505 Congress Street South Boston

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505 Congress StreetSouth Boston
Re-imagining the Boston Waterfront

• RECREATE, LLC
• Tim Johnson, Jennifer Balkcom, Scott Nguyen,
  Arvind Pai, Alison Novak, Charu Singh

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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
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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
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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
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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
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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
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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
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Site Specifics
505 Congress St. is well-located but has many
challenging site conditions.
High Traffic Flows
Odd-shaped parcel
Adjacent to Central Artery Tunnel
Shallow depth 100
Vent Building
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MARKET STUDY PUBLIC APPROVAL SITE
ANALYSIS TARGET MARKET DESIGN
CAPITAL BUDGET PROJECT FEASIBILITY
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Site Suitability
The most common issue is access.

• Office FAIR
• Retail POOR
• Hotel GOOD
• Residential FAIR

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MARKET STUDY PUBLIC APPROVAL SITE
ANALYSIS TARGET MARKET DESIGN
CAPITAL BUDGET PROJECT FEASIBILITY
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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
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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
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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
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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
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Site Design
LEED rated design.
Indoor Technologies
Photovoltaic panels
Indoor air quality improvement systems
Energy efficient systems
Maximizing daylighting
Dual-flush toilets
Low-E glass
Energy Star appliances
Green roof
MARKET STUDY PUBLIC APPROVAL SITE
ANALYSIS TARGET MARKET DESIGN
CAPITAL BUDGET PROJECT FEASIBILITY
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Project Development Timeline
We anticipate 3 years for project development.
MARKET STUDY PUBLIC APPROVAL SITE
ANALYSIS TARGET MARKET DESIGN
CAPITAL BUDGET PROJECT FEASIBILITY
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Capital Budget
Total Development Costs are 262/sf.
MARKET STUDY PUBLIC APPROVAL SITE
ANALYSIS TARGET MARKET DESIGN
CAPITAL BUDGET PROJECT FEASIBILITY
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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, Investors 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
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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
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505 Congress Street
Q A
MARKET STUDY PUBLIC APPROVAL SITE
ANALYSIS TARGET MARKET DESIGN
CAPITAL BUDGET PROJECT FEASIBILITY
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Thank you.

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Pipeline Supply