I don’t know if Independence Wharf is jinxed.

But after reading Paul McMorrow’s excellent story on the troubled waterfront high-rise in the June 22 issue of B&T I certainly have my suspicions.

General Electric Asset Management probably thought it was getting a steal when it scooped up the mostly empty office project (the one with the garish green glass facade) back in 2002 from late Big Dig construction magnate Les Marino.

GE shelled out $82 million to pick up a seemingly promising, though mostly empty, harborside complex with Class A pretensions.

It certainly looked like a steal - Marino had pumped well more than $100 million to buy the old Atlantic Avenue warehouse that had been on the site and convert into what at least he believed would be a highly sought after corporate address.

But now it looks like history is repeating itself again, with industry insiders warning that GE is not likely to get anywhere near the $100 million it is seeking, despite years of hard labor slowly filling the office building with tenants.

Given the depressed market for commercial real estate, GE may very well have to take a haircut and call it day.

Not fun but nothing that is going to wreck the balance sheet.

Marino, though, was not so fortunate.

His Modern Continental riding high as the Big Dig’s largest contractor, Marino bet big on Independence Wharf in hopes of striking it rich in an office market that was humming from the late 1990s boom.

But his big bet backfired badly. (It was a story I covered pretty extensively back in my Boston Herald days.)

Independence Wharf rolled onto the market just as the tech boom fizzled at the start of the decade. The building sat empty for years, its green glass facade a turnoff in Boston’s highly snobby corporate office market.

When Marino sold it in 2002, he lost tens of millions – a serious blow that hastened the unraveling of his Modern Continental construction empire.

Let’s just hope the next owner has better luck.

The national economy may be showing signs of life, but not the commercial real estate market. At least not yet.

The office market is expected to remained mired in recession until 2011, with real recovery not kicking in until 2012, according to the newly released PricewaterhouseCoopers’ Korpacz Real Estate Investors Survey.

Now that’s a mouthful.

Office tower values, already hammered, will continue dropping over the next year as demand by companies for new space falls.

The suburban market will take the biggest hit, with an expected 12 percent drop in values, with downtown business districts a close second, at 11.4 percent. Malls and apartment complexes will fall in value by 8.5 percent and 7 percent, respectively.

The good news is that the Boston market, as well as San Francisco, will see less steep declines than other markets.

Dallas, San Diego, Houston and Atlanta, by contrast, will get hammered, with commercial property values set to plunge anywhere from 12 to 17 percent over the next year.

Ouch.

As I said before, there’s quite a bit of maneuvering going on behind the scenes on Beacon Hill when it comes to the gambling issue.

Gov. Deval Patrick and top state lawmakers insist nothing’s going to happen until the fall, when there will be hearings and a vote on whether to finally open up the Bay State to casino gambling.

But as these things go, many of the key details will have been already hammered out by then behind closed doors.

One of those issues surely getting debated in back rooms at the State House is who gets to play in this new market and who doesn’t.

Basically, there are two groups when it gambling operators looking to build casinos in Massachusetts, the insiders and the outsiders.

The insiders have been around here for years and have already locked up real estate sites.

Richard Fields, the horse racing enthusiast and casino builder who now is the lead investor in Suffolk Downs, is the most prominent member of the insider group.

He’s hammered out a deal to take out a potential competitor, the nearby Wonderland dog track, and lined up some heavy political support.

Mohegan Sun, while it may be based in Connecticut, also has a site locked down in the Western Massachusetts town of Palmer, ironically also counts as an insider here. In fact, the Indian casino is well along with seeking approval for plans to build a large-scale casino in the town, should state lawmakers legalize expanded gambling.

What would the insiders like to see? A good bet is legislation artfully written that gives a green light to their casino plans, instead of a bill that opens up the field to any and all comers.

Arrayed against the insiders are the outsiders, big names like Donald Trump, Steve Wynn and Penn National that have the reputation, and, in most cases the cash, but don’t have inside position.

They are more likely to push for a proposal that puts casino licenses out to bid in various parts of the state, letting the highest bidder walk away with the prize.

Of course, while that may sound great to some, there are some serious downsides here. In a state like Massachusetts where communities have make or break say over major development projects,  you could wind up awarding  a casino company a license to build, only to find out that there is no chance the gambling operator in question will be able to line up the necessary community support.

Would-be casino operators who are not already here in the state, courting the local officials and decision makers, are likely to be playing catch up.

That’s where the insiders, if they can pull it off and line up the local support they need, have a potentially huge advantage.

Here’s a shout out to Carl Koechlin.

Carl is one of the unsung heroes whose determination helped save Fenway Park – and much of the colorful neighborhood around it – from the wrecking ball.

After 12 years at the helm of the Fenway Community Development Corp., Carl is moving on to take over the helm of South Shore Housing, a regional nonprofit serving Plymouth and Bristol counties.

I got to know Carl when I was at business reporter at the Herald, covering a potentially disastrous plan by former Red Sox chief John Harrington to tear down the 1912 antique ballpark.

Harrington and crew, with the backing of City Hall, claimed Fenway was too creaky to be saved and had to be torn down. Not only that, but it had to be replaced by seizing- largely at public expense - a large swath of the neighborhood next door and building a phony looking, outsized new Fenway atop it.

Carl and some of the other dedicated folks at the Fenway CDC weren’t buying it.

They teamed up with a coalition of activist groups, including the now famed Save Fenway Park! to save both the ballpark and the neighborhood.

It wasn’t easy. City officials and the Sox executives under the Harrington regime wanted nothing more than to arrogantly brand opponents as a bunch of out of touch crazies.

I had one well known public relations flak scream at me over the phone after I wrote a story that support was building among even top city business leaders for a renovation, not a tear down. She claimed saving Fenway Park was an engineering impossibility and that she had the studies to prove it.

So much for that.

Carl and his gang were never the flashiest folks in a debate that brought out some heated emotions.

But they shrewdly, and calmly, promoted an alternative plan to save the ballpark and the streets around it.

The so-called Urban Village plan envisioned a restored and somewhat expanded Fenway as the centerpiece of a neighborhood revival, one that would replace unsightly surface parking lots and fast food joints with new residences, shops and offices.

It was far better than any plan City Hall came up with for the area – and it was mostly a volunteer effort to boot.

In fact, even if the Boston Redevelopment Authority looked askance at such citizen planning, hard headed developers have taken a different view.

Long a backwater, the streets around Fenway are now filling up with new housing, shops and offices.

Maybe it’s not exactly the Urban Village envisioned by Koechlin and other folks at the Fenway CDC.

But all the new development taking shape around the old ballpark is a testament to those like Koechlin who believed that Fenway and the streets around it deserved another shot, not a wrecking crew.

With the economy at low ebb, it’s tough going for Boston area office landlords as they try and figure out where their next tenant is going to come from.

But don’t despair, for President Obama’s new healthcare package could spark a surge of demand for medical office space, a new report finds.

Marcus & Millichap Real Estate Investment Services estimates 10 million square feet of new medical office space will be needed if the president’s new health insurance initiative gets through Congress this year.
Given the Boston area’s huge medical research and health care industry, we should get our share of that new space and then some.

The firm’s estimate is based on idea that millions of now uninsured Baby Boomers will be put on the health care rolls.That, in turn, will trigger the need for thousands of new primary care physicians – and millions of square feet of new medical office space.

Overall, medical offices have held up well during the recession, with a vacancy rate of 11.6 percent – compared to more than 15 percent for the traditional office market.

If you thought downtown Boston rents were bad, think again.

Tokyo has replaced London’s West End as the world’s most expensive office market.
And expensive it is.

Office rents in Tokyo’s business district now average $183 a square foot – more than three times what some top-shelf tower space is fetching here in Boston, according to a new survey by CB Richard Ellis.
No bargain there.

London is now No. 2, with West End office rents having fallen to $172 a square foot.

A year ago, the same space was fetching more than $300 a square foot.

Ouch.

Still, this year’s office rent survey is more a race down the cost scale than up it.

While the Tokyo office market is more expensive now than London, it is mainly because London rents fell more sharply.

It looks like the Turnpike has a new real estate chief.

Peter O’Connor, deputy secretary for real estate and economic development at the Executive Office of Transportation, will now be overseeing the Turnpike’s many development endeavors.

This will be welcome news for local developers, some of whom are competing for the right to build on various, Turnpike controlled air-rights parcels over the highway’s Boston span.

The Turnpike’s real estate operations have been in flux since the cash-strapped state highway authority laid off its real estate chief and his assistant, leaving just two staffers in its devastated real estate department.

In an interview earlier today, O’Connor, who has a long background in state and city economic development, said he plans to take a fresh look at the myriad of development plans the Turnpike is overseeing.

In particular, the Turnpike is juggling several different proposals by developers to build over various sections of the highway’s Boston span. However, while there is no shortage of plans, after more than a decade, the Turnpike’s air-rights endeavors have resulted in no major projects getting built.

It’s a track record that O’Connor says he is acutely aware of. In fact, it’s an assessment he has also made clear to the Turnpike itself.

“The way I put it, you guys have deals papered from the Zakim Bridge to Brighton, but no one has built anything,’’ O’Connor said of his blunt assessment. “Clearly whatever construct you were using didn’t work.’’

I say keep it coming.

If you think we are headed for a California-style price decline, dream on.

That’s my take, in my column this week for B&T, on the heated debate in the real estate blogosphere over where the Bay State’s real estate market is headed the way of California.

My vote is no, we are not going to see a 50 percent drop, by the time the dust settles, in home prices from their boom-time peak.

That’s what they are seeing out in the Golden State – with San Francisco Bay area home prices have crashed by 41 percent just over the past year.

By contrast, home prices back here in Massachusetts have fallen by 22 percent over the past three years. We may see another five percent decline over the remainder of this year and 2010 before the dust settles, the New England Economic Partnership reports.

Why the difference?

The biggest factor is new home construction. California went on a binge to end all housing binges, with 208,000 new housing starts in 2005 alone.

Here in Massachusetts, we saw roughly 12,000 new housing permits granted a year during the boom by local cities and towns.

That may be a testament our own state’s problems with a suffocating NIMBY culture that frowns on new development of any type.

But in this case, it may have actually saved us from a more painful, California-style housing collapse.

Let just hope the Pike’s latest air-rights screw up will be its last.

City Councilor Michael Ross throws a well deserved rock at the Turnpike Authority for effectively shelving plans to develop a lucrative series of air-rights parcels near the Prudential Center, the Herald reports.

Of course, then again, what’s new.

The Turnpike has been hurting for cash for years now.

But I would need three or four blog items to detail thoroughly the stunning series of air-rights fiascos committed by the authority that gave us the Big Dig.

One particular development mess, though, comes to mind.

Matt Amorello, back when he ran the highway authority, came up with a cockeyed plan to build a new, skyline topping tower off Kneeland Street where the Big Dig headquarters was located.

The Turnpike spent a lot of time talking up plans for a  new neighborhood, with hopes of getting as much as $200 million from a developer who would take the bait.

Of course, only one bidder turned up – a local development company that had never built a tower, let alone a megadevelopment like that.

Meanwhile, as Amorello was spinning these silly development fantasies, real developers with money were lining up, checkbooks in hand, eager to bid on Turnpike owned development parcels near North Station.

They sat waiting, though, for a couple years. At least one resorted to hiring a local lobbying firm to get things moving.

When the Pike was finally ready to move, it wound up making millions from these sites.
Of course, it didn’t get a dime for its silly sky-rise plan everyone has since forgotten, Southgate or something like that.

So maybe it’s time to stop complaining about the Turnpike’s pathetic handling of what could have been a golden goose and look to Plan B.

Granted, air-rights can be tricky. But then again, what do you think the Prudential Center and the Hancock tower garage are then? But somehow both projects managed to get built over the highway decades ago under different leadership.

It’s time to turn these projects over to someone else – City Hall and the Boston Redevelopment Authority come to mind.

Don’t be fooled by all the talk from our top state leaders that the gambling debate is on the back burner until the fall.

The biggest casino companies in the world are busy scouting out the state for development sites, talking up lawmakers and state officials, and hiring high-powered lobbying firms.

Suffice it to say, Beacon Hill is abuzz with gambling talk and intrigue during these seemingly innocent, lazy days of early summer.

It is a story I first broke in my weekly column for Banker & Tradesman on May 4. The Globe has also done a pretty extensive story as well, looking at some of the lobbying hires made by some of these Las Vegas high rollers.

As the summer rolls on, I’ll keep you up to date on some of the background maneuvering going on.
For those in the development and construction business, where these projects go and who builds them matters a great deal. At stake are literally billions in new business.

Here are some extra details to start chewing on:

•    Mohegan Sun has hired O’Neill Associates, the lobbying and public relations firm founded by former Lt. Gov.  Thomas P. O’Neill

•    Development Associates, a casino building arm of  Steve Wynn’s gambling empire, has brought on board ML Strategies, whose big guns include former state economic development chief Steve Tocco.

•    Nevada gaming power Station Casinos is said to have joined the hunt.  The firm has competition, with Boyd Gaming, Penn National, Harrah’s Entertainment and Las Vegas Sands all actively scouting or believed to be interested in Massachusetts.