Saturday, May 11, 2013

Boston commercial real estate -- now officially all the way back... (Blog Post No. 2013-5)

Unshrouded at last -- Restarting work on the Burnham Building officially
signals the end of the downturn.

Faithful readers of this weblog may recall that your correspondent referred, albeit somewhat in passing, to the "Filene's Pit" in a post just over year ago about the commencement of construction on the Millennium residential project at Hayward Place. At the time, the reference was to the that fact that the Filene's Pit (a.k.a., "One Franklin") remained just that - a pit - as it had stood since the fall of 2008, when construction abruptly halted and the half-demolished rear of the Burnham Building was unceremoniously shrouded in tarp as a result of the real estate and equities market meltdown. The fact that the Burnham Building, the heart and soul of the old Filene's department store assemblage, is now being unshrouded and construction re-started on the project is the unofficial signal that, ladies and gentlemen, commercial real estate in Boston is all the way back. In the language of the CPI Index, if 2008 = 100, then 2013 = 100 as well. Mojo now restored. Allow me to explain.

Filene's department store was unquestionably the leading symbol of downtown Boston for the entire 20th century. Edward Filene is well-known for a number of innovations in the highly competitive urban department store industry, but for RTUF, his importance lies in commissioning Daniel Burnham, one of the major American architectural players of the early 20th century, to design a new home for the retailing behemoth that quite literally was the anchor for Downtown Crossing for decades. Burnham obliged with a fantastic piece of urban fabric - a building that defines its location as well as anything you're likely to find anywhere, made all the more poignant by Burnham's untimely death around the time of building's completion in 1912, leaving it his only work in Boston.

Fast forward almost a century, and Filene's fell on truly hard times in the early 2000s, losing ground to rivals and not finding its footing in the brutally discount-dominated market, and suffered the final indignity of being closed by their common parent company in favor of the Macy's (formerly the headquarters of arch-rival Jordan Marsh) across Summer Street. Still, at first, the future of the site looked bright, as local developer John Hynes, son of a former mayor of Boston and the hero of One Lincoln, brought Gale International and Vornado to the site, permitted it rapidly, and started demolition in early 2008. However, the fall of Lehman Brothers intervened within the year and construction activity halted, virtually on a dime, at the point at which (1) the incredibly crappy 2-3 story (does it matter, the thing had no windows to help us out?) modernistic concrete nonsense that stretched from the Burnham Building's side to Franklin Street, (2) the entire backside of the considerably more worthy edifice at the corner of Franklin and Hawley streets had been pulled off in a classic facade-ectomy, and (3) the resulting exposed sidewall of the Burnham Building was left to look, sadly, into the 2-3 story pit that had been dug to be the foundation of the new, cantilevering tower that was to rise above it all.

You have to admit, dear reader, that the story would be sad enough had it ended there and been picked up only this spring, but, alas, that was not so. No, in a kind of Greek tragedy-cum-nightmare, the resulting blighting influence of the Filene's Pit was made all the more acute by the resulting feud between Vornado and the Mayor over a purported quote from Vornado's chief executive to the effect (and I paraphrase) that in some cases it might strategically make sense to leave blighted sites blighted in order to incentivize the affected municipality to come to the table with more subsidy to restart development. Needless to say, this did not sit well with the current occupant (you may have seen RTUF's recent pre-valedictory to the Mayor in late March here), who took this kind of talk personally, and effectively demanded that Vornado step off the job if anything was ever going to happen once the worm turned. Well, before the worm turned, Vornado and Gale ceded control to Millennium Partners (our friends from down the street at Hayward Place), who redesigned the old cantilevered tower, making it taller and simpler, and have now, at long last, restarted construction on the Filene's Pit. Downturn now officially, for those of you keeping score at home (as Lindsey Nelson used to say on Channel 9, immediately after a play had been officially scored), OVER.