Seaport Developers Have A Business Lesson For Their Biggest Critics
Critics have lobbed “bad architecture” and “poor planning” critiques at Seaport developers for years, and Thursday morning, the developers responded: It could have been much worse.
“There could have been 10 to 15 single-use office buildings that easily got financing, but then this wouldn’t have been a neighborhood,” Cottonwood Group Managing Director and co-Head of Investments Tinchuck Ng said Thursday at Bisnow’s Boston Seaport Annual Conference. “Why we’re so confident in this becoming a real neighborhood is we’ve had the right capital base from the get-go.”
Cottonwood is developing the $950M EchelonSeaport, a mixed-use project featuring a blend of luxury condos and apartments across three towers with ground-level retail and public space. The project will add more street-level activation and neighborhood amenities along some of the Seaport’s busiest streets, which Ng and other developers unanimously said was their top focus. But making the focus a reality requires following key financing rules.
“Mixed-use projects are not the easiest to finance in the U.S.,” Ng said. “Lots of [lenders] prefer single-use projects.”
The financial preference is why the earliest developments in the ongoing Seaport boom were single-use projects like the Park Lane Seaport apartment complex and Fidelity’s Seaport Place offices. Once a critical mass of interest was established, lenders were more receptive to mixed-use projects. That's when Boston began to approve master plans for developments like Seaport Square, where a 7.5M SF mix of office, retail and residences is underway.
The Seaport’s master plan succeeded at setting a vision for the neighborhood and setting out a path for how to implement that vision, Ng said. It also helps that creditors in the area are committed to the neighborhood for the foreseeable future as opposed to the kind of "hot money" that looks to quickly unload an asset, she added.
But building a critical mass was needed first to prove the viability of the neighborhood built from a sea of parking lots.
“It wasn’t long ago when there wasn’t anything here until you got to Fidelity’s offices. To be frank, it was a real grind at first to get folks to look down here. Now there is great momentum,” WS Development Senior Vice President Yanni Tsipis said. “We think it's best if the area grows in an organic fashion and not feel like it just popped up overnight. Let the neighborhood take its course. That’s how a city evolves.”
As Seaport Square evolves, chatter of the Seaport being “community theater Blade Runner” has dissipated, and more of Boston has accepted the burgeoning waterfront neighborhood as a viable place to live, closer to more established areas like Back Bay or the South End. WS is teaming up with the designer of New York City’s High Line to create a linear park from Summer Street to Boston Harbor.
Hearing claims of the neighborhood not doing enough to court local retailers, WS also curates a pop-up store program in nine modular retail structures at The Current, previously home to the She Village of female-owned businesses. The developer maintains it is committed to the public realm, with a new park currently under construction and adding more community features like a day care and performing arts spaces to its projects in the area.
“In terms of creating more opportunity for more local operators, we’re putting our money where our mouth is by creating highly visible flexible spaces for startups and small businesses,” Tsipis said.
While the neighborhood is showing progress, that doesn’t mean the critics have gone away.
There is still plenty of chatter in online forums and in neighborhood meetings about developers continuing to push forward different iterations of glass boxes to get as much of a return on their investment as possible. Developers Thursday said it is too early to write off the neighborhood, saying it isn’t even halfway built out.
The next wave of Seaport development could be what finally stitches together the urban fabric many neighborhood groups have been waiting for.
“What’s going to define the Seaport three to four years from now is the willingness of developers to take a risk on local operators and not just chase credit tenants,” COJE CEO Chris Jamison said, eliciting applause from the audience. “It’s about taking a step back and asking how do we take this corner of the city and make it a neighborhood.”
Calling the current development boom Seaport 1.0, Jamison, whose firm is behind Boston restaurants like Lolita and Yvonne’s, expects Seaport 2.0 to have more authenticity from local groups being able to come in and take space from some of the national retail tenants that haven’t performed as well. But even Jamison recognized the Seaport’s original wave of homogenous designs all comes down to dollars and cents.
“When you pay a lot for the land and it’s as expensive to [build] in Boston as it is, you have to underwrite those numbers,” he said. “But it’s going to be incumbent on the next round of developers to think if they can take a $10 hit on rent and create a real neighborhood.”