A seaport bustles again
Global companies flock to the waterfront district of Boston. By Lisa Prevost
When General Electric Co decided to leave its longtime home in Connecticut and chose the waterfront district of Boston for its new headquarters, it thrust a once-windswept province for fishermen and dock workers into the spotlight.
Still, beyond the arrival of GE, long a bellwether of the US economy, the South Boston waterfront is growing at breakneck pace, a sign of this city's popularity with global investors and solid reputation as a fountainhead of research and development.
Thomas M. Menino, a city mayor who died in 2014, had envisioned the area, just across the Fort Point Channel from downtown as an "innovation district," with state-of-the-art office space, plenty of walk-to-work apartments, numerous restaurants, and pedestrian-friendly streets and parks.
Since 2000, the area has gained 10 million square feet of development and more than 4,000 residents. And in recent years, the appetite for a Seaport address has only increased, such that 2,700 residential units and 1.3 million square feet of office space are in some stage of construction, according to the Boston Redevelopment Authority.
From upstart technology companies to cutting-edge biomedical firms to traditional corporate giants, the Seaport is attracting businesses to both brick-and-beam style office space in old industrial buildings and new glass office towers overlooking Boston Harbor.
Among the more notable newcomers is Vertex Pharmaceuticals Inc, which moved its global headquarters into twin glass towers on the waterfront in 2014. PricewaterhouseCoopers took 13 of 17 floors in an environmentally friendly office tower, 101 Seaport, last year.
And this year, GE will move its headquarters into temporary Seaport space as the company begins rehabilitating two brick warehouses and constructing a building in the Seaport's historic, industrial-era Fort Point neighbourhood to make permanent offices.
GE had considered dozens of locations, including New York, before announcing in January that it had settled on Boston. The decision was helped along by a state incentive package expected to total $80 million to $120 million, and a city offer of as much as $25 million in property tax breaks.
But in announcing its selection of the Seaport area in March, the company said it "was excited to be a part of such a dynamic and creative ecosystem that is leading the future."
"GE is not buying a place or a location," said Dennis Frenchman, a professor of urban design and planning at the Center for Real Estate, part of the Massachusetts Institute of Technology. "GE is buying into a culture that they want their employees to be a part of."
Frenchman chose a barren stretch of parking lots in the Seaport as a study site this year for students in his real estate development studio programme.
The students were tasked with creating mixed-use proposals for the 22-acre site (which is not actually for sale), inspiring visions of robotics production spaces beneath apartment houses, waterfront "maker" spaces, like breweries and chocolatiers, and co-working spaces for entrepreneurs.
"The city really has developed this concept of an innovation district. We wanted students to think about what it means to innovate," said Peter Roth, a lecturer in real estate development who helps run the programme. "And there's so much activity in the Seaport right now that the students had a lot of projects to reference."
A portion of the Seaport is still reserved for maritime and industrial uses, including a cruise ship terminal. But the completion of the $15 billion Big Dig highway rerouting project in the mid-2000s literally paved the way for development by connecting the area to Logan Airport and Interstate 90, said Richard McGuinness, the redevelopment authority's deputy director for waterfront planning.
Other crucial public investments included a new sewer treatment plant to help clean up Boston Harbor, new mass transit service via the Silver Line of the Massachusetts Bay Transportation Authority and construction of the Boston Convention and Exhibition Center.
In devising a master plan for the area, the authority has taken care to "avoid mega-blocks" by requiring building frontages to be active with retail and local services, McGuinness said.
In addition, the plan integrates the street grid system that was part of the historic district into the new district and requires developers to build public parks that connect with pathways to the waterfront.
One of the most active developers in the Seaport (and an alumnus of the MIT Center for Real Estate) is Shawn Hurley, the chief executive and president of Skanska US Commercial Development in Boston.
The company claims three projects totalling 1.3 million square feet on Seaport Boulevard, facing the harbour. In addition to 101 Seaport, Skanska recently completed the residential tower Watermark Seaport, which has about 280 luxury apartments and 65 loft-style units. Rents range from $2,300 to more than $7,000.
Skanska is building another office tower with an unusual elliptical design and two floors of retail space at 121 Seaport. That project is scheduled for completion in 2018.
Hurley cited the infrastructure developments in the Seaport and the strength of the existing Fort Point neighborhood, home to many artists, as catalysts for the investment by Skanska, which is based in Sweden.
"If you walk around Fort Point, at least 80% of those old buildings have been repositioned to new residential, retail, office, but it's kept the historic nature of the area," he said. "Those people are the anchor for the seaport. We're building off of that. It's a great juxtaposition of old versus new."
Other global investors agree. This year, Skanska sold 101 Seaport to a German real estate fund for $452 million, a price comparable to values in Boston's pricey downtown financial district.
"Investors are trying to find yield, and the Seaport, with all that it has to offer, is one of the hottest submarkets in the country," said Glenn Verrette, an executive managing director in the Boston office of Cushman & Wakefield. "We're seeing capital from all over the world trying to invest in the Seaport and downtown Boston."
Alexander Shing, the chairman and founder of Cottonwood Management, in Los Angeles, says his company drew on an international investor base to purchase two blocks in the Seaport for development of three 20-story towers.
Approved in May by the redevelopment authority, Cottonwood's project will include roughly 450 condominiums, 285 rentals and 125,000 square feet of retail space around a central courtyard.
Directly on the harbour on Pier 4, known to longtime Bostonians as the former home of Anthony's restaurant, a local landmark, Tishman Speyer is teaming with two Chinese insurance giants to build a 13-storey office tower and a nine-story condominium building, both with ground-floor retail. Located next to the Institute of Contemporary Art, the development will also include a one-acre public park at the tip of the pier.
With so many more people moving in and out of the Seaport now, additional infrastructure investments are again being eyed, this time for transit.
McGuinness said the city was considering expanding its largest transit hub, South Station, as well as adding water transportation and increasing public awareness of the area's highway access points.
Shing said the transportation crunch should not be a big concern.
"Solutions will evolve,'' he said, adding that, given what it signals about the Seaport's vibrancy, "It's an excellent problem to have."