Columbus Center Now Stalled

As you know, developers of Columbus Center requested an 18-month moratorium on construction earlier this year, effectively leaving the state of the entire project in limbo. Developers met with officials from the Boston Redevelopment Authority (BRA) on May 1, 2008 to discuss the developers’ attempts to get the project back on track.

Information flowing from the South End News earlier this month paints a somewhat positive picture that parties are moving towards a resolution.

Jessica Shumaker, a spokeswoman for the BRA, said that “nothing really was settled from the meeting.” After filling the agency in on their current situation, the developers, represented by the local Winn Development Company, told the BRA that they’re still exploring their options. “We’re still very much working hard to see if this project can move forward and how we can get it to move forward,” said Shumaker. As for the developers, she said, “They were very committed, they weren’t trying to say to us that they were stepping away at all.”

Last week, the South End News reported that the construction on the Columbus Center site would continue at a slower pace over the next 18 months, according to Alan Eisner, a spokesman for the developers. Eisner said that the developers would be doing “minimal work there” so as to “keep the site in play.”

“If it keeps them going until they can get things finalized and fully move forward, I would say that further proves that they’re committed to finding a solution so that they can move forward,” said Shumaker. “I would say that’s a positive that they’re doing everything they can to get this up and running.”

Given the significant ups and downs that the Columbus Center project has experienced over the years, the only thing that is clear now is that Winn Developers (in business with California Public Employees’ Retirement System (CalPERS) and MacFarlane Partners on this deal) will continue to search for financing to make the development happen – the timeline, however, is uncertain.

Developers Promise Columbus Center Completion

The Boston Globe recently reported that the Massachusetts Turnpike Authority board has secured a $270 million guarantee from the developers of the Columbus Center project that they will see the expensive four-block deck over the highway to completion.

The guarantee clears another hurdle for the project, which has been 11 years in planning and development, encountered monumental opposition, and finally went into construction only late last year.

Columbus Center is a significant mixed-use six-building development that will be built on top of a deck that stretches over open traffic lanes on the Massachusetts Turnpike from Clarendon to Tremont Streets in Boston’s South End.

An interesting point that the article in the Globe mentions is that the deck will be owned by the Turnpike. The Turnpike Authority amended its air-rights lease with the developers, Winn Development and MacFarlane Urban Realty Co., to clarify the ownership and purpose of the deck on which the mixed-use project is being built on the edge of the Back Bay.

That clarification – stating the deck will be owned by the Turnpike, leased to the developers, and created in part to benefit the public – was necessary for the developers to use $10 million in jobs-creation grants from the state.

Crews have been onsite in the South End for some time now, working nearby other developments, including 285 Columbus Lofts and the Clarendon Back Bay.

Columbus Center Gets Reprieve

It was back on January 8th that we did a feature on Columbus Center (see Will Columbus Center Ever Be Built). At that time, the development team behind Columbus Center were under pressure to secure funding before a January 15, 2008 deadline to secure the necessary funding for the project to continue (after lenders backed away from the deal). January 15th came around, and the decision was postponed, until February 15th.

Recently the South End News (see Turnpike Authority waives Columbus Center deadline for funding) reported that the deadline has now been waived and the development team behind Columbus Center is free to move forward. A lender is not yet in place to pump the needed $500 million into the project, but those involved feel as though everyone is working in good faith, and they’re comfortable moving forward on that notion.

Some people are fans of the Columbus Center condo-hotel development, others are staunch pessimists. Regardless, if and when the development is finally complete, the area will look much better than it currently does, neighbors, however, are more than likely in for a noisy few years if and when construction gets going for real.

Will Columbus Center Ever Be Built

Much noise had been made back in Q4 of 2007 about the beginning of “construction” at Columbus Center. We’re now told that the job site activity was preconstruction (namely site preparation such as painting stripes on pavement, testing dirt, pulling old shrubs, adding fences, etc.), and actual construction has not yet begun.

It appears that Columbus Center is a project more than 13 years in the making, and with costs continuing to rise, the original $300 million price tag for the mixed-use condo, hotel, public park, and parking garage project has nearly tripled.

The fate of Columbus Center has not deterred other developments in the immediate vicinity from pushing ahead – 285 Columbus Lofts, the Bryant on Columbus, the Clarendon Back Bay, and the Brooke House Residences, all of which are in various phases of actual buildout, have significant inventory already sold and/or under agreement.

The property owner of the Columbus Center parcels is the Massachusetts Turnpike Authority (MTA), and as landlord, MTA recently gave the project owners until January 15, 2008 to borrow $500 million or else risk eviction. Of significant note for condo buyers at Columbus Center is the potential that residents themselves will be responsible for the infrastructure below them.

Potential condo and parking buyers at Columbus Center could be financially and legally responsible for the subterranean tunnels that enclose the 7 rail lanes (CSX freight, Amtrak, MBTA commuter rail, subway) and the 7 turnpike road lanes along the interstate transportation corridor. Neither the developer nor the government has records showing the 99-year cost of these responsibilities, but they potentially include periodic inspection by tunnel-bridge structural engineers for at least 99 years, tunnel maintenance for at least 99 years, tunnel upgrades dictated by Massachusetts Turnpike Authority for at least 99 years, and premiums for 99 years of developers error/omission insurance and owners liability insurance.

So will it ever be built? It’s hard to say if Columbus Center will be constructed as we currently know it today. It’s evident that something will be built over the turnpike eventually, as there’s nowhere else to go in Boston. The potential development of Columbus Center is exciting, as it would offer residents a final product that would significantly beautify the area, however, a lengthy construction process, and the negatives associated with a project of such scale would be felt (see Temporary Downgrade of Boston Condos).

For further information on the layout of the Columbus Center development, see the Columbus Center address information file (PDF).

Temporary Downgrade of Boston Condos

The city has been a buzz with new developments, with living spaces being created, and/or renovated, making the excitement palpable as we enter the winter season, anticipating the completion, and commencement, of developments in 2008. But, is a “downgrade” coming?

[Read more…]

Columbus Center Development Begins

The long-awaited Columbus Center condo development has actually begun. However, it’s been in somewhat of stealth mode. Unless you are within a few hundred yards of where the initial probing between Berkeley and Clarendon has begun, you probably would not even know anything has changed.

Nearby residents did voice their concern via a recent article in the Boston Courant that noise and shaking is already being felt. This is somewhat concerning given that true construction has not yet even started. The project will be a multi-phase project: completion of the deck over the turnpike is scheduled to take approximately 2.5 years, and construction of the actual buildings should take at least another year. So we’re looking at an early 2011 completion at the earliest.

We have been working with clients who are showing interest in the purchase of a condo at two nearby developments, namely 285 Columbus Lofts and the Brooke House Residences. Some are voicing concern about having a large-scale construction site quite close to their new home. Construction hours will be limited to a certain schedule during the day, and the developer is committed to working with the community to keep all apprised of schedules and events, however, Columbus Center will be a construction site, and will carry with it the typical things that come with large-scale development (noise, vibrations, etc.).

Exclusive photos of the rather quiet construction site are below. Columbus Center prices and floor plans have not yet been released.



US Condo Downturn Troubles Lenders and Developers

The Wall Street Journal reported this weekend that in cities across the US, namely Miami, instances of foreclosure and condo development bankruptcy are increasing. The problems are emerging as some buyers who signed contracts to by new condos two to three years ago, when construction was just starting, seek ways to back out as they encounter trouble getting financing in the suddenly dicey mortgage market. Falling prices are forcing appraisals down, so banks aren’t willing to lend the full amounts that people committed to in the sale contract.

Boston appears to be bucking that trend slightly, or at least serving up a different flavor of the same end result. Consider that Bostonians continue to lay down large deposits on units in condo developments that are far off on the horizon, with what on the surface, appears to be little to no concern over obtaining financing when the occupancy date approaches, and final checks have to be written (take for instance the Mandarin Oriental, which is practically 100% sold, and will not open until June 2008, as well as 45 Province, which is on track for a 2009 completion, but is experiencing strong sales, and large deposits, thus far).

Where condo developments seem to be experiencing issues in Boston is not so much on the consumer financing end, or consumer demand for that matter, but on construction costs that have increased to levels that do not allow developers to turn a profit on making the project a reality. Take for instance, Columbus Center, which was approved years ago, but has not broken ground due to rising construction costs that erode project profit potential, the Broadluxe that is currently foreclosed upon by TD Banknorth for various construction cost related issues, the original Channel Center effort that saw a whole block purchased by a developer, only to see a small portion of the area developed, or perhaps most recently, the announcement that East Pier (Portside at Pier 1) in East Boston may flounder because developers anticipate not obtaining the profit levels for which they had hoped.

However, a broad brush stroke story on the state of the entire US provides little insight into the local market here in Boston. Despite the four above-mentioned condo development projects experiencing issues, be that temporary or permanent, construction still continues and will continue. Take for example The Clarendon and Russia Wharf (to name only two), both of which have recently broke ground on new construction in the Back Bay and on the Waterfront respectively.

With the little consistency that is seen (or unseen) in even the Boston market, it leads one to question whether the failure of certain condo development projects in the city are simply a result of particular developers seeking to take advantage of the demand from three to four years ago (the time when planing and permitting took place) , and a lack of planning and foresight to build proper safeguards into their projects.