To read a related story about the "flipping"
of approved residential condominiums as office space, click here.
To read a SAND comment on this issue, click here.
Rather than just sitting on the properties,
they're being offered for sale - for use as office space instead
because that market is roaring.Thomas C. Palmer, The Boston Globe
SAND COMMENT: So, Archon/Goldman intends to sell a fully-approved condominium as office space "because the market is roaring"? What about zoning? The 100-Acre Plan? The Municipal Harbor Plan? The 100-Acre Plan? And what about the BRA variances from as-of-right zoning that were granted on this project that approved a multi-story addition on this historic building for use as a residential condominium? What about other area variances that will be handed to Archon/Goldman by the BRA (for example, construction of a new tower over 319 A Street) contingent on progress of the company's highly publicized mixed-use Master Plan?
10/18/2007
The Boston Globe
Fort Point Channel vision clouding over
Development team selling off properties as condo market cools
by Thomas C. Palmer Jr., Globe Staff
The man who helped reinvent New York's vibrant Soho and Florida's South Beach had a similar bold vision for Boston's Summer Street neighborhood. But that was a year ago.
Since then, Tony Goldman and investment partner Archon Group have sold seven of the 17 properties that were to be the building blocks of a revitalized 24/7, live-work-play district in the Fort Point Channel area.
And now they have put two more buildings on the market - 316 and 322 Summer St., historic warehouse structures whose renovations were to kick off the transformation of Summer and adjacent side streets.
The city approved the prominent brick buildings for conversion into luxury condos, but the residential market has cooled significantly in the last year.
"We found it very difficult to do that project in an economically feasible way," Goldman said in a telephone interview yesterday. "The construction costs being where they are and the market being where it is, it doesn't pencil out."
Rather than just sitting on the properties, they're being offered for sale - for use as office space instead because that market is roaring.
"This was bought under one scenario," said Michael G. Smith, a principal at Jones Lang LaSalle, who is marketing the properties for the owners. "If they can make the same sort of return without spending the time and energy doing so, my sense is they'll do it."
Bids are due today for the buildings, which Smith estimated could draw a dozen potential buyers and may ultimately sell together for about $18 million. Archon, a unit of the investment bank Goldman Sachs, paid $92 million for a big chunk of the old Boston Wharf Co. portfolio in 2005, and Tony Goldman joined as the visionary developer.
Tony Goldman (not related to Goldman Sachs) said the plan has always been to resell some of the properties and to develop others, creating a lively 21st century urban location where even families would settle.
"If you get the street where it needs to be, like a garden, it grows in a very healthy way," Goldman said in September 2006.
But after 316 and 322 Summer are sold, only two of the development team's original 10 buildings facing Summer Street will remain in its control. The others have been sold to four new owners.
Was last year's vision just an illusion?
"The vision that was clear, was articulated and presented to the city - that was truthful," Goldman said.
Goldman called Archon executives "great partners" but suggested he would not have given up as soon as they did on developing 316 and 322 Summer. "My history has been much more long term," he said. "They have a little bit of a different timetable. I knew that going in."
He acknowledged being disappointed at not being able to turn those two buildings into condos. "I would love to have done that myself, that's true," he said. "But I would be equally as joyful if that is tenanted with a creative class of commercial tenants that fill the streets, service the retail, and fill the restaurants."
"To hand it off to some chump just because he would pay the price - that's not in the cards," Goldman said.
Neighbors of the area, including tenants who were removed from the now-empty 316-322 Summer St. buildings, were skeptical after Archon and Goldman bought the properties and trumpeted their vision to remake the neighborhood for luxury living.
Some are upset now that, not only has that transformation not taken place, but a year later there's been little improvement.
"Buildings that had been full of small businesses and artists are now empty," said Valerie Burns, a 24-year resident of nearby A Street. "That has really created in certain parts of the neighborhood a much more desolate and even unsafe place."
Archon and Goldman have made some changes. They signed leases to bring LaMontagne Gallery to Melcher Street, house the boutique clothier Achilles at 281 Summer, and put the sports car showcase Otto Club on Pastene Alley.
Most visibly, the developers spent $200,000 to relight the ruby red "Boston Wharf Co. Industrial Real Estate" sign that identifies the historic district.
By contrast, though, Young Park of Berkeley Investments Inc., which bought a similar-sized piece of the Boston Wharf portfolio along Congress Street, is going full-bore on a trio of luxury condo buildings - even in the face of a soft market. The buildings, which open next April, will feature a two-floor, 15,000-square-foot restaurant complex owned and operated by Boston's Barbara Lynch.
Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.
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