Deals & Developments

Office market still bleeding away

Scott — Fri, 27 Aug 2010 16:01:58 +0000

Massachusetts may be adding jobs, but the battered office market is not out of the woods yet.

Just take a look at what is happening out on the I-495 office and innovation belt.

The amount of vacant office space has hit 32 percent along the 495 West corridor – the highest since the start of the Great Recession, CresaPartners reports. It’s a key stretch of economic territory that ranges from Framingham to Hudson.

Rents are down as well – to $21.75 and $14.50 for Class A and Class B office buildings respectively.

One sure bet - Bay State gambling debate will be back again next year

Scott — Fri, 27 Aug 2010 15:50:24 +0000

Looks like Bay State lawmakers won’t be heading back to Beacon Hill to take another shot at passing a gambling bill.

Senate President Therese Murray apparently can’t come up with the votes to bring here members back from the beach to do some extra work.

But don’t count out the gambling boosters – and our tough-as-nails local racetrack owners – just yet.

Despite some ominous cuts and layoffs, there’s no chance embattled local racetracks while Suffolk Downs or Plainridge will go the way of Revere’s Wonderland and kick the bucket.

While Suffolk has slashed purse money for winning horses and Plainridge axed about a quarter of its payroll, both tracks are retrenching in hopes of making another push for expanded gambling come 2011, insiders say.

Despite the last minute collapse of this year’s bill, track owners and other gambling boosters came within an inch of getting what they wanted – and they know it.

For the first time, both the House and Senate voted in favor of a gambling bill – and by sizeable margins.

One insider likens Suffolk Downs lead investor Richard Fields, who helped build the Seminoles a casino, as akin to someone furiously pumping money into a slot machine, unwilling to give up his seat to the next customer.

Maybe luck hasn’t been with him, but why give up now and let the next guy hit the jackpot?

“That spirit will keep us going for another year,’’ this veteran observer of the long-running Bay State gambling debate recently told me.

Sounds about right to me.

The FBI’s increasingly clueless headquarters hunt

Scott — Thu, 26 Aug 2010 21:46:22 +0000

I can’t speak to the FBI’s ability to catch crooks.

But when it comes to the job of finding a site to build a new Boston headquarters, the G-men are blowing it.

In a hunt that has gone on almost as long as the search for Whitey, the feds began scouring Boston and its environs back in early 2007 for a place to build a new, high-tech security fortress.

But nearly three years later, there’s no sign that the FBI - whose real estate search, to be fair, is being handled by the General Service Administration – is close to landing anywhere.

In fact, the search has gone on so long there’s even concern that someone pencil pusher down in Washington will cut the money out of the federal budget for the project.

Now the mystery deepens, with state officials now talking about moving the U.S. Postal Service’s mail sorting plant to a location that has been eyed for agency’s new headquarters.

It’s not clear where that leaves the FBI, which supposedly had been torn between building in Boston or in neighboring Chelsea.

Sadly, this is the very kind of real, tangible stimulus project – not silly pothole filling – that is needed to help pump some badly needed jobs and cash into our sagging Greater Boston economy.

We are talking about a $200 million development project that could generate as many as 500 construction jobs.

As I wrote in my B&T column back in January, it’s time for the FBI to pick a site and get building.

“It’s like the government does not look at any of these things in the big picture of everything that is going on,’’ Joe Torpy, a veteran Boston real estate lawyer, complained a few months back. “This guy has a job filling a pothole when you could have 500 guys working on a new building.’’

Here come the foreign investors again

Scott — Fri, 13 Aug 2010 16:45:08 +0000

Back in the 1980s it was the oil-rich Saudis and Japanese that went on an office tower buying spree, both in the Hub and in other major metro markets.

The 1990s saw the Germans get into the game, with the Irish emerging in the past decade with an appetite for high-rent Newbury Street buildings.

Now the Chinese are getting into the game, with a big assist by Harvard University.

Having been hit hard by the commercial real estate downturn, Harvard is looking to downsize its $5.4 billion commercial real estate investment portfolio.

It’s a sizeable – and apparently struggling – chunk of Harvard’s overall $26 billion investment portfolio.

With US investors down on their luck right now, China, through its sovereign wealth fund China Investment Corp., has emerged as a potential buyer of Harvard’s investment assets, The Wall Street Journal reports.

Apparently, the Chinese have some money to burn right now – CIC is sitting on a $300 billion pot of cash.

Not alone, foreign investors, from Canada to Kuwait, snapped up more than $2 billion in towers and other commercial real estate across the U.S. during the second quarter, the Journal reports, citing Real Capital Analytics.

The travails of Fenway developer John Rosenthal

Scott — Fri, 13 Aug 2010 16:42:39 +0000

Can this guy ever catch a break?

In a development market where getting anything built takes sheer grit and determination, John Rosenthal stands out.

The head of Newton-based housing developer Meredith Management and an anti-gun crusader known for his provocative Turnpike billboards by Fenway Park, Rosenthal doesn’t give up easily.

In fact, Rosenthal has been pushing plans for a major air-rights project that would span the Turnpike near Fenway Park since the 1990s.

Now, close to making his dreams of a major Fenway air-rights project a reality, the long-suffering developer is facing what looks to be one last hurdle.

CommonWealth REIT, formerly known as HRPT, is suing the city of Boston and city zoning officials to stop Rosenthal’s One Fenway plan and the revamp of the Yawkey commuter rail stop in a major rail and bus hub, the Boston Courant reports.

The move comes with Rosenthal in the final stages of hammering out a financing package for his $500 million plan, having spent years lining up the needed city and state permits.

If nothing else, this may be one expensive hurdle for Rosenthal to clear.

CommonWealth, which owns a small parking lot in the path of a planned access road into the new Yawkey Station, has made it clear it wants to be compensated, and then some, for its real estate.

The real estate investment trust has proposed to Rosenthal that the developer deliver, for free, 225 garage parking spaces in exchange for the 85 surface lot spaces it now controls. That’s a $10 million-plus proposition.

Meanwhile, in a bizarre twist, the lead attorney for CommonWealth in its suit is none other than wife of the MBTA’s general manager, the Herald reports. Of course, the T is heavily involved with plans for a new Yawkey Station, which involves more than $12 million in public money.

Needless to say, if CommonWealth’s suit is successful, that dollar amount stands to jump again.

Lawmakers scramble to save casino bill

Scott — Thu, 22 Jul 2010 03:27:14 +0000

The odds still look long right now as the end of the legislative session looms on July 31^st. But with hundreds of millions in potential revenue at stake, Beacon Hill is mounting a last-ditch effort to pass a gambling bill.

A legislative conference committee is moving closer to a tentative agreement on the rough outlines of a casino bill, with a formal announcement possible by week’s end, according to two industry insiders monitoring the discussions

The budding proposal comes after House and Senate leaders, emerging from a meeting with Gov. Deval Patrick on Monday, pledged to revive the faltering casino effort.

The scramble represents a dramatic reversal of fortune for gambling boosters in Massachusetts, with a casino and slot bill appearing all but a done deal just a few weeks ago after decades of misfires and humiliating defeats.

But sharp differences over what kind of gambling bill should be passed have undermined the process, with House Speaker Robert DeLeo, whose district includes Suffolk Downs, insisting on including racetrack slots despite strong opposition from Senate President Therese Murray and Patrick.

Legislative negotiators are now looking at plan that could include two or three casinos, with one or two slot parlors. One idea for defusing the racetrack slot controversy, in turn, involves restricting them to a set period of time, after which they would sunset, noted one executive.

“My guess is they can get a vote done by Friday,’’ said one suddenly optimistic industry executive

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The budding proposal comes after House and Senate leaders, emerging from a meeting with Gov. Deval Patrick on Monday, pledged to revive the faltering casino effort.

“My guess is they can get a vote done by Friday,’’ said one suddenly optimistic industry executive

The real scoop on casino gambling here in the Bay State

Scott — Fri, 16 Jul 2010 19:51:13 +0000

Forget about silly talk of Steve Wynn scoping the South Boston waterfront for a casino.

Wynn’s a busy guy of late, having pulled out last fall of a competition to build a racino in Queens and then toying for a short time with the idea of siring a casino in Philadelphia.

But please, before the Southie casino story pops up again, someone check the clips. Frankly, it pops up every time a casino bill gets close on Beacon Hill, but we are no more likely to see a casino down there than a football stadium.

Why? Go ask Southie’s elected leaders, such as State. Sen. Jack Hart.

Granted it’s a fun story – and I’ve done more than my share of those.

But a much bigger story no one seems to be paying much attention to is the winding down of the legislative clock.

Yes, the session ends on July 31^st, after which gambling legislation, if it hasn’t been passed or signed by the governor, will die.

However, given how contentious the debate is this year, the effective deadline for the Legislature passing a bill this year is July 22 – this coming Thursday.

If House Speaker Robert DeLeo and Senate President Therese Murray can’t get agree on a bill to the governor by Thursday, Patrick will suddenly find himself with a trump card.

Basically, if a bill is passed after July 22^nd, the governor can simply pocket it and let it die if he doesn’t like it.

Would he? Why not - it’s an election year and Patrick has spent months railing against racetrack slots, something the House leader seems to really want in any bill.

Of course, the Legislature could try and override Patrick’s veto. But the Senate, when it recently passed its casino proposal, fell one short of a veto-proof margin.

Good luck with that.

Menino plays winning hand on Filene’s project

Scott — Fri, 16 Jul 2010 19:22:17 +0000

I can sum up in two words the trump card Mayor Thomas M. Menino is slapping on the table in his battle to get work moving again on the stalled Filene’s development project – casino gambling.

In my B&T column, I noted back on April 5th that Menino, in his showdown with Vornado and its chairman Steve Roth over the half gutted Filene’s block, held an especially potent secret weapon in his back pocket.

As I noted, Vornado is a key player in a group of investors seeking to turn Suffolk Downs into a casino. And without Menino’s active support, that casino plan, I argued, is going nowhere.

Further, I pointed out the obvious – Vornado knows this and is not going to try and stick it to the mayor and lose out on a casino windfall.

Well, what do you know, with a casino bill possibly passing in a matter of weeks, Menino is putting his best card down.

Reading between the lines of a recent Globe article, the mayor seems to be saying something like this: If you don’t fix the Filene’s mess, I am going to get you booted off the Suffolk casino team.

Now how’s that for clout?

Sure, Vornado is selling its stake in Filene’s, but who’s buying?

Scott — Wed, 14 Jul 2010 20:20:43 +0000

The pressure is mounting on Hub tower developer John Hynes to get work started again on the long-stalled Filene’s project.

Not surprisingly, he would like to ditch his now toxically-controversial partner in the project, New York-based Vornado. If you may recall, the giant real estate investment firm infuriated Mayor Thomas M. Menino when its chief executive put foot in mouth earlier this year and bragged about letting a Manhattan development plan sit idle in a bid to extra government goodies.

Not missing the obvious analogy with Filene’s, Menino blew, forcing an apology from Steven Roth, Vornado’s chairman.

But the real question is why what kind of dough Vornado seeking for its stake in the now deader than dead $750 million Filene’s tower complex and why would anyone pay the kind of big bucks that likely involves?

That last time I checked, the price-tag for buying Vornado out was an unappetizing $100 million. That was the estimate bandied about when Menino and City Hall started rumbling about taking the property by eminent domain.

It’s hard to see anyone with any shred of sanity laying out $100 million in order to get a deck chair on this Titanic of downtown development projects.

I guess it’s always possible Vornado will simply eat its losses – after all it stands to make a good deal of money if and when Suffolk Downs snags a casino license. (Vornado, as I have noted before in my B&T columns, is a key investor in the track.)

After all, don’t make the mayor any angrier than he already is when there is a casino goldmine to be gained.

Get ready for the next real estate craze - apartments

Scott — Fri, 02 Jul 2010 16:41:50 +0000

Forget about that old image of the lone developer out there on the frontier, pushing the envelope.

Instead, most builders would much rather follow the pack and let a few impatient pioneers wind up with all the arrows.

Developers like a crowd – just so long as the competition is not across the street.

The result is once a trend gets rolling, everyone jumps on. It happened with telecom hotels a few years ago, then condos.

So with the office market still struggling, the industry buzz now is about apartments.

For one, vacancy rates are low, especially compared to a number of downtown Boston’s new condo towers. Secondly, rental projects are probably one of the few things banks will agree to finance now.

So as developers look to get back into the game, look for a surge in apartment proposals.

In fact, there is already talk that Joe Fallon may be looking to build apartments next on Fan Pier instead of more condos. Look for others to make that shift as well in the coming months.

Meanwhile, out in the suburbs, Philadelphia-based O’Neill Property Group is looking to get started on the construction of major apartment complex on the Belmont/Cambridge line, while another developer in Concord has landed financing to begin work on a 350 unit apartment complex.