Beacon Capital Partners plans to redevelop its 14-building Channel Row portfolio in South Boston’s Fort Point area into 1.75 million square feet of mixed-use space.

Fresh off the successful $192 million sale of Cambridge’s One Kendall Square, Beacon Capital Partners is wasting little time recirculating its profits. According to industry sources, the real estate investment firm is preparing to unveil plans for a 1.75 million-square-foot redevelopment of an aging warehouse complex in South Boston.

Beacon is hoping to file by the end of the month, spokesman Alex McCallum told Banker & Tradesman last week of the company’s intentions of submitting the project notification form with the Boston Redevelopment Authority. The project will also kick off a new community advisory process in which Mayor Thomas M. Menino will appoint a citizens’ advisory group to help shape the ambitious proposal.

Originally known as the Midway Parcel when Beacon bought the existing 14-building portfolio from the Boston Wharf Co. last June, the developers are renaming the property Channel Row. Changing the project’s moniker may be the easiest part of Beacon’s task, however, with some observers predicting that the firm could run into difficulties on certain aspects of its proposal. Chief among the potential roadblocks is a mid-rise office building, one that would exceed a 150-foot height limit for the area.

Beacon could also find itself in a quandary over a residential component for the seven-acre parcel. Headquartered a few blocks away, Gillette Corp. sued Beacon last year after the city approved conversion of an abutting mill complex into condominiums. The toiletries giant ultimately dropped its suit, but an agreement with Beacon placed a moratorium on residential development for the Channel Row complex. Gillette was concerned that residents would clash with the industrial nature of the area, perhaps complaining about late-night truck traffic.

The problem on that deal is that BRA Director Mark Maloney subsequently issued an edict that any new commercial project in the emerging Seaport District include a residential component amounting to one-third of the development size. In order to meet that mandate, the Gillette pact would obviously need to be violated.

While neither could discuss the situation in detail, both BRA spokeswoman Susan Elsbree and Beacon’s McCallum said they believe potential solutions are in the offing, including the addition of an estimated 250,000 square feet of artist live/work space in some of the existing buildings. Elsbree said that would not only meet the city’s guidelines, it would also solve a longstanding issue of how to accommodate artists being pushed out of Fort Point Channel by the rising economic tide. Elsbree said her agency has already sat down with Gillette and Beacon to address the matter.

There are ways that housing can be done without impacting the industrial uses, and I think we have made some progress, Elsbree said.

McCallum acknowledged that avenues are being explored to solve the situation, including one possibility of having some of the residential component off-site, with Beacon possibly contributing to a stalled affordable housing plan in South Boston.

I think there’s a certain amount of optimism that a solution can be reached, McCallum said. The parties have been meeting, and all the issues have been put on the table, and we are getting close to some finality to the process.

Towering Issue
Gillette spokesman Stephen Brayton was less definitive, maintaining that the Beacon agreement involved their willingness to address the housing issue as part of an overall master plan for the surrounding 100-acre district. The overview would be similar, Brayton said, to a recent suggestion by state environmental chief Robert Durand that the same area undergo such a planning initiative.

We certainly support the city’s vision for a vibrant, mixed-use area, as long as it’s part of a comprehensive master plan, Brayton said. The residential development would have to be adequately buffered from the industrial uses.

Elsbree said it is possible that Beacon could get credit for building housing elsewhere, but added that the BRA would still want some residential component at Channel Row.

The height of a proposed new office building slated for the southern end of the parcel is also raising concerns. McCallum downplayed rumors that the building would be 30 stories high, instead calling it a mid-rise that would be more than 20 stories. Although he declined to provide specifics, McCallum did confirm that the structure would exceed the height limit, but said doing so would allow Beacon to better preserve the existing properties.

A city official who requested anonymity said it is doubtful Beacon’s final plan would reach the 30-story mark, maintaining that Beacon has already been told that a tower of that height would be out of scale and could raise the ire of local residents.

Thirty stories would be a problem, but I don’t think they are going to come in that high, said the source. They know it would not be well-received.

Another source on Beacon’s project team agreed with that notion, maintaining it has been a source of internal debate as well. I have a lot of trouble imagining a tower like that over there, said the source. I can’t imagine it happening.

According to yet another source, Beacon has enlisted Keen Development Corp. of Cambridge to assist with the artists’ component. Principal Robert Kuehn, who did not return phone calls by B&T’s deadline, has previously produced similar work, including the 300 Summer St. artists cooperative just up the street from Channel Row. If the project is approved, Beacon would begin the first phase later this spring, adding the artists’ piece plus renovating other properties into 125,000 square feet of office space. There would also be 1,200 parking spaces, including some under ground. The second phase, including the new tower, would begin by the end of the year.

Besides the on-site issues, Beacon must also grapple with the potential traffic problems that could result from the project, said Vivien Li, executive director of The Boston Harbor Association. Given the congestion already seen in the Fort Point area, Li said there are concerns that such a major rehab would make things even more difficult. A Street, which runs in front of the project, is often backed up a mile at rush hour.

A Street is totally at capacity now and it is also a truck route, so it is pretty key, Li said, adding that, The impact to the transportation system is going to be very acute, and we have told them we are concerned about that.