.... The project, marketed as SouthGate, with up to 2 million square feet of development potential and building heights to 300 feet, was supposed to be a signature part of a Baker administration effort to sell off surplus state land.
But by the time bids were due last spring, there were no takers.
State officials have subsequently floated the idea of selling the parcels without the steam plant, owned by the energy conglomerate Veolia. The facility provides heat to many office buildings in downtown Boston, and Veolia has no plans to shut it down or build a replacement on its own.
But developers apparently have not warmed up to that idea, either. So now they sit.
Development experts in Boston say a number of issues undermined the SouthGate proposal in 2016, including requirements that the existing steam plant be replaced, the Reggie Wong Memorial Park be preserved in some form, and a deck be built over one of the highways.
The biggest factor, though, may have been the state’s minimum asking price: $167 million.
“The number they came out with was way too high,” said Michael Rubin, a real estate lawyer at Posternak Blankstein & Lund.
“The upfront money and the tentacles that came along with it made it much more expensive. . . . By the time you’re done as a developer, it’s not economically viable.”
State officials eventually waived the minimum bid, but developers and investors had already been scared away by then.
Still, some local real estate experts found it surprising that the state couldn’t work out a deal, given the parcels’ prime location.