Suffolk Downs Redevelopment | East Boston/Revere

[millerm277]

I dont understand how everett can build a million 5 over 1’s but they cant do it here? Theres a massive shortage of housing and ppl are paying to get in something, I dont see how they cant make the numbers work here.

- Suffolk Downs needs a lot of infrastructure work. The "Beachmont Square" promo for the first part of the project PDF here claims "$337m in on + offsite infrastructure investment" in building out Suffolk Downs. Presumably, a good portion of that is going to be front-loaded costs that are going to make the immediate economics/returns worse - that $20m you need to put in the utilities/roads for the next building might be later utilized by a bunch of subsequent buildings, but in terms of near-term return, it's an additional drag.

- Suffolk Downs was proposed pre-pandemic. As permitted, it is supposed to be 1/3rd office/lab space - over 5 million square feet of it. It's obviously very questionable as to what the market for any of that is, especially since it seems like we're firmly past the "build lab space everywhere" boom. The project may require a pretty substantial reworking to fully build out.

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In contrast....Everett's putting up apartment buildings on sites that were already basically built out in an infrastructure sense from my impression. I'm sure there's upgrades and such to a degree with the heavier utilization, but there's already streets, drainage/sewers, water/electric service, etc.

A dollar put into those projects is a dollar that probably goes more immediately to producing a rental unit that will start producing revenue in the near future.

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My suspicion is that if the first building puts out good rental $/occupancy once it opens they'll probably have an easier time getting financing for the other 2 that are supposed to neighbor it in "Beachmont Square", especially if interest rates also start easing a little (as appears likely).

 

[stick n move]

- Suffolk Downs needs a lot of infrastructure work. The "Beachmont Square" promo for the first part of the project PDF here claims "$337m in on + offsite infrastructure investment" in building out Suffolk Downs. Presumably, a good portion of that is going to be front-loaded costs that are going to make the immediate economics/returns worse - that $20m you need to put in the utilities/roads for the next building might be later utilized by a bunch of subsequent buildings, but in terms of near-term return, it's an additional drag.

- Suffolk Downs was proposed pre-pandemic. As permitted, it is supposed to be 1/3rd office/lab space - over 5 million square feet of it. It's obviously very questionable as to what the market for any of that is, especially since it seems like we're firmly past the "build lab space everywhere" boom. The project may require a pretty substantial reworking to fully build out.

-----

In contrast....Everett's putting up apartment buildings on sites that were already basically built out in an infrastructure sense from my impression. I'm sure there's upgrades and such to a degree with the heavier utilization, but there's already streets, drainage/sewers, water/electric service, etc.

A dollar put into those projects is a dollar that probably goes more immediately to producing a rental unit that will start producing revenue in the near future.

-----

My suspicion is that if the first building puts out good rental $/occupancy once it opens they'll probably have an easier time getting financing for the other 2 that are supposed to neighbor it in "Beachmont Square", especially if interest rates also start easing a little (as appears likely).

This makes a lot of sense. I didnt really think that part of everett had much infrastructure but thinking about it now there were a few roads there (though shitty) and the industrial buildings def needed electrical, internet, sewer, fire, and whatever infrastructure so it makes sense that it would be much less money there to build. Suffolk downs is literally starting from scratch so everything needs to be built out from nothing.

One thing I hope is that with the lab market dying down they just go all in on residential. If it is supposed to be 10,000 housing units then maybe they could get 20,000 now. Its going to probably take at least 20 years to build this place out so they could always add back in lab space later, but hopefully they really go hard on residential when they redesign it and then get the expenses figured out.

 

[stefal]

Prices have to creep back down within some part of the development process for developers to have an appetite for building housing. It's pretty difficult to make money currently with high land prices and construction prices. John Fish, president of Suffolk Construction, stated something along the lines of developers not making any money on anything they build moving forward because of the high costs in the industry. He's concerned because that's his revenue stream.

Our zoning, building code, and development review processes certainly don't help alleviate any risk or costs either.

 

[Stlin]

Prices have to creep back down within some part of the development process for developers to have an appetite for building housing. It's pretty difficult to make money currently with high land prices and construction prices. John Fish, president of Suffolk Construction, stated something along the lines of developers not making any money on anything they build moving forward because of the high costs in the industry. He's concerned because that's his revenue stream.

Our zoning, building code, and development review processes certainly don't help alleviate any risk or costs either.

I will say that buildings being built today are seemingly generally a lot more complex than buildings built in earlier eras, but that probably is for the better. A lot of 60-80s era office blocks have not aged well - UMass has the following slide on what it sees as the eras of construction on its campuses, and I'd tend to agree with it for construction generally.

There's more demand for buildings to be better, both in terms of code and resilience to seismic, environmental, and generally habitablity, and all that costs money. Paper thin "hear your neighbors watch TV" walls, floors that pass sound that you need to avoid walking heavily etc in new construction has, for the most part, basically gone away even in wood framed 5 over 1s. I've seen a lot of people talking about how code requirements obstruct housing production, but in my view there's a good reason for almost every line in it - even if it costs more. Something as logical, and now seen as a basic expectation like sprinklers was only mandated for multi family construction in MA in 1990.

 

[stellarfun]

Revere was counting on the new tax revenue from the full build out of their portion of the project to pay for the new $500M high school project (at Wonderland site). Now it's in trouble!

"The District has provided a Total Project Budget of. $497,517,901, which includes an estimated construction cost of $412,006,854 ($700/sq. ft.)."
Massachusetts School Building Authority.