general chem labs.
 
Can I get a math check on this? A billion dollars for the building alone?
 
That's an all-in number. From the Globe coverage:

The $1 billion estimate provided by P&G Gillette includes construction, land acquisition, and equipment purchase costs.

They also note that Gillette sold the land for $80M but we don't yet know what they bought it back for; presumably it's less than that. Not sure what equipment costs are, but presume it's a relatively small fraction vs the other inputs. So yeah seems like the building itself is a big part of the $1B price tag.
 
www.bostonglobe.com

Gillette buys back parking lots for nearly $20 million more than its 2021 sale price - The Boston Globe

Gillette buys back parking lot it sold five years ago, for a $20 million premium.
www.bostonglobe.com www.bostonglobe.com

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Five years ago, amid a regional life sciences laboratory boom, Gillette’s parent company shaved off a slice of parking lots directly next to its longtime World Shaving Headquarters in Fort Point, and sold it to a lab developer. Now P&G Gillette has bought the land back — for nearly $20 million more than its 2021 sales price.

Cincinnati-based consumer products giant Procter & Gamble, Gillette’s parent, has re-purchased 232 A St. for $99.3 million and now plans to use the property as part of its $1 billion overhaul of the razor maker’s home campus.

Life sciences real estate developer Breakthrough Properties bought the 2.4-acre swath of parking lots in 2021 for $80 million, and later secured city approval to build a 325,000-square-foot research and development lab and 1.2-acre waterfront park there. The 24 percent value swing in the past five years — a period where the region has grappled with a glut of lab vacancy — reflects both Gillette’s future development goals and the value that comes with city permits to build a 150-foot-tall commercial building there.
 
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Justbuildit said:
That's an all-in number. From the Globe coverage:

The $1 billion estimate provided by P&G Gillette includes construction, land acquisition, and equipment purchase costs.

They also note that Gillette sold the land for $80M but we don't yet know what they bought it back for; presumably it's less than that. Not sure what equipment costs are, but presume it's a relatively small fraction vs the other inputs. So yeah seems like the building itself is a big part of the $1B price tag.
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$20M more than the 2021 sale price, according to today's article. (previous post)
 
Thanks, really interesting on the price increase over 5 years that can be attributed basically entirely to the completed permitting. A bit off topic, but reminds me of the recent paper about development in LA and the relative cost of vacant unpermitted land vs vacant land that has been through permitting. In that study they were able to calculate a 50% value increase from permitting alone, or $48/sf.

cayimby.org

Economists Put a Price on Obtaining a Building Permit in LA. It’s Not Small. - California YIMBY

If you want to build something in Los Angeles County, waiting for a permit takes time — and now there’s a study estimating the cost of that wait. Researchers find that vacant land with an approved building permit sells for…
cayimby.org cayimby.org

I don't think Breakthrough would view this as a "good deal" but compared to (a) holding it and paying taxes or (b) building out an empty lab, seems like a decent outcome for them. And for Gillette, in a high interest rate/yield environment and with an essentially flat stock price over the last 5 years, not a bad deal for them either.

Still, to the point above, if the total buildout is estimated to be $1B, then that means $900M will be in construction, equipment purchases and other improvements. Real investment in a great location. Assuming all of the resilience and channel frontage improvements will be carried by Gillette as well.
 
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