New Office Tower Downtown
Trans National Properties is proposing a $900M mixed-use high-rise for Winthrop Square. EVP Justin Krebs gave us the many reasons why now is the time. See a preview below, and then get details from all the power players in the neighborhood at Bisnow’s Future of Downtown Boston, Aug. 18, 7:30am, Hyatt Regency.
Here are factors that Justin (pictured with CBT’s Andrew Chipman and Chloe Bouscaren) says justify new development:
- Lack of new office product under construction downtown.
- Since last summer, Cambridge and Seaport office gross rents grew to the mid $70’s/SF and $50’s/SF, respectively.
- Tech and innovation tenants are moving into base buildings near public transit, driving low-rise rents up.
- Office blocks over 20k SF are limited.
- The historically low spread between low-rise and high-rise rents ($15-$20/SF) points to a market poised for more rent growth.
- At 888 Boylston St, being built by Boston Properties in Back Bay, gross rents are hitting $90/SF over lease terms.
Asset sales point in the same direction. Norges Bank purchased an interest in Atlantic Wharf (above) for about $1k/SF. One Lincoln St, which is being marketed as a single-building REIT, is likely to fetch a similar price, say industry observers. Tenants want relatively new, highly efficient, column-free space. It allows them to optimize employees/SF, provide greater natural light through high floor-to-glass ratios and more collaborative workplaces.
The CBD, which used to roll up the sidewalks at 7pm, has been awakened by thousands of new residences with many more planned. The streets are filled with techies, young professionals and empty nesters who, in turn, draw in more restaurants and retail. With this new vibrancy, Justin figures a developer can build a new tower for $650/SF, lease the offices at $55/SF to $65/SF NNN and realize a 9% return on investment.
As part of the City’s Winthrop Square RFI to select a developer, Trans National is proposing a $900M, 1.5M SF mixed-use tower that combines the city’s Winthrop Square garage site and Trans National’s adjacent 133 Federal St. At 740 feet tall (57 stories), it would top the downtown skyline. The working plan—designed by CBT Architects—includes 300 linear feet of ground-floor retail, an Entrepreneur Innovation Center, 260 apartments (or a hotel), and 700k SF of office with 150 condos above. If the City taps Trans National by year-end, Justin says the company might be able to start construction in ’17 for occupancy in ’20.
The change for downtown (formerly known as the Financial District) is profound and continuing, says Downtown Boston BID president Rosemarie Sansone, an event panelist. The game changer has been downtown’s transformation into a residential neighborhood, she says. Since 2000, 2,850 new housing units have been completed with 1,037 more under construction or in the pipeline.
The April opening of the Roche Bros supermarket in Millennium Partners’ $700M mixed-use Burnham Building/Millennium Tower says loud and clear, “People actually live here.” Some residents have waited 14 years to have a real supermarket, Rosemarie says. The Midtown Cultural District Residents’ Association, formed last winter, has 350 members and works with the BID on improving the 34-block neighborhood, which has 23M SF of commercial property. In another watershed moment, Havas/Arnold Worldwide and its 700 employees moved into the offices of the Burnham Building last September. The topping off the adjacent Millennium Tower is planned for September with the completion of the last section—the residences—to follow in July ’16.
Also this fall, Yvonne’s is scheduled to open. Red Sox slugger David Ortiz is a partner in the eatery being built-out in the former Locke-Ober space. The boutique Godfrey Hotel (above) will complete construction on Washington Street. PRIMARK, the Irish clothier, will open and the founder of the former Coffee Connection, George Howell, will open a café for connoisseurs, replete with tasting stations, inside of the Godfrey Hotel. All the activity seems to be making a believer out of the once skeptical New York-based Midwood Investment & Development. It’s likely to resurrect—perhaps in new form—the big, pre-recession multifamily tower it was planning for Bromfield and Washington streets, industry sources say. For more, join us at the Hyatt Regency for Bisnow’s Future of Downtown Boston on Aug 18. Register here.