Putting a price on air is never easy. But Massachusetts officials have finally struck an accord with developers for a two-acre expanse of empty space over the Massachusetts Turnpike in Boston, and the number is a record-setter: $55 million.
That’s how much life sciences landlord IQHQ and local developer Meredith Management will pay the state Department of Transportation for the right to build a roughly 90,000-square-foot deck over the highway near Fenway Park, connecting Beacon Street and Brookline Avenue. The deck would support the second phase of Meredith’s long-awaited Fenway Center complex: a $1 billion, two-tower complex that will house about 700,000 square feet of offices and labs for life sciences companies.
A MassDOT spokeswoman confirmed that the $55 million price represents the most a developer has paid for a long-term lease for any of its properties, land or air. The state could get even more money under a deal that would split cost savings on certain expenses.
MassDOT’s board authorized the state to enter into the 99-year lease on Monday. The price was roughly based on the value of a comparable piece of land with permits for a similar life sciences complex, minus the costs associated with building the deck.
Meredith president John Rosenthal said Wednesday that he expects construction on the second phase to begin in October. The deck will take nearly two years to build, if all goes well, and then the two towers and podium with a garage will take another two years.
Proposals to build across the Pike have failed miserably over the past few decades; the last major deck to go over the busy highway was the one that supports Copley Place, in the 1980s. Perhaps the most famous of these debacles was the Columbus Center project that got sidelined roughly a decade ago.
It was another air rights imbroglio that prompted the Baker administration to up its game. Mall owner Simon Properties bailed on building a luxury housing tower at Copley Place in 2016. Governor Charlie Baker then instructed aides to analyze what went wrong, and what state officials could do better.
The answer included better communication with private-sector partners, and more flexibility. Speaking at an Urban Land Institute event on Wednesday, undersecretary of transportation Scott Bosworth said the state bureaucracy was not set up to efficiently handle air rights deals. With the Simon project, his team concluded the design review process was too cumbersome, too conservative, too time-consuming.
Bosworth said improvements to the state’s process should benefit other air rights projects coming down the Pike: the Boston Properties project over Back Bay Station, a luxury hotel/condo proposal on Boylston Street planned by Peebles Corp., and the massive complex underway at South Station. There’s also interest in building above the Alewife and Sullivan Square T stops, and Bosworth said Simon is even talking about returning with alternative plans for Copley Place.
Developer Samuels & Associates recently started work at the western end of Newbury Street on an air rights project over the Pike that will include an office building and a hotel. Unlike the second phase of Fenway Center, much of the Samuels development will be built on solid ground.
The first phase of Fenway Center is almost done; that project, consisting of two apartment buildings, went up almost completely on land.
In contrast, this next phase will be built almost entirely in open air. Fortunately for Meredith, the life sciences sector in which IQHQ, a California-based real estate investment trust, specializes is proving to be the hottest part of the commercial real estate market these days, particularly during the COVID-19 pandemic.
Rosenthal also attributes the recent success to achieving a working partnership with the state, the city, and the neighbors.
Then there’s arguably the most important factor: persistence. After nearly 20 years of Sisyphean efforts to get something built over the Pike, Rosenthal can finally see the mountaintop.