March 18, 2013

Boston booms as young workers say no to suburbs

Developers financed with cheap debt are seeking to profit from a growing work force

By NADJA BRANDT Bloomberg News

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A crane stands on the top of a high-rise building under construction on A Street in Boston. Developers and investors drawn to Boston’s expanding life sciences and technology industry, along with a growing work force of educated young adults, are fueling a boom in construction.

Bloomberg News photo/Kelvin Ma

Neighboring Cambridge, which has also seen a spike in new development, hosts employers such as biotechnology company Biogen Idec Inc. and technology giants Amazon.com, Google and Microsoft, said Peter Meade, head of the Boston Redevelopment Authority.

"In the last 24 months, suburban tech firms have been looking to relocate into town," said Andrew Hoar, president and co-managing partner at CBRE/New England, a joint venture partner with CBRE. "For many other markets it's the other way around. The young graduates in this town don't want to commute."

The race to catch up with the city's growth is evident in the Seaport area, where about 3 million square feet of buildings is under construction, according to the redevelopment authority.

The waterfront neighborhood, for decades isolated by Fort Point Channel and an elevated stretch of Interstate 93, has become more accessible after the Central Artery/Tunnel Project rerouted the highway below ground. Known as the Big Dig, the 15-year-plus project was completed in 2007 after being plagued by delays and cost overruns.

"The opening up of areas like the waterfront is expanding opportunities to have developments occur in a way we have not seen in many years," Joseph Fallon, founder and chief executive officer of Fallon Co., developer of the Vertex buildings, said in an interview at his office in the Seaport, behind him the expansive view of Boston Harbor -- and cranes.

The neighborhood, long targeted for growth, was slow to develop.

Fidelity Investments and Drew Co. built the Seaport World Trade Center exhibition center there in 1986, joining Anthony's Pier 4 restaurant, a local landmark. A larger-scale overhaul was hampered by the lack of infrastructure, a common vision for the area and economic downturns, according to the redevelopment authority's deputy director for planning, Richard McGuinness.

MAYORAL PRIORITY

Development of the district has been a top priority of Mayor Thomas Menino during his almost 20 years in office.

Fallon plans to complete the two Vertex structures in the waterfront area by the end of this year and has an adjacent parcel that may accommodate a third building. It will build a residential project if Vertex doesn't exercise the option to use the land, Fallon said.

The developer's other projects in the Seaport neighborhood include a condo building and a 360,000-square-foot office for law firm Goodwin Procter, both of which will break ground this year.

Vertex, which has added more than 500 employees in Massachusetts in the past five years, is currently based in Cambridge. The company was attracted to the Seaport's proximity to Logan Airport and different types of transportation, as well as its mix of new businesses settling into the neighborhood, said Zach Barber, a spokesman for the drugmaker.

"The site and the neighborhood was exciting for us to be an anchor tenant in," Barber said.

New restaurants are popping up, such as Blue Dragon, an Asian eatery from Ming Tsai, host of the PBS cooking show "Simply Ming."

The outdoor Bank of America Pavilion showcases music events, while a convention center, completed in 2004, draws a regular stream of visitors, as does the Institute of Contemporary Art, which relocated from the Back Bay in 2006.

Drew Co. is building Waterside Place, a $120 million mixed-use project in the Seaport area that it expects to complete by year-end. It will include apartments, offices for startup companies and ground-floor retail, according to the authority.

Skanska USA, the American division of Stockholm-based construction and engineering firm Skanska, in December acquired a parcel of land in the Seaport district from Morgan Stanley for $33 million and is planning an office building to accommodate spill-over demand from low-vacancy areas like East Cambridge, said Shawn Hurley, executive vice president. The company would build even without having a tenant signed first, known as speculative construction.

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