11-21 Bromfield Street | DTX | Downtown

stoweker

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I appreciate that you can take a good-natured ribbing! And yes, you're right, no way the Macy's building is getting redeveloped; the data center there is just too insanely profitable, I have to think, judging by the dozens of employees you frequently see having smoke breaks outside on Summer St. My impression based on that is they've been very successful landing major clients who've needed to offshore terabytes of data to them.

[Also check out the Google overhead view of how much rooftop mechanicals they have crammed up there, to (presumably) facilitate the cooling/exhaust needs for those thousands of servers and all the heat they emit....]

P.S. How much money do we think the developer has poured into the 11 Bromfield development proposal already, given that this is the 3rd iteration now? Could it be as much as $20-$30 million, when you consider the architects, engineers, design consultants, staffers dedicated to BPDA interactions, etc., etc.?!?
nah, no way they've spent that much. Maybe like 1-2mm at the top end, no more than that. soft costs won't start to get expensive until they need like real engineering, drawings, site 3rd parties etc done, it would be kind of silly to get that pregnant on this thing before they have full approvals from the city. getting some renderings here and there doesn't cost a fortune. you can also get people to do work for you on spec if they think it's going to lead to a much larger check later on when you plow forward with the project.
 
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DBM

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nah, no way they've spent that much. Maybe like 1-2mm at the top end, no more than that. soft costs won't start to get expensive until they need like real engineering, drawings, site 3rd parties etc done, it would be kind of silly to get that pregnant on this thing before they have full approvals from the city. getting some renderings here and there doesn't cost a fortune. you can also get people to do work for you on spec if they think it's going to lead to a much larger check later on when you plow forward with the project.
Well, just remember, they did full PNFs for the first two iterations [but of course didn't get nearly as far along as they have this go-round]. So all those analyses--shadow, wind, soil, geotechnical, traffic, etc., etc.--alongside the renderings (from both architects-of-record and consulting architects on landscaping, etc.), and the folks who have to do the compiling of the submissions, and ensuring that every.single.last.item. of regulatory compliance is in place, can be done for that relatively cheap? Well, like you said, working on spec--so even though the clock keeps running overall, the developer is ordering "a la carte" in a sense instead of keeping the contractors on a payroll throughout.

These submissions are so insanely long--450+ pp. I think I saw for this one. No one ever accused Boston of suffering from a lax or minimal regulatory environment [at least in terms of what the BPDA requires for these Article 80 submissions]
 

kmp1284

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ha which is why 1 dalton, st regis, and echelon are sucking wind. imagine that the condos at sudbury are probably super slow too (but that's a weird location...). Too much luxury supply not enough people to buy 1,000 sf condos at $3,000 PSF
Sudbury’s up to a whooping seven units in five months. Big numbers though, not far off One Dalton.
 

stoweker

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Well, just remember, they did full PNFs for the first two iterations [but of course didn't get nearly as far along as they have this go-round]. So all those analyses--shadow, wind, soil, geotechnical, traffic, etc., etc.--alongside the renderings (from both architects-of-record and consulting architects on landscaping, etc.), and the folks who have to do the compiling of the submissions, and ensuring that every.single.last.item. of regulatory compliance is in place, can be done for that relatively cheap? Well, like you said, working on spec--so even though the clock keeps running overall, the developer is ordering "a la carte" in a sense instead of keeping the contractors on a payroll throughout.

These submissions are so insanely long--450+ pp. I think I saw for this one. No one ever accused Boston of suffering from a lax or minimal regulatory environment [at least in terms of what the BPDA requires for these Article 80 submissions]
a lot of those 450 pages though are copy paste from 3rd party reports which are "cheap" to order - think like copy and paste from a bunch of $25-50k reports (if not a lot less). the people putting the reports together are banging them out using a template, and the cost of labor at those firms isn't super high. where soft costs start to really get expensive is when you engage an architect to do like a real building plan, and they need engineers, and all sorts of different sub-contractors on the design to put together a CD set. It's not til you get to the drawings that soft costs becomes $$$$$$$.
 

stoweker

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Sudbury’s up to a whooping seven units in five months. Big numbers though, not far off One Dalton.
hey that's like 15% sold! i'll go to my grave that sudbury and st regis condos are going to get smoked.
 

DZH22

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Sudbury's biggest problem is it's still part of a construction zone. Once State Street is done, it will become more appealing. I wonder what their deal is for that second lower residential tower though.
 

stefal

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Sudbury's biggest problem is it's still part of a construction zone. Once State Street is done, it will become more appealing. I wonder what their deal is for that second lower residential tower though.
Good numbers on their first residential tower would be a big lure for a lender. The opposite, on the other hand....
 

gac108

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I'm not sure where some of you are getting your information regarding the sales of many of these places. One of my best friend's wife is in top-tier sales and has numerous clients who have put money down on places in St Regis, Dalton, MP, Sudbury and most others and she says that, though they are going for a little less than expected, they are filling up. She has many clients coming from SF area, Seattle, China, India, parts of Europe, all that work for big tech and biotech companies that have money to burn. Many of their offices/labs aren't even built yet so they're looking to purchase now before the plethora of new buildings open and the massive influx of new area residents that are expected arrive. This is happening and we're going to see unprecedented (in our lifetimes) population growth over the next 5 years. That's a fact.
 

Beantropolis

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This double/triple height exterior floor massing has to stop. It is the most insidious design fad that has ever happened to Boston. The city is being grotesquely disfigured.
 

beck4537

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Blackbird

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No parking, lots of retail, and money going towards affordable units in 41 Lagrange? Honestly, just build it. Yes it could be taller and better-looking, but the important boxes are all checked.
 

HarvardP

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I'm not sure where some of you are getting your information regarding the sales of many of these places. One of my best friend's wife is in top-tier sales and has numerous clients who have put money down on places in St Regis, Dalton, MP, Sudbury and most others and she says that, though they are going for a little less than expected, they are filling up. She has many clients coming from SF area, Seattle, China, India, parts of Europe, all that work for big tech and biotech companies that have money to burn. Many of their offices/labs aren't even built yet so they're looking to purchase now before the plethora of new buildings open and the massive influx of new area residents that are expected arrive. This is happening and we're going to see unprecedented (in our lifetimes) population growth over the next 5 years. That's a fact.
This is a very anecdotal statement delivered by a wildly biased party (the realtor) to a person (you) who is likely biased towards large development. With these big buildings, it's best to trust the numbers, not realtor-driven buzz.
 

stoweker

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This is a very anecdotal statement delivered by a wildly biased party (the realtor) to a person (you) who is likely biased towards large development. With these big buildings, it's best to trust the numbers, not realtor-driven buzz.
i can give an anecdotal statement that people i know who work for companies associated with the equity and/or debt of the projects mentioned know / acknowledge that things are not going so great, and that at least one is likely headed back to the bank.

anyways bringing it back to this deal, still not sure how it's going to fly as a spec build with retail and office given vacancy in both right now along washington street, and further, not having parking at an office building seems like a non-starter but what do i know, maybe some CEOs are super hot to trot on taking the redline to work. For what it's worth in Dallas (admittedly a car driven [no pun] society) there's like 15-20% structural vacancy in the downtown office market due to a lack of parking in the big buildings - you can't lease the big towers to full because you can't guarantee parking for your senior employees.

All that being said would love to see something go up here, it would be a huge add to the neighborhood and pull activity up from lower washington and generally start to improve that area. would be great to start to see the retail along that corridor get nicer.
 
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HenryAlan

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I guess in that scenario it crushes financial district retail if no one is around to like buy a salad and run an errand at cvs at lunch.
Maybe, but even that might surprise us. Speaking for myself, when I was in the office every day, I brought my lunch, but now that I am in just once or twice a week, I always buy my lunch. If enough people switch their behavior in similar ways, it might be enough to support lunchtime retail activities. And if there is enough housing built around concentrations of office buildings, then the work from home crowd can also support the retail operations. Add to that the increasing relevance of lab space, where workers have to be on site, and things might end up not so different for the salad and sub joints.
 

bigpicture7

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Maybe, but even that might surprise us. Speaking for myself, when I was in the office every day, I brought my lunch, but now that I am in just once or twice a week, I always buy my lunch. If enough people switch their behavior in similar ways, it might be enough to support lunchtime retail activities. And if there is enough housing built around concentrations of office buildings, then the work from home crowd can also support the retail operations. Add to that the increasing relevance of lab space, where workers have to be on site, and things might end up not so different for the salad and sub joints.
Your personal story aligns with mine and corroborates the Bloomberg article I posted upthread (from that article):
Instead, she is seeing a “flight to experience,” with demand highest for top-quality buildings close to amenities and infrastructure. Or as Henderson puts it: “People don’t want to go somewhere without nice lunch options.”
Let me add some more of my (admittedly personal) perspective: nowadays I do all of my junk work at home (checking off small tasks, responding to emails/Slack, administrivia, dialing into short routine Zoom mtgs). No need to go into the office for that, and might as well eat leftovers for lunch/nurse a big coffee pot all morning long/etc. Now when I go in (~2 days a week), it is specifically for the more nuanced collaboration: the tough conversations/bigger decision making/needing to get buy-in from colleagues, OR, if I need a big uninterrupted chunk of time (I'm fortunate to have a nice office with a door I can shut). So it is specifically for the more special work days that I go in, and (percentage wise) I am buying lunch/coffee and socializing with colleagues much more on those particular 'special' days than I ever did on a given day when I was working 5 days/week in the office.

I believe that the building itself and surrounding amenities, including being in a well-connected/hub location, are actually going to be more important than ever when it comes to offices. The only question in my mind is what the total demand is going sum up to be: the doubters still might be right that the overall demand is pretty low. But my take is that you'll see more companies headquartering in urban centers than before, just with smaller operations per company. The question is: what will that add up to headcount-wise.
 

stoweker

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Your personal story aligns with mine and corroborates the Bloomberg article I posted upthread (from that article):
Let me add some more of my (admittedly personal) perspective: nowadays I do all of my junk work at home (checking off small tasks, responding to emails/Slack, administrivia, dialing into short routine Zoom mtgs). No need to go into the office for that, and might as well eat leftovers for lunch/nurse a big coffee pot all morning long/etc. Now when I go in (~2 days a week), it is specifically for the more nuanced collaboration: the tough conversations/bigger decision making/needing to get buy-in from colleagues, OR, if I need a big uninterrupted chunk of time (I'm fortunate to have a nice office with a door I can shut). So it is specifically for the more special work days that I go in, and (percentage wise) I am buying lunch/coffee and socializing with colleagues much more on those particular 'special' days than I ever did on a given day when I was working 5 days/week in the office.

I believe that the building itself and surrounding amenities, including being in a well-connected/hub location, are actually going to be more important than ever when it comes to offices. The only question in my mind is what the total demand is going sum up to be: the doubters still might be right that the overall demand is pretty low. But my take is that you'll see more companies headquartering in urban centers than before, just with smaller operations per company. The question is: what will that add up to headcount-wise.
agree with you 100% - my gut is that overall office demand on a SF basis is down a bit but doesn't fall off a cliff, but office density goes down with the exception of lab space which needs people at benches to do their science / direct collaboration with other people. I don't think the new normal will really be felt until the late 2023/2024 lease expirations start to rollover when CFOs have a really good understanding of what use is going to look like. If firms stay in their space though my gut is that they're going to want a massive TI package from their LL to stay in place so that they can re-configure existing space to better align with the new work world. If i'm a CFO and realize i need a totally reconfigured floor plate, why would I stay in place unless the landlord comes out of pocket to rebuild my space when i can jump ship to a new building where the LL will give me a huge new TI package. Not sure how much that basis creep gets priced in right now on renewals, the general assumption is that TI on renew is pretty light, but i can't see that being the case if every company in america needs to add a ton of amenity space / zoom rooms / private offices / other stuff you need to accomodate the new world of employee usage (and don't forget that a ton of companies are going to hybrid weeks permanently too..)
 

DBM

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I'm somewhat surprised no one has mentioned subleasing activity as a prime indicator here... it skyrocketed to unprecedented levels at the start of the pandemic, right? But my understanding is, it's already more-or-less back to "normal," pre-pandemic baseline levels.

IF it had stayed up at an unusually elevated range, I think that would've been a serious indicator of a rather profound and radical shift... but the fact it has subsided so rapidly back to pre-pandemic levels (again, per my understanding) seems very telling to me.

Unless people think I'm vastly overrating subleasing activity as a key market indicator? Rebuttals are welcome!
 

bigpicture7

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I'm somewhat surprised no one has mentioned subleasing activity as a prime indicator here... it skyrocketed to unprecedented levels at the start of the pandemic, right? But my understanding is, it's already more-or-less back to "normal," pre-pandemic baseline levels.

IF it had stayed up at an unusually elevated range, I think that would've been a serious indicator of a rather profound and radical shift... but the fact it has subsided so rapidly back to pre-pandemic levels (again, per my understanding) seems very telling to me.

Unless people think I'm vastly overrating subleasing activity as a key market indicator? Rebuttals are welcome!
I'm not an insider with access to special data, so take what I say with a grain of salt. I just want to point out (as I have similarly in the past), that almost any executive in a publicly traded company (short of the topmost echelon of Google, Apple, Amazon) who felt their firm's visible financial performance could be boosted by this few-strings-attached cost shedding opportunity was going to take this opportunity. Dumping expensive leases, subletting if possible, etc: it was going to happen, especially early on when companies had no choice but to have everyone working remote anyway. I am not claiming I can prove one way or another exactly how many office square feet companies are going to need in the future, but it is nonetheless worth pointing out that all of the lease non-renewals and subletting activity that surged early in the pandemic was not a reliable indicator of pretty much anything.

ASIDE: I also found it hilarious early in the pandemic how so many insolvent, cash flow negative startup CEOs were the ones being interviewed as "evidence" of companies eliminating offices. We are talking about startups with 1-year runway remaining on their venture funding, who, by committing to an "office free future", could turn that into 2 years of runway. But, of course, these CEOs weren't going to say "because my financial performance is in the toilet, I am compelled to ditch my office"...no no, they always said "we are a cutting-edge company, who, unlike those dinosaurs, believe in empowering employees and fostering collaboration through flexible blah, blah, blah." Can I blame them? No; it makes sense. But it's got to be interpreted accordingly.
 
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DBM

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I didn't attend, but I heard that this week's BPDA hearing (slideshow presentation here) was highly favorable in terms of this project's chances:

1.) The NIMBY presence was sparse/uninspiring;
2.) The BPDA handlers were very forcefully arguing for the project's importance;
3.) And the proponent's point man was extremely well-prepared in terms of fielding questions/concerns from the audience.

So... per the project page, comment period ends in January, so in theory this goes to the BPDA Board for approval in, what, March? Followed by a six month or so mobilization/permit-acquiring period, maybe groundbreaking around Halloween 2022--exactly two years after the 3rd iteration was submitted.

Provided, of course, the financing environment isn't completely wretched in the first half of 2022--paging Dr. Stoweker!

(Among other things--the looming interest rate hikes by the Fed--any impact? I presume not, only in that, relatively speaking, rates are so damn rock-bottom to begin with. Right now it's at .25%. So, it might rise to, what, .5%, by the time these guys go loan-shopping? Does that really matter, in this context, on a project that's going to cost at least $430 million per p. 9 of that slideshow presentation?)
 

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