A condominium/hotel building, as well as a separate condominium development, will be the first structures erected during the planned Fan Pier build-out in Boston.
A site that has bounced from developer to developer over the last 20 years is finally on track to come to life, and the commercial broker in charge of leasing the 500,000 square feet of office space planned for the Fan Pier site is hoping that the newness of the buildings – a relative rarity in Boston – will have potential tenants enthusiastically signing up.
“It’s an opportunity to start new,” said Stephen Lynch of CB Richard Ellis, the commercial broker who is handling the leasing. “We think the market is ready for this.”
There is demand for new office space, since the average age of Class A office space in Boston is just under 30 years old, Lynch said.
Joe Fallon, president of The Fallon Co., which owns the Fan Pier site, unveiled the plans for the project Wednesday night at the Westin Boston Waterfront. The phased waterfront development at Fan Pier will start with the construction next year of a hotel/condominium building along with a separate condominium building. That will be followed by the construction of two 18-story office buildings.
One of the office buildings will have a 29-foot floor plan, and the other will have a 30-foot floor plan.
Because construction of the new office space will be phased, and because it is part of a mixed-use project, it will be good for the overall office market in Boston, said Bill Barrack, managing director of Jones Lang LaSalle in Boston.
The rebounding commercial real estate market also favors Fan Pier.
“I think the market is absolutely going in their direction,” Barrack said.
Indeed, the South Boston Seaport District, where Fan Pier is located, has been among the many bright spots in Boston’s commercial real estate market since the beginning of the year. Vacancy rates after the second quarter of this year fell to single-digit levels that have not been seen since 2002, a trend that is pushing up rental rates.
According to CB Richard Ellis, the vacancy rate in Boston was 9.4 percent after the second quarter of this year, down from almost 11 percent in the first half of the year. A total of almost 300,000 square feet of space was absorbed in the second quarter.
The Seaport District also is outperforming many other submarkets in Boston. The vacancy rate at the end of the second quarter was 11.5 percent, but development continues at a fast pace.
Surging Waterfront
In the early 1990s, the Seaport District was a struggling office submarket, but with the infrastructure and support that has since been added – including the MBTA’s new Silver Line bus route – the area has become much healthier.
Fidelity Investments absorbed 110,329 square feet in the World Trade Center West building during the second quarter, according to a report from Jones Lang LaSalle, and several mid-sized transactions increased year-to-date net absorption to 107,631 square feet.
Both the vacancy and availability rate in the South Boston Waterfront area declined to noteworthy lows during the second quarter of 2006, reaching 12.4 percent and 12.5 percent, respectively. The availability rate shows a 6 percentage point drop over the last year – a significant decline, say industry watchers – and is at its lowest level in six years, according to Jones Lang LaSalle.
Experts at Jones Lang LaSalle say they expect the South Boston Waterfront to continue to make headlines, since several new developments have been proposed there. There has been no slowdown in investment and development activity.
The Boston Redevelopment Authority recently approved a master plan for the Fort Point Channel area, which entails nearly 6 million square feet of new development at a 100-acre site along the South Boston Waterfront.
The office buildings at Fan Pier will embrace some green building ideas, said Richard Martini of The Fallon Co. For example, they will have central HVAC systems that can be zoned to certain parts of the buildings, so if one person is working on a weekend, the air conditioning for an entire floor does not have to be turned on.
“It will be very energy-efficient,” Martini said.
The first four buildings of the project – the hotel and condo buildings, and the two office buildings – are in the design review process.
Developers have been tossing around ideas for Fan Pier for two decades, but the site was not permitted until recently. The Pritzker family, which owned the site before Fallon bought it, arranged the building permits under with the Fallon plan will go forward.
The condos will be branded by a yet-to-be-named five-star hotel, and are following in the trend of the new InterContinental Boston Hotel and Residences, which is opening in December in the Fort Point Channel area. The design, however, is slightly different. The hotel rooms will be stacked vertically instead of interspersed with the condos, as is common for most condotels.
“We’re thrilled to be a part of this,” Fallon said.
The site will have retail and restaurant space, as well, and more buildings are to be designed and built later in the process.
