Developers Face Constant Challenges
By Thomas Grillo
Reporter
The year began with a storm of protest that forced Mayor Thomas M. Menino to withdraw his support for a 22-story dormitory on Beacon Hill.
As 2007 ends, a well-organized effort is under way to convince the Boston mayor to kill plans for a pair of high-rises at the Prudential Center.
Some dismiss the community activists as NIMBYs, the acronym for residents who fight development on their block. But protesters insist that they are not against development but want any new construction to fit the scale of Boston?s historic neighborhoods. The story was all too familiar in 2007: Developers propose something, and neighbors work to reduce the size and scope of the project.
In January, Menino backed Beacon Hill residents in their fight to prevent Suffolk University from building a high-rise dormitory at the edge of their neighborhood. The university had planned to raze the former Metropolitan District Commission headquarters at 20 Somerset St. and build 550 dorms. But the plan received strong opposition from neighbors who said a nearby residence hall already is the source of numerous complaints.
Last summer, Suffolk abandoned the plan and purchased a building in Downtown Crossing. The Boston Redevelopment Authority approved Suffolk?s proposal to convert 10 West St. in Downtown Crossing into a property that will include 274 dorm beds with ground-floor retail.
Today, the fight has shifted to the Prudential Center, where Boston Properties and Avalon Bay Communities want to build a 19-story office building at 888 Boylston St. and a 30-story residential high-rise across from the Boston Public Library. Some neighbors and elected officials insist the buildings are too tall.
Despite a flurry of opposition from Prudential Center tenants, as well as the Back Bay and Bay Village neighborhoods, Menino has not curbed his enthusiasm for the project.
?There was opposition to the Mandarin at first but we worked with the community to come up something everyone can live with,? Menino told Banker & Tradesman last week, referring to the $230 million Mandarin Oriental hotel scheduled to open next summer on Boylston Street. ?The public review process for the two buildings is still ongoing.?
Gregory Selkoe, a former BRA official and Menino critic, said neighborhood opposition does not guarantee that the mayor will pull the plug on a proposed development.
?The mayor won?t abandon his support for a project just because there is neighborhood opposition ? just look at the [biotechnology] lab,? Selkoe said about the controversial research center under construction in the South End despite protests about studying some of the world?s most dangerous viruses in the densely populated section of the city. ?It very much matters who is lined up against it, who has political clout and who has the mayor?s ear.?
Need proof? Just ask a handful of property owners at Strada234, the luxury condominium development on Causeway Street near the TD Banknorth Garden. Some of the property owners have urged the mayor to halt plans for Lovejoy Wharf, a 14-story luxury condo development with views of Boston Harbor and the Leonard Zakim Bunker Hill Bridge.
Robert Sarno and 21 other Strada residents filed suit in Suffolk Superior Court to stop the $85 million project at 160 North Washington St. and 131 Beverly St. being developed by Ajax Management Partners. The project would feature 250 residential units and 40,000 square feet of retail space at the underutilized 2.1-acre waterfront site.
?Apparently, the city hears only the voices of established neighborhoods and not the voices of neighborhoods like ours, [which are] in transition,? said Sarno. ?We want to make our part of the city as attractive as our Beacon Hill neighbors. But it?s proving hard to do when Causeway Street residents get treated as second-class citizens. What do we have to do to become valued Bostonians??
While some abutters say the mayor only listens to a portion of city residents, developers tell a different story. While builders would not to talk on the record for this story, fearful of retribution from Menino, privately they say the mayor micromanages every development decision.
?The approval process is so arduous, risky and arbitrary that only the biggest developers with the deepest pockets have the staying power and ability to push their projects through,? said Selkoe. ?Only the most connected can build anything in this city. All roads lead to Rome and in this case, Rome is Menino?s office at City Hall.?
In response, a BRA spokeswoman said the agency works with developers and community members to review project proposals, all of which go through a lengthy public and community review process before any decisions are made.
A ?Very Strong? Picture
But not every project faced opposition in 2007. Joseph Fallon broke ground on Fan Pier to pave the way for the city?s most ambitious 21st century neighborhood. The $3 billion dollar development spans 21 acres across nine city blocks on Boston Harbor. It will include 3 million square feet of residential, commercial, hotel and retail space.
Last summer, the BRA approved the $700 million One Franklin St. project, better known as the Filene?s redevelopment. The 39-story mixed-use project by Gale International and Vernado Realty Trust will bring new office, hotel, residential and retail space, in addition to a brand-new home for Filene?s Basement. Construction is expected to be completed in 2011.
On the office market side, 2007 continued to offer good news for downtown Boston landlords with rising rents and shrinking vacancies. Overall, Boston?s 58 million square feet of office saw the vacancy rate fall to 6 percent at the end of 2007, down from 8.5 percent one year ago, according to Jones Lang LaSalle, the global real estate services and money management firm. Average asking rents soared to $54.80 at the close of the year, up from $37.31 last year, a 47 percent increase.
Nearly every Boston submarket saw a decline in vacancies while rents increased, according to Jones Lang LaSalle. Back Bay had the lowest vacancy rate at the end of 2007 with just 3.6 percent, down from 5.4 percent last year. Average rents in the Back Bay grew to $65 per square foot, up from $40. In Charlestown, vacancies fell to 15.1 percent from 17.4 percent in 2006. Rents in Charlestown increased to $31, up from $25 in 2006.
In the Financial District, the vacancy rate dipped to 5.9 percent at the close of the fourth quarter, down from 8.6 percent last year while rents soared to $59.36, up from $40.39. At North Station, where several new residential and retail developments are under construction or in the pipeline, vacancies slipped to 9.6 percent from 15.3 percent while average rents increased to $28.19, up from $27.83.
In South Boston?s waterfront, vacancies fell to 8.6 percent from 10 percent, as rents climbed to $33.92 from $27.83. In South Station, vacancies were flat at 4 percent as rents increased to $42.29 in 2007, up from $26.51.
Among the biggest deals in 2007 was Blackstone Group?s $39 billion purchase of Equity Office Properties, which was the nation?s biggest private real estate sale of all time and made Blackstone the largest Class A landlord in Greater Boston. Ropes & Grey leased more than 400,000 square feet of space at the Prudential Center.
?It?s been a banner year and the picture is very strong when you think about the real estate fundamentals,? said Ronald K. Perry, executive vice president at Meredith & Grew. ?Rents are up across the board, sale prices are up, vacancy rates declined significantly and net absorption was strong as businesses continued to grow.?
