Downtown/Financial district infill and small developments

"The project did not require any variances." Music.

Curious what the all-in costs are going to be for this project. The building was quoted as being $3.8M, and another $1.6M on the retrofit. With what should be relatively low legal and regulatory fees/charges, seems like a pretty affordable way to bring 15 new units to the market even considering the ROI hit on the two affordable units (not to mention the reduced long-term tax benefit). Really hope we get more than 6 of these applications.

Let's assume it's $5.1M total, per this link, and that means cost per unit is $340,000. Yes they're small, and yes some will be sub-market, but at a current rate of even $750/sf, that's a healthy margin.


therealreporter.com

$5.1M Loan From Rockland Trust Makes Way for First Downtown Office Conversion by Boston Pinnacle

Boston — Boston Pinnacle Properties secured $5.1 million in financing from Rockland Trust for a 145-year-old building on Frankli
therealreporter.com therealreporter.com
 

110 Canal Street​

1713970044528.jpeg


“110 Canal Owner LLC (the Proponent) is proposing the adaptive reuse and development of an existing building with vacant office and vacant restaurant space. The Proponent proposes to repurpose the building into a hotel with guestrooms on the upper floors and a ground-floor restaurant. The proposed project will include approximately 82 Hotel rooms, a restaurant, and surface parking in the existing adjacent parking lot. The proposed project does not contemplate any changes to the property footprint or building envelope. All work will be within the existing building.”


https://www.bostonplans.org/projects/development-projects/110-canal-street
 
I don't hate it, we do need hotels, and maybe this has been in the works for awhile, but I'm really surprised that this wasn't immediately pivoted to the conversion program under PLAN: Downtown. There was some moaning about tax breaks to developers upthread, but clearly the giveaways aren't big enough if these guys are passing over a 75% tax break for 29 years to instead build a hotel. Bulfinch Triangle is squarely within the plan area, too.

1713970687750.png


Is developer sentiment that sour on new residential? Sure there's the 17% affordability requirement but I would have thought that this would pencil out since it's effectively a conversion already. Glad there's some new life to the street in any case.
 
Last edited:
Justbuildit said:
I don't hate it, we do need hotels, and maybe this has been in the works for awhile, but I'm really surprised that this wasn't immediately pivoted to the conversion program under PLAN:Downtown. There was some moaning about tax breaks to developers upthread, but clearly the giveaways aren't big enough if these guys are passing over a 75% tax break for 29 years to instead build a hotel. Bulfinch Triangle is squarely within the plan area, too.

View attachment 49920

Is developer sentiment that sour on new residential? Sure there's the 17% affordability requirement but I would have thought that this would pencil out since it's effectively a conversion already. Glad there's some new life to the street in any case.
Click to expand...
I think the problem is the high interest rates (particularly 30-year mortgages). They not only make construction financing difficult, they make residential units hard/slow to sell.
 
Last edited:
Justbuildit said:
Is developer sentiment that sour on new residential? Sure there's the 17% affordability requirement but I would have thought that this would pencil out since it's effectively a conversion already. Glad there's some new life to the street in any case.
Click to expand...
Can just be that the economics on the hotel are that positive.

Boston seems to be frequently ranked as the most expensive city in the country for hotel prices in recent years.
 
That’s the only explanation I can come up with, and it makes sense. There are a number of small hotel projects in downtown and when family has visited they’re very surprised by hotel prices. I would’ve guessed the the super heavy tax breaks would have shifted the balance in favor of residential, mortgage rates notwithstanding.

Perfect location for the Garden, though, it’ll be sold out every event night.
 
JeffDowntown said:
I think the problem is the high interest rates (particularly 30-year mortgages). They not only make construction financing difficult
Click to expand...
This is a big part of it. Conversions involve a lot of expensive work -- installing new plumbing, new doors, new walls, etc. etc. If interest rates and construction costs are stunting ground-up construction, you can bet it's affecting conversions.

The big fall-off in building permits (groundbreakings, not planning board/BPDA approvals) for new apartments last year means no one who has the money to break ground now has to worry about delivering into an oversupplied market in two years, in the way some people whose buildings are opening right now have to.

B&T had a good story a few weeks back on the hotel-conversion idea. Some of these old buildings are marginal for a residential conversion because of how deep they are, but hotels' BOH uses can be stashed in some of the square footage that would otherwise be wasted in a residential use.

bankerandtradesman.com

Another Option for Vacant Office Buildings - Banker & Tradesman

New hotel construction has slowed to a crawl in Boston since COVID but a new source of room supply is emerging in conversions spurred by the city’s struggling office market.
bankerandtradesman.com bankerandtradesman.com
 
Aha! I had been trying to figure out what that was since going by it a few weeks ago. Thanks for the update and confirmation. Any idea if this is to support new/upcoming projects in the area, or just grid resilience/redundancy?

As for location, it's on the east side of Charles St, which puts it in the Theater District in my book, so Downtown makes sense.
 
Justbuildit said:
Aha! I had been trying to figure out what that was since going by it a few weeks ago. Thanks for the update and confirmation. Any idea if this is to support new/upcoming projects in the area, or just grid resilience/redundancy?

As for location, it's on the east side of Charles St, which puts it in the Theater District in my book, so Downtown makes sense.
Click to expand...

I found this description from McCourt Construction. I think there was also a drive to build a building to disguise what had previously been an exposed utilities yard.

 
mssrro said:
I found this description from McCourt Construction. I think there was also a drive to build a building to disguise what had previously been an exposed utilities yard.

Click to expand...

Love that final paragraph - -someone at Eversource has a joyous twinkle in their eye. (y)
 
Small change, but they’ve dramatically expanded the outdoor seating area for the small restaurant/bar in Post Office Square. There’s a small rope that separates this area from the rest of the park but it’s pretty indistinguishable and the outdoor restaurant area blends in with the park.

Seems like a positive change and the outdoor area was very busy on Tuesday —

IMG_2817.jpeg
IMG_2816.jpeg
 
Smuttynose said:
Small change, but they’ve dramatically expanded the outdoor seating area for the small restaurant/bar in Post Office Square. There’s a small rope that separates this area from the rest of the park but it’s pretty indistinguishable and the outdoor restaurant area blends in with the park.

Seems like a positive change and the outdoor area was very busy on Tuesday —

View attachment 50587View attachment 50588
Click to expand...
This is one of m favorite outdoor patios in Boston. Nice to hear they expanded the outdoor seating.
 
Can you sit outside with a drink here without ordering food? I know that the state's awful liquor licenses don't allow that in most restaurants/bars. Thank god for the beer gardens.
 
BronsonShore said:
Can you sit outside with a drink here without ordering food? I know that the state's awful liquor licenses don't allow that in most restaurants/bars. Thank god for the beer gardens.
Click to expand...
Yep, for sure; decent beer selection, wine, and limited cocktail menu. Also coffees, pastries, and sandwiches, but have never tried the food.
 
BronsonShore said:
Can you sit outside with a drink here without ordering food? I know that the state's awful liquor licenses don't allow that in most restaurants/bars. Thank god for the beer gardens.
Click to expand...
I did this back on a nice day in April, so the answer is YES.
 
Smuttynose said:
Small change, but they’ve dramatically expanded the outdoor seating area for the small restaurant/bar in Post Office Square. There’s a small rope that separates this area from the rest of the park but it’s pretty indistinguishable and the outdoor restaurant area blends in with the park.

Seems like a positive change and the outdoor area was very busy on Tuesday —

View attachment 50587View attachment 50588
Click to expand...

Sip is a great asset to Post Office Square. Lovely space.
 
1716468171237.png



These days, many lenders will not do new office loans, period. Synergy has found financing in different ways. It scored a loan from the bank Washington Trust, a longtime partner, for One Liberty. The firm got 179 Lincoln for $10 and an agreement to take over the mortgage.

For 101 Arch, Synergy found wealthy individuals, not institutional partners, to take equity. Getting a loan to finance the rest of the deal was “extremely difficult,” Greaney said.

It managed to score a $65 million loan from a group that includes Kawa Capital Management.

“We scoured the debt markets,” he said. “We went to the regional banks, to the national banks, CMBS, debt funds and ultimately settled on Kawa.”

Greaney is on the lookout for more office deals. Synergy recently had law firm Goulston & Storrs’ former 400 Atlantic Ave. home under agreement but decided in the end the projected returns were not worth the risk, he said.

“It’s hard to call ‘bottom.’ We’re pretty close,” Greaney said of the market. “The last two cycles I was in, we bought going down, we bought at the bottom and we bought going back up again. … When you start and when you stop is more important [than] picking the actual bottom.”
Click to expand...

🤔🤔🤔

Greaney believes there is a flight to quality buildings under way, but that it is a “flight to quality within the class.” Class B buildings that are well-located and well-maintained, with updated facilities like lobbies and gyms, will win the day for the many tenants that cannot afford the rents in a brand-new skyscraper, according to the Synergy founder.
Click to expand...
 
Those are some big, big debt burdens that could be existential if this strategy isn't correct. Love that there's someone out there taking big cuts at the second tier office world; I think they've generally been right with their Post Office Square and Downtown portfolio, but this is absolutely going to need some real movement back to downtown action if it's going to work. All of the buildings are at least handsome, well-built historical pieces that could conceivably attract small and mid-sized groups. Will be an interesting few years...
 
You must log in or register to reply here.

Back
Top