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505 Congress Street South Boston

Explore the potential for a multi-family rental development in the growing neighborhood of South Boston, with a central location on 505 Congress Street. Despite challenging site conditions and negative land value, the stable Boston economy and limited existing supply present a unique opportunity. This project development timeline may take 3 years, with a total development cost of $39,300,438.

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505 Congress Street South Boston

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  1. 505 Congress StreetSouth Boston Re-imagining the Boston Waterfront RECREATE, LLC Tim Johnson, Jennifer Balkcom, Scott Nguyen, Arvind Pai, Alison Novak, Charu Singh

  2. Introduction This is where it gets interesting! • Multi-family rental as the highest and best use • Central location in a growing neighborhood • Challenging site conditions • Negative land value!!! MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  3. The Boston Economy Stable economy. • Recovering from a period of negative growth • All demand drivers are stable • Vacancy rate is forecasted at less than 5% • Positive real rent growth projected • Leading growth industries Source: Torto-Wheaton Research 2005 MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  4. Supply Potential oversupply of office and hotel products. • Limited Existing Supply • Little hotel and office space • Even less multi-family residential • Convention center • Extensive Development in the Pipeline • 9M sf of retail, office, cultural and residential uses • Most residential development slated for sale MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  5. Market Summary Multi-family rental opportunity. • Boston office market is saturated but improving. • South Boston provides significant opportunities for retail. • Hotel market improving in Boston but will be oversupplied in S. Boston. • Residential demand in the area is a stable option. • However, condominium market has peaked. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  6. Regulatory Process Area is slated for large-scale development, site use flexible • Article 27P • Flexible open space and FAR requirements due to IPOD zoning • Affordable housing and street improvement requirements • Article 80: BRA Review • Large Project Review • Boston Civic Design Commission MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  7. Regulatory Analysis But challenges exist. • Areas of concern • FAR and site coverage ratio relief may trigger exaction fee • Meeting EPA & HUD standards for air quality and noise • Unspecified fee schedule • Strategies • Foster relationships with relevant BRA staff, neighborhood groups, and environmental NGOs • Look to comparable projects MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  8. Site Specifics 505 Congress St. is well-located but has many challenging site conditions. High Traffic Flows Odd-shaped parcel Shallow depth 100’ Adjacent to Central Artery Tunnel Vent Building T T T MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  9. Site Suitability The most common issue is access. • Office: FAIR • Retail: POOR • Hotel: GOOD • Residential: FAIR T T T MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  10. Highest and Best Analysis Multi-family rental is the highest and best use. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  11. Residential Market Area The target population is well represented within a 5 mile radius of the site. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  12. Residential Target Market Target: young, urban, service-based professionals. • Greater Boston Target Group • $65,000-125,000 income range • Service-based employment • Upwardly mobile, well-educated • Immediate Vicinity Target Group • Convention center visitors • Start-up companies MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  13. Site Design Residential Tower 107 units 98,900 net rentable sf Drop Off Point Egress Office-on-Demand 19,190 net rentable sf Service Area Retail Ground Floor Uses Ingress 70 parking spaces Landscaped Park Creative design optimizes this constrained site. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  14. Site Design LEED rated design. Indoor Technologies Photovoltaic panels Indoor air quality improvement systems Maximizing daylighting Energy efficient systems Dual-flush toilets Low-E glass Energy Star appliances Green roof MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  15. Project Development Timeline We anticipate 3 years for project development. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  16. Capital Budget Total Development Costs are $262/sf. MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  17. Project Level Financing Total Development Cost: $39,300,438. • Construction Loan • Equity Contribution • Permanent Loan • Key Bank; 18 month term, 75% LTC, floating Interest rate 6.54% • Key Bank, Investor’s Circle, Team; 13.6% blended return • Deutsche Bank; 10 year balloon, 30 year amortization, 80% LTC, fixed interest rate 5.6% MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  18. Project Feasibility Based on as-of-right FAR, project is not feasible. • Current Scenario: • FAR 4, 107 residential units • Land Residual: -$6.4M • Possible Strategies: • Increase FAR • Build over highway? • Remove Green Features • Decrease construction costs • Get rose colored glasses MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  19. 505 Congress Street Q & A MARKET STUDY PUBLIC APPROVAL SITE ANALYSIS TARGET MARKET DESIGN CAPITAL BUDGET PROJECT FEASIBILITY

  20. Thank you.

  21. Pipeline Supply

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