As it nears completion of the 259-unit Caldwell apartment tower in Lynn, developer Procopio Cos. is proposing another 300-unit rental high-rise on a nearby downtown property it bought in April for $6.7 million. Image courtesy of Procopio Cos.
Sprawling waterfront development parcels and a transit-friendly downtown have proven to be powerful lures for projects in Lynn, attracting institutional investors and interest from national developers.
The Caldwell, a high-rise nearing completion in Central Square, is testing the market for amenity-rich construction with rents to match, with one-bedroom units starting around $2,000. Developer Michael Procopio is doubling down on the downtown’s prospects with plans for a 300-unit apartment tower on a pair of parcels that he acquired in April, betting on the long-term appeal of this post-industrial Gateway City of 95,000.
Lynnfield-based Procopio Cos. closed on the $6.7 million transaction at 510 Washington St. in April despite the sudden uncertainties about high-density housing during COVID-19. With approximately a three-year permitting and construction period ahead, Procopio hopes that pandemic concerns will be a fading memory by completion of the complex.
“Our view is if we get a vaccine next year, that’s plenty of time to get back to some level of normal,” Procopio said.
As multifamily development spills from high-end Boston locations to inner suburbs, the city of Lynn has emerged as a favored location for new construction. More than 2,000 units are in predevelopment along the once-neglected waterfront, where a 331-unit apartment complex is nearing completion in early 2021 at the former Beacon Chevrolet dealership property.
New downtown zoning that allows 10-story buildings by-right cleared the way for the Caldwell to replace a surface parking lot, and will apply to the new 510 Washington St. development as well. The project will get its first public review on Tuesday during a meeting of the city’s site plan review committee, said James Cowdell, executive director of the Economic Development and Industrial Corp. (EDIC) of Lynn.
Growth Along Coastal Corridor
Two multifamily properties currently on the market will gauge investors’ appetite for a recently-completed complex and an approved development site.
Colliers International is marketing the 100-unit Ironwood apartments, a two-phase project completed in 2018 and 2019, on behalf of Procopio Cos. The 5-story wood-framed complex in suburban West Lynn is expected to attract offers of $330,000 to $350,000 per unit, said Christopher Sower, executive vice president for Colliers Boston.
“People have reacted well to [Procopio Cos.’] quality of construction. They self-perform on a lot of their projects and don’t cut corners,” Sower said.
And Newmark Knight Frank is marketing the former Lynnway Mart Indoor Mall & Flea Market property as a locally preapproved development site for a 550-unit, four-building apartment complex.
Lynn’s development boom is a natural progression for the near North Shore market, Sower said. Large-scale new multifamily construction has spread steadily from Chelsea and Everett to Revere and Lynn, driven by developers acquiring commercial and industrial properties near transit.
“You typically see local private developers go in and establish the markets. Now there’s institutional capital in Lynn, and once they establish rents, it’ll attract even more institutional investors,” Sower said.
Procopio views the downtown and Lynn waterfront as appealing to distinctly different clients. The downtown’s vibrant restaurant scene pre-COVID and 21-minute rail commutes to Boston’s North Station provide an urban environment with substantial discounts to downtown Boston rents. A $33 million renovation of the aging MBTA commuter rail station, located less than a block from the Caldwell, is scheduled to begin in 2023.
Leasing velocity at the Caldwell, which recently opened a sales office at 49 Munroe St., has been slower than anticipated, Procopio said. Uncertainty about the college population’s demand for off-campus housing, combined with competition from new Revere Beach developments in the same rent range, has been a factor, but the property hasn’t adjusted rents yet ahead of its anticipated Oct. 1 opening. Rents will begin at $1,730 for studios, $1,985 for one-bedroom units and $2,705 for two-bedroom units.
Median gross rents in Lynn, by contrast, were just $1,130 in 2018, according to the U.S. Census Bureau’s American Community Survey. The city does not have a minimum affordability component for multifamily developments.
Long-Term Bet on Waterfront
Along the waterfront long hidden behind commercial buildings on the Lynnway, transit upgrades are critical to the progress of one large development parcel and could enhance the desirability of several other long-watched sites.
Developer Charles Patsios is seeking approval by state transportation officials of a new public MBTA commuter rail stop at the former GE Gear Works factory site, where Patsios has proposed 1,262 multifamily units as part of a $500 million project. The property is located along the Rockport/Newburyport line, and use of the Gear Works stop was previously restricted for use by GE employees.
MassDOT spokeswoman Jacquelyne Goddard said the station’s future is not up for discussion at any scheduled meetings.
“At some point in the future the property’s use may be part of a larger discussion in connection with the housing development immediately adjacent to the station,” she told Banker & Tradesman.
Developer Joseph O’Donnell’s Belmont Capital is expected to submit a formal proposal next year for the 17-acre former Club Morgan property on the south end of the Lynnway, including 868 multifamily units and an unspecified amount of commercial space, the EDIC’s Cowdell said.
Steve Adams
And Boston-based A.W. Perry Inc. has long-term plans for a mixed-use redevelopment of the 17-acre former Garelick Farms property at 626 Lynnway that it bought in May 2019.
Cowdell said the overall level of interest by developers is the highest in his 30-year tenure, citing the Caldwell as a pacesetter for future projects.
“It opened the eyes to a lot of major players. I spent a lot of time in 2007 chasing developers and now they’re chasing us. Prior to COVID, we were meeting with them every single week,” he said.
