All good points, and the last thing deserves a rim shot.
I think Chiofaro and Prudential simply overpaid for the property back in 2007. There was a hell of a lot of overpaying for real estate going on in 2007 as many of us recall all too well [shudder]. It's hard to say how much they overpaid: nearly all assets classes went into bubble mode by 2007, but then there's also the screwy development process is Boston that is so based on mayor-schmoozing, especially in the Menino era. So some of it was market-based overpayment and some of it political-based overpayment. But when one group gets smacked down repeatedly due to the size/scope of their proposals, and is endlessly complaining that the numbers don't work, even when they're into the post-Menino regime, at some point it becomes clear: they paid too much at acquisition. And the quite solid ongoing revenues in the as-is condition don't make up for that fact, at least not enough to redevelop it, for the reasons fattony describes above.
But it might be that the numbers - 600 ft vertical & 900K sq ft area - work well enough (if not great) for Prudential, but not enough for Chiofaro to get his ROI, too. (Chiofaro is very probably in the first tranche of risk, with Prudential much less exposed than him.) If so, then it makes sense for Prudential to go hear it from the BRA / City directly rather than through the filter of the guy who's going to get crushed.
This article does not say who reached out to whom in the BRA - Prudential conversation. But I would guess it was Prudential who reached out. They'd probably like to hear, without a filter, the BRA / City tell them, more or less, "If you and/or Chiofaro overpaid and can't make the numbers work, we're not going to fix that for you. You can go to 600 ft of height and 900K sq ft of area. Maybe we'll allow some flex on the parking part, maybe not. But those are the basic numbers. If you can't make that work for what you paid, then face your choices: a) develop it at 600/900K for a lower than hoped-for ROI, b) keep running it as a garage while waiting for burn off of the HT parking easement (but watch out for the ongoing concrete decay!), or c) sell it and take whatever the hit turns out to be for having overpaid in 2007." Or, more bluntly, fish or cut bait, but quit asking for more from the City either way.
If that's where the current mayor has drawn the line, and those numbers sort of work OK for Prudential but not at all for Chiofaro, then Prudential really needs to get that face to face from the BRA / Mayor, without Chiofaro in the room. Then they can go back to their office and decide if Don is really headed under the bus.
Prudential has to be worried about missing this cycle, and likely is worried that Chiofaro can't / won't be able to come to terms with the situation in time, given how much more exposed he is to the overpayment back in 2007.
I admit, this is all speculative, but it fits the available evidence.
