The Hub on Causeway (née TD Garden Towers) | 80 Causeway Street | West End

Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

Just wanted to get these two into a single post. I'm not as much concerned with the over-all height of either tower, but with them being the same height, the fatness of the office tower diminishes the residential.


Old:
15cdb41.jpg


New:
3822d031-0b32-40d8-a811-da1e6db9d850
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

If they could have put the old towers on the new base + the slanted entrance way roof this would have been perfection.
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

Yes, it did. You seem to have completely missed the implication of that. Boston Properties isn't building at 600' anymore because it can't sell it. It's not the neighbors. It's not the BRA. It's not some bleeding heart trying to save their beautiful sleepy little town. All of those forces allowed this project at 600'. When the developer chose to reduce it, you can be pissed at the developer, but don't get pissed at "Boston." It's not "Boston's" fault.
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Yes this is important and being forgotten. The developer is doing this which means the developer doesn't believe the market can handle more ultra-premium units.

That's a big deal because it means they believe the upper end of the housing spectrum may be reaching a saturation point.
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

I like the old plan. The new one is OK but pretty generic looking.
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

meddlepal said:
Yes this is important and being forgotten. The developer is doing this which means the developer doesn't believe the market can handle more ultra-premium units.

That's a big deal because it means they believe the upper end of the housing spectrum may be reaching a saturation point.
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In Chicago and Toronto, 600 footers pencil out for merely "luxury" $2,000-2,500/mo apartments. I get developable land is in shorter supply in Boston. So that is going to drive up per unit prices due to land. But, land is a fixed cost on this project. When not add more mid-range lower floor units to pad returns.
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

I like the old residential tower but the new office tower. Let's give it time and see what happens before we lose the plot. The base is going to be built first and I'm sure the renders for the towers will change a few times.
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

In Chicago and Toronto, 600 footers pencil out for merely "luxury" $2,000-2,500/mo apartments. I get developable land is in shorter supply in Boston. So that is going to drive up per unit prices due to land. But, land is a fixed cost on this project. When not add more mid-range lower floor units to pad returns.
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Because they think the luxury market bubble in Boston is going to pop and they don't want to be stuck with a bad ROI proposition?
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

There was a render in the middle somewhere that was better than either of the two Justin just posted
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

Just spoke to the attendant at the TD Garden lot. He confirmed that the lot is closing September 7th.

Looks like the September 8th groundbreaking was on the money!
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

vanshnookenraggen said:
Is this for the whole project or just the towers?
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Last I had talked to a buddy at BP (~8 weeks ago), they were ready to go on the entire podium and the residential tower. The office tower would not break ground without an anchor tenant.
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

Do you know how tall the residential tower will be?
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

meddlepal said:
Because they think the luxury market bubble in Boston is going to pop and they don't want to be stuck with a bad ROI proposition?
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Could be the market or could be that capital is drying up or both. Interesting.
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

tangent said:
Could be the market or could be that capital is drying up or both. Interesting.
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High End Housing Market Cooling Off:

http://www.bostonglobe.com/business/2015/09/03/high-end-housing-market-cooling-off/Saz5Is3IsZJL6PVYvCTIEP/story.html

Excerpts:

"The concessions remain confined to the high end for now, and mostly to Boston, where the new luxury properties are concentrated. The broad middle of the rental market — where two- bedrooms rent for $2,500 or less — is as tight as ever, and overall rents are climbing at their fastest pace in three years. But the slowdown in high-end Boston real estate serves as reminder that the laws of supply and demand still do apply.
So far this year, more than 2,200 new apartments have opened in central Boston neighborhoods, where rents are typically among the city’s highest, according to the Department of Neighborhood Development. Nearly 2,600 more are under construction."

"Of course there are only so many people who can pay pricey downtown rents. And for those who can’t, the high-end glut is bringing little relief. Across the metro area, average rents climbed 5 percent in the 12 months ended in July, according to the real estate data firm Axiometrics — the fastest clip in nearly three years. The fastest increases are in the less- expensive neighborhoods, places like the South Shore, where the average of $1,976, according Axiometrics, is a little more than half what it is downtown."
 
Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

tangent said:
Could be the market or could be that capital is drying up or both. Interesting.
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Capital is the opposite of drying up.

Monday's Boston Globe:
Local banks in search of bigger returns are rushing to grab a slice of Boston’s soaring commercial real estate market, lending at a pace not seen since the boom of the late 1980s and raising concerns among bankers and analysts that another bubble is in the making.

Flush with money from growing deposits, stock offerings, and healthy cash reserves, the 25 largest banks based in Greater Boston have increased commercial real estate lending nearly 40 percent over the past three years, more than double the national increase of 16 percent , according to SNL Financial LLC, a Virginia research firm. [...]

Industry officials say the competition for deals is so fierce that many banks are relaxing lending standards, allowing developers to put up far less of their money to get financing. Many banks also are waiving standard protections such as requiring developers to personally guarantee loan amounts beyond the value of the property.
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Wednesday's Wall Street Journal:

Many factors, on the demand and supply sides, continue to hinder the home-construction market in the U.S. from returning to normal. But, several home builders say, the availability of construction loans no longer is one of them.

Indeed, lenders are opening the spigot at a steady, albeit moderate, pace for commercial and residential construction alike, which bodes well for output in those industries. That, in turn, stands to benefit the U.S. economy, given that rising construction spending contributes greatly to gross domestic product.

Figures released Wednesday by the Federal Deposit Insurance Corp. show that total outstanding balances on construction loans from FDIC-backed institutions amounted to $255.8 billion in the second quarter, up 3.9% from the first. That marks the fifth consecutive quarter of double-digit, year-over-year percentage growth as construction lending rebounds from its nadir of $201.5 billion in early 2013.
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Re: The Boston Garden (TD Garden Towers) | 80 Causeway Street | West End

For the record, I think we're all speculating way too much about the shorter-than-expected height of the residential tower here. That tower is still likely years from being built and its details will surely change. That being said, allow me to speculate further:

jpdivola said:
In Chicago and Toronto, 600 footers pencil out for merely "luxury" $2,000-2,500/mo apartments. I get developable land is in shorter supply in Boston. So that is going to drive up per unit prices due to land. But, land is a fixed cost on this project. When not add more mid-range lower floor units to pad returns.
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As jpdivola notes, land in this example is a sunk cost. It doesn't matter what gets built on this lot, the land is already purchased and the price paid does not vary with the height of a building sitting on top of it. In supply constrained markets such as Boston, building prices are only high because the underlying land is scarce and thus expensive (due to scarcity rent). But if the land is already purchased it can be treated as free for the purpose of maximizing return. The price of land should only figure into the equation if one is looking to buy or sell the land, not if one already owns the land and is looking to build on it.

Since the cost of land is sunk, the developer only needs to consider the variable costs of building height. As long as the developer can make an economically profitable return on any marginal height increase then that height should be built. Even if the "high luxury" market is saturated, I find it incredibly hard to believe that a developer can't turn an economic profit on merely "semi-luxury" floors. Look at the Avalon developments over at Assembly Row: they're priced a bit lower than the stuff going up in Boston ($2630 average rent vs $4025 at AVA Theater District and $3574 expected at Avalon North Station) and they're 95.5% leased up within a year of opening. There is still tons of demand in this segment. If the developer has determined that market will support x floors of "high luxury" while the building is approved for y floors where y>x, why not build z floors of "semi-luxury" where z=y-x? Yes, the availability of semi-luxury could end up absorbing a bit of your "high luxury" demand, but if the "high luxury" market is already saturated then the demand for it must already be elastic enough that dropping prices in the name of selling more quantity would increase revenue. This proposition would only not work if the marginal revenue from building a few "semi-luxury" floors was less than the marginal cost of building those floors, but the example of "semi luxury" rents in tall new construction buildings in cities with cheaper land and comparable construction costs shows this to not be the case.

All this leads me to wonder about the details of the deal between Boston Properties (BP) and Delaware North (DN) on this project. As far as I understand, DN (the same owner as the Garden and the Bruins) owns the land and BP is the developer and future landlord. I've also heard that DN is providing financing. If, for example, BP is designing the project and DN is getting a per square foot payment from BP, this could increase the variable cost of building height to BP and throw off the calculation. In this case, land would be a sunk cost to DN but in effect a variable cost to BP. That could explain why potentially profitable height is being left on the table.
 
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