OCTOBER 23, 2015
$359M Sale May Speed Seaport’s Completion
The last big chunk of open land in the Seaport is being sold in a $359 million deal that is likely to accelerate completion of the bustling new district.
WS Development of Chestnut Hill is buying the remaining 12.5 acres of the tract, known as Seaport Square, with an eye toward building offices, housing, and shops where a dwindling number of parking lots now sit.
It’s one of the priciest land deals ever in Boston. And at 2.8 million square feet of permitted space over 10 blocks, it’s among the biggest developments in the city.
“This is the hottest neighborhood in town,” said Dick Marks, a partner at WS. “It’s an extraordinary opportunity.”
WS is buying the land from an arm of the investment bank Morgan Stanley, which partnered with local developer John Hynes’s Boston Global Investors to launch Seaport Square in 2006. Since then, they’ve pushed the site through city permitting for a total of 6.3 million square feet on 23 acres, and gradually sold it off piece by piece. Along with two blocks that are set to sell to the Chinese investment firm Celona Capital by the end of the year, the WS purchase is the last of the lot.
“It’s a hole in the middle of the doughnut,” Marks said. “This gives us an opportunity to stitch everything together.”
From a 15th-floor apartment in a new building at the foot of Pier 4, you can see what Marks means.
Straight ahead, along Seaport Boulevard toward downtown, he points to a couple of still-empty lots, now cluttered with construction trailers and equipment for the towers going up. On those, the plans call for an office building, hotel, and condominiums, alongside a new park. To the left, toward the elevated stretch of Summer Street and the Convention Center, blocks of parking lots will eventually become housing around a big park to be known as Seaport Hill.
WS, best known for retail developments such as The Street in Chestnut Hill and Legacy Place in Dedham, says that beyond the skyline-altering buildings they’ll put up, they plan to bring lots of street life to a district that critics say lacks a certain vibrancy today.
WS hasn’t hired architects yet, but Marks said his firm aims to avoid the boxy glass towers that characterize much of the Seaport. He points to the elliptical glass tower that Skanska USA recently started on Seaport Boulevard and the terraced condo buildings BGI presented to the city as signs of progress. And he said he’d like to follow on that with more creative — and user-friendly — designs.
“We’re going to bring in art, music, skating rinks, chessboards, farmers markets, pianos,” Marks said. “We want to build places where people want to be.”
While the whole area is zoned and has city approvals, specific projects will need design review before construction can begin. Marks said that WS hopes to break ground on its first buildings in 18 months to two years but acknowledges it will take “a number of years” to finish everything.
That was too long for Morgan Stanley, which partnered with Hynes to buy the site in 2006 for $204 million from Rupert Murdoch’s media giant News Corp. The bank did not return messages seeking comment, but it purchased the land through an investment fund that was due to cash out, Hynes said.
WS had been a partner in the retail development of Seaport Square. And when Morgan Stanley began talking this spring about selling the whole site, WS said it wanted to buy. The deal is set to close Friday.
The purchase is among the biggest ever recorded for an unbuilt site in Boston, and it is the second major land deal close in the region’s core in two months. In August, San Francisco-based DivcoWest paid $291 million to buy the 42-acre NorthPoint site in East Cambridge.
Purchases at those sums — before launching a years-long construction process — are votes of confidence that Boston’s strong real estate market will continue for a long time, said Greg Vasil, chief executive of the Greater Boston Real Estate Board.
“People are betting on Boston for the future, that more people will continue to flock to the city,” Vasil said. “And in Boston they’re not making any more land. It’s an investment you’re never going to lose.”
For Morgan Stanley and Hynes, investing in the Seaport has paid off well. They have already sold three parcels of Seaport Square to Skanska USA for a combined $87.7 million and another, One Seaport Square, for $72 million to a venture led by Berkshire Group.
With the Celona deal — on which no price has yet been disclosed — and this, they will come out far ahead of their initial $204 million, despite what Hynes estimated as $80 million invested in the permitting process, streets, and other infrastructure work.
“It’s terrific,” he said. “The game plan from day one was to create some value in this district. That’s certainly panning out.”
For the veteran developer, it caps nearly 10 years of spearheading site work and securing approvals on the project. BGI is buying a small plot where it will build a four-story office building and move its headquarters from Post Office Square, Hynes said. And he’ll probably stay on in an advisory role.
But from here, Seaport Square is WS Development’s baby.
It’s the biggest project yet for the company, which was co-founded by Stephen Weiner and Jeremy Sclar, and operates shopping centers and mixed-use developments in 10 states.
And it’s a chance to make a lasting mark on their hometown, “to build something for the ages,” said Sclar, who now runs the company.
Tim Logan can be reached at firstname.lastname@example.org. Follow him on Twitter at @bytimlogan.