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Re: Filene's
Boston.com - September 24, 2010
Boston.com - September 24, 2010
New pitch for former Filene?s site
Developers seek to sell for rental units, stores
By Casey Ross, Globe Staff | September 24, 2010
Owners of the downtown site of the former Filene?s department store are putting the property up for sale, just as city officials said they will take the unprecedented step of revoking the project?s permits next week following a two-year delay in construction.
The turn of events raises the possibility of new life for the fallow property, where there are now skeletons of half-demolished buildings lining a massive crater that had been dug for the foundation of a once-planned 39-story tower.
Instead of the $750 million office-condominium complex they failed to build, developers Vornado Realty Trust of New York and John B. Hynes III are marketing the Filene?s block as ideal for apartments and stores. Potential buyers are already coming forward.
?It?s an intriguing opportunity, and we?re interested in it,?? said Bill McLaugh lin, an executive with AvalonBay Communities Inc., one of the region?s largest apartment builders. He said the firm has not made a bid, but is eyeing the property as well as other sites in Boston. ?We?re very positive about the strength of the rental market. It could not be a more opportune time.??
The developers declined to comment yesterday. But the broker handling the sale for them yesterday said Hynes and Vornado had anticipated the loss of the permits and so are aggressively pitching potential buyers various development scenarios that involve hundreds of apartments and retail stores, with only a small component for office space.
?We?re very excited about this new concept,?? said the broker, Robert Griffin, managing director of Cushman & Wakefield. ?We have people who want to buy the site, people who want to build on it, and people who want to lease the space.??
Hynes and Vornado have so far spent more than $150 million buying the property and preparing it for construction. However, they have not disclosed their asking price.
Converting more of the property to retail use also raises the possibility of a return of the original Filene?s Basement, which closed after nearly a century in that location in anticipation of construction and has not reopened elsewhere in the downtown neighborhood since the project stalled.
?We definitely hope to have the opportunity to open a store in the original location,?? said Marcy Syms, chief executive of Syms Corp., which owns Filene?s Basement.
Depending on the bids they receive, Hynes and Vornado could either sell the property outright or just a portion and remain part of the development team. If they stay on the project, Hynes and Vornado would probably assume a less-public role given their turbulent relationship with the city.
Mayor Thomas M. Menino has sharply criticized the team for leaving the construction site idle, fearing the gaping hole in the ground is undermining his goal of reviving the Downtown Crossing district.
The Menino administration yesterday said it will revoke Hynes and Vornado?s existing permits effective Monday, the city?s three-year deadline for approved projects to be under construction.
City officials said they could not remember another instance where they pulled permits on a privately owned development site, and are doing so in this case only because of the property?s critical location downtown ? and because its developers have not been able to resume construction.
?It is abundantly clear to us that the developers are ill-equipped to execute the project as it was approved,?? said Boston Redevelopment Authority director John Palmieri. ?And the blight that exists there is unprecedented. It sits in the middle of a historic shopping district and retail center where we?ve been spending a lot of money to bring renewal.??
The revocation appears to be a strategic move by city officials to force Hynes and Vornado into action. Ultimately, it will have little impact on the overall scope of what gets built, as Palmieri said yesterday the city would still support a large-scale project there.
?If a developer comes forward with a program close to the one we approved, we would be in a position to conduct a review very quickly,?? Palmieri said.
The original redevelopment plan for Filene?s was approved in 2007, but Hynes and Vornado stopped work on the site in June 2008, when the credit crisis and economic downturn dried up funding for large building projects, especially those with luxury condominiums and offices as main components.
But the market for new apartment buildings and stores is much stronger, according to local real estate officials, making it likely that the Filene?s property will draw multiple bidders.
?There is a surprising amount of [funding] available for apartments right now,?? said George Fantini, principal of the mortgage banking firm Fantini & Gorga. ?And this is a great location because of its access to transportation and for so many other reasons.??
The property is connected to the Downtown Crossing MBTA station at the corner of Washington and Franklin streets. Before the economic downturn, the area saw rapid redevelopment that added hundreds of condominiums, new college dormitories, refurbished theaters, and several new restaurants.
While the Filene?s site is attracting heavy interest, selling it could still prove difficult. Fantini said the biggest sticking point will be price, as buyers are looking to take advantage of distress in the real estate market to pick up properties at bargain prices.
?Apartments and retail make sense there, but if the land is priced too high it would break the back of the deal,?? Fantini said. ?That?s going to be the challenge.??
Jenn Abelson of the Globe staff contributed to this report. Casey Ross can be reached at cross@globe.com.
