Berkeley Investments, the Boston-based developers behind FP3 and Worcester’s CitySquare, have backed out of a deal to take over development of the 45-acre NorthPoint project in East Cambridge, Banker & Tradesman has learned.
Berkeley Investments President Young Park said in mid-December his firm was interested in taking over the mega-development, but was still examining the deal’s financials. Officials from Berkeley and North Point’s majority partner, Pan Am Railways, did not return repeated calls for comment, but four sources close to the development said the deal is dead. Those sources said the real estate market’s rapid deterioration and the ballooning cost of bonding conspired to push the cost of taking on the multi-billion dollar project outside Berkeley’s margins.
When completed, NorthPoint will encompass 5 million square feet over 19 city blocks, and include 2.2 million square feet of commercial/office space, 150,000 square feet of retail, and 2,700 residential units. Just two residential buildings have gone vertical – the 8-story, 99-unit Sierra building, and the 12-story, 230-unit Tango. The Collaborative Companies, which is marketing the condominiums, said 45 units have sold, with three under agreement. Collaborative is averaging two to three closings per month.
Extension Complication
NorthPoint is critical to the planned MBTA Green Line extension to Somerville and Medford. Pan Am originally committed to building a new, $70 million Lechmere station to accommodate the Green Line’s new path. That station was originally supposed to open in 2010. However, in the face of internal squabbling between Pan Am and Jones Lang LaSalle (which acquired Pan Am’s local development partner Spaulding & Slye), state transportation officials seized control of the new station’s design and buildout. Beacon Hill insiders privately doubt the state can afford to foot the bill for the new station without outside help.
That’s why Pan Am’s flirtation with Berkeley may have long-felt consequences for NorthPoint’s neighbors. This past summer, Forest City Boston, a division of Cleveland-based Forest City Enterprises, emerged as a strong, interested bidder. Forest City was seen as willing to fund the T station – Berkeley was not. But Berkeley also narrowly outbid Forest City. Pan Am chased the extra few million dollars, and then the capital markets shifted. So now, the railroad is where it started – stuck with a piece of land it doesn’t want and can’t afford to build on.
Sources said it’s unlikely now that any developer could restart the project without help from state or federal stimulus funding.
Forest City’s interest in the parcel predates the current failed bid, and the firm appears to remain interested – at the right price.
“It’s a good piece of land in the long term,” said Frank Wuest, president of Forest City Boston. He quickly added, “Who knows what’s going to happen in today’s market?”
The failed sale is just the latest setback in NorthPoint’s long and troubled history. When developers broke ground in 2005, it was estimated to be a 15-year project. But now, at the beginning of 2009, the original completion date of 2020 seems exceedingly optimistic. Two years after the groundbreaking, no buildings were occupied, and the project’s partners were battling each other in a Delaware courtroom. NorthPoint’s owners announced in November 2007, that Texas-based Archon had agreed to buy the project for $175 million. But Archon, which is affiliated with Goldman Sachs, began trying to extricate itself from that deal soon afterward, and the deal was dead by the spring of 2008. The sale was also complicated by legislative wrangling over the state’s Chapter 91 tidelands regulations. In holding up the tidelands bill, area legislators specifically invoked the desire to subject NorthPoint to additional public review.
