Boston Properties has begun building an apartment tower that will become Cambridge's tallest building even as the region faces a construction slowdown.

The office REIT has commenced construction on its 37-story residential project at 121 Broadway St. in Kendall Square, it revealed in its quarterly earnings report Tuesday afternoon. The project is planned to include 439 rental units and is estimated to cost $598M.

"It's a fantastic new residential building that we're building in Cambridge," BXP CEO Owen Thomas said during the company's earnings call Wednesday.

The project is part of a $1.2B redevelopment and partnership with Eversource that will include not only the residential tower but also two life sciences buildings and an underground substation, the Boston Business Journal reported.

The 16-story life sciences buildings at 290 and 300 Binney St. total 810K SF and are 100% pre-leased to AstraZeneca and the Broad Institute. In November, BXP sold a 45% stake in the life sciences buildings to Norges Bank Investment Management in a deal that values them at $1.7B.

The under-construction life sciences buildings became the subject of a legal dispute Friday when Thermo Fisher Scientific filed a lawsuit against BXP, claiming the construction could disrupt its operations, the BBJ reported. BXP Executive Vice President Bryan Koop told the BBJ that the company is “confident that all construction activities have been consistent with both regulations and our own high standards for sensitive and safe redevelopment in urban settings.”

Boston Properties' development abuts another major project in the neighborhood, MIT's multiphase Volpe Center redevelopment. MIT was selected to develop the site in 2016 in a $750M deal.

Construction of new residential developments has slowed across the state as rising interest rates and cautious lenders have made it more difficult to finance projects over the last two years. There were 725 residential building permits issued in Greater Boston through the first nine months of last year, down from 1,276 in 2022 and 1,710 in 2021, The Boston Globe reported.