Skanska Buys $177M Back Bay Site, Plans 27-Story Office Tower
A multinational developer is proposing a 27-story office tower in Boston’s Back Bay neighborhood after paying $177M for a development site.
Swedish construction giant Skanska purchased an approximately 3K SF parcel at 380 Stuart St. from John Hancock Life Insurance Co. and is planning a 625K SF office structure at one of the neighborhood’s last remaining developable sites, Skanska announced Friday.
The project will follow plans for a John Hancock tower approved in 2015 that never came to fruition. A representative for Skanska said new renderings of Skanska’s proposal weren't available. Transaction details weren’t available in property records as of Friday afternoon.
The permits for the original curved, 26-story high-rise were expected to be included in the sale, John Hancock said in late 2019, after it failed to break ground on the estimated $350M project, the Boston Globe reported. A vacant 144K SF building sits at the plot two blocks south of the Newbury Street section and steps away from Back Bay’s prominent 62-story John Hancock skyscraper.
“While Boston has proven to be a major hub with a strong tenant base in medical, education, life-sciences and finance, Back Bay is an ideal location to bring a new, modern and flexible office building to the community,” Skanska USA Executive Vice President Russell DeMartino said in a statement.
The building would include ground-floor retail, below-ground parking and target LEED Platinum certification, Skanska said. The acquisition comes during the coronavirus pandemic’s crushing impact on office markets, which has left downtown Boston offices with a current daily occupancy of around 8% to 12% and Back Bay asking rents in a continued decline in Q3 to $68.73 per SF, according to CBRE's Q3 2020 Office and Lab Report.
Office markets’ recovery from the pandemic recession may stretch beyond 2024, with rents expected to slowly rise again in 2023, according to Cushman & Wakefield.
While office construction loans may be hard to come by, Skanska usually fully funds projects from its own balance sheet, Skanska USA Commercial Development CEO Robert Ward told Bisnow in June.
The developer is looking to build speculative office buildings in the Washington, D.C., area and also is mulling office projects in Los Angeles and Bellevue, Washington.