Hanover’s Massive Commitment to Alewife, Cambridge
For its first foray into the Cambridge multifamily market, The Hanover Co has targeted a $310M investment in the Alewife neighborhood, where it will build 865 of the 2,500 apartments in its regional pipeline. With little land left there, it’s looking at other Cambridge neighborhoods, says development partner David Hall. Hear what makes this little city so appealing at Bisnow’s Future of Cambridge, Tuesday, Nov. 3, 7:30am, Hyatt Regency. Sign up here.
Hanover's commitment to Alewife, a former light industrial district on the city’s western edge, comes with financing from a pension fund adviser and insurance company for a three-building complex, David says. It just started construction on the second of three Alewife apartment buildings. The first, completed last year with 398 units—a two-bedroom rents for $3,500—is 98% leased. The developer recently closed on a third site where it expects to start construction on 254 apartments late next year.
The main reason Hanover is in Alewife is its Red Line T-stop that goes directly to Harvard and Kendall squares, David says. Being on the outskirts, the location can accommodate a product that’s “quasi suburban,” he tells us. The five-story wood frame low-rises are built over a podium with above-grade parking, on a flat site. The total development cost is 60% less than at UDR and Hanover's 100 Pier 4, which opened last spring in the Boston Seaport District. The reason: that's a 22-story high-rise with a steel frame, underground parking on a waterfront site, which usually calls for complicated slurry wall construction. At 100 Pier 4 in the Seaport, apartment rental rates are 50% higher than in Alewife.
David’s team is actively seeking another Cambridge site for a “significant” development. If it lands one in North Point or Kendall Square, David expects the total development cost to approach that of Boston because those locations call for high-rise buildings with structured parking. There’s “plenty being discussed; nothing imminent,” he says. One thing is for certain: construction costs will continue to escalate and traffic will keep intensifying. The city has a major transportation issue that requires a solution more far-reaching than any one developer can propose, he says.
Cambridge is intensely studying its future growth options now that it’s in the midst of a historic development boom, says Iram Farooq, the assistant city manager. Unlike many strong prior cycles, both the commercial and residential sides of the property market are firing on all cylinders. There’s a pipeline of 5.2M SF with 2.3M SF of offices, labs and retail in construction. Among the largest projects, Novatis’ $600M, three-building complex near Central Square is nearly complete with a grand opening slated for Dec. 9.
The city is searching for ways to maintain the diversity of its people, businesses and activities through the life cycle of each, she says. It’s engaged in discovering how to live with the water that surrounds it—the Charles River, Boston Harbor and the Atlantic Ocean. It’s assessing vulnerability to climate change through 2030 and 2070 and trying to figure out how development must adjust (i.e., elevating buildings and critical systems). The work done in New York/New Jersey after Hurricane Sandy is a good model, Iram tells us.
A big draw for life science and pharma companies like Novartis, Baxter, Sanofi and Bristol Meyers Squibb is the East Cambridge, Kendall Square innovation cluster powered by one of the world’s most dynamic and complete ecosystems, says Mike Joroff, longtime director of the MIT Lab for Architecture and Planning and a global innovation consultant. It’s composed of: those who conduct basic research and create knowledge; companies that capture the knowledge to make products and services (the Internet, gene therapy); and those who provide financing to bring them to market.
Think biotechnology was invented yesterday? Try again. Mike traces its roots back to the 1970s, when MIT shut down its biology program to launch the biotech program that it’s still rolling out. In the 1980s, MIT, Forest City, and the city formed a pioneering JV of sorts to develop a science center—University Park at MIT. They built it by redeveloping a big swath of Cambridgeport into labs, offices, housing, hotel, retail and restaurants that support—and form critical components of—the Cambridge innovation ecosystem. University Park is now a prototype that’s studied worldwide, says Mike, who conducts many of these sessions.
Since World War II, the MIT ecosystem has spawned four major industries: guidance/missiles; computer hardware/software; computer science/new media; and biotech, Mike says. In life science, there’s cross-pollination. Biotech needs nano technology to deliver DNA; new media to apply infographics; basic research to map the human genome; life science, pharma and VC firms to create new treatments and therapies. Amazingly, Tech Square has served as a home for all four industries, he tells us. To accommodate future industries, it’s important to build—or incorporate—agility into buildings. At the old, windowless Metropolitan Storage warehouse on Vassar Street, there’s a plan to use it for startups, dorms and academics by opening walls to let in light. That would bring into the innovation ecosystem a hard-to-use building that's in a prime location; a “great advance for architecture," Mike tells us.
To nourish the ecosystem, the city’s new zoning for Kendall Square calls for reserving 3% of new commercial property for startups. Looking at large scale infrastructure issues, Cambridge (and the entire metro region) needs to repair, upgrade and improve the existing transit system and, Mike says, invent an entirely new means of transportation. Join us in assessing Cambridge: where it's at, where it's going and what can be imagined moving forward at Bisnow’s Future of Cambridge event, Tuesday, Nov. 3, 7:30am, Hyatt Regency. Sign up today!