We’re two years into the pandemic, and downtown Boston still feels like a ghost town. You know the story: dark storefronts, empty sidewalks, quiet lobbies. It might seem hard to find hope amid the tumbleweeds.
Not for John Usdan. The Midwood Investment & Development boss is betting big on the future of Boston’s central business district with his plans for a $350 million, 22-story tower, built for 1,700 office workers.
Several major real estate firms advised Usdan to go a different route, he said, by proposing labs for the half-acre block Midwood owns at Bromfield and Washington streets, in the heart of Downtown Crossing. Life science is red hot. Why not capitalize on it?
Nope. He stuck with offices.
What the heck was he thinking?
Usdan’s investment thesis, then and now, is based on a few key principles. COVID-19 will endure, maybe outlasting any of us; he’s not waiting around for it to go away. Most office employers will adopt a mix of remote and in-person work, so they’ll still need a physical space in which to collaborate and commiserate. And as their current leases expire, these companies will seek modern workplaces to attract the best and brightest talent. As for labs, Usdan said he worried about the additional money needed to outfit a building for life sciences, and how to repurpose the place if demand evaporates.
So he’s pushing ahead with an office tower, albeit one that will differ from typical Boston office high-rises in a few key ways.
Each floor will feature a heated outdoor terrace, and the ventilation system will only circulate air from the outside through the building. The tower would meet the city’s definition for zero-carbon emissions; there will be no natural gas burned for heat, and renewable energy credits will be secured to offset the electricity that tenants consume.
Midwood is nearing the end of the Boston Planning & Development Agency’s review, with the agency accepting public comments for another few weeks. It has been a long haul: The New York-based developer first invested in the four-building block in the mid-1990s, and finally secured full ownership in 2006. Midwood scrapped plans for a residential tower at the site during the Great Recession, and then came back in 2016 with a much taller condo-and-apartment concept, reaching 59 stories, amid the boom times of the 2010s. That giant project died amid widespread opposition.
So Midwood filed a notice with the BPDA in March 2020 that it would return with an office proposal, instead of residential. We all know what was going down that month. But COVID-19′s arrival did little to dissuade Usdan: In October of that year, his firm filed detailed plans for a building with nearly 400,000 square feet of offices with street-level shops and no parking garage, replacing a four-story block that has gradually emptied out in recent years.
This latest iteration, even at half the height of its predecessor, is not without opponents; much of the concern about traffic and size comes from neighbors, such as residents of the condo tower at 45 Province. Midwood’s reps say they’re trying to be a good neighbor by, for example, agreeing to improve the Province Court loading dock area shared with the Jewelers Exchange building next door.
Some of Midwood’s critics say the developer is ignoring the vast number of office buildings going largely unused in Boston today, with most white-collar workers still mainly working from home. A few other developers started work on office buildings before the pandemic: One Congress, Winthrop Center, South Station; taken together, they still have millions of square feet to lease. Surely, the naysayers say, another office project will just add to the glut.
Those critics may have a point. Brokerage firm CBRE listed nearly 25 percent of the office space in Boston’s central business district as available at the end of 2021. In comparison, business districts with larger residential populations are faring better: Back Bay’s availability rate is relatively strong, at 10 percent, and the Seaport is not far behind, at 12 percent. But it still looks like a recession in the Financial District and Downtown Crossing.
Brokers saw signs of a turnaround downtown in the second half of 2021. Two consecutive quarters of occupancy growth. A surge in office-building tour requests from prospective tenants. Several high-profile lease agreements by the likes of fund manager Eaton Vance, home-security provider SimpliSafe, and law firm K&L Gates.
But no one is ready to celebrate just yet.
Jeffrey Myers, research director at Colliers International’s Boston office, notes that there is far more office space under construction in Boston, on a percentage basis, than in the suburbs or in many other comparable US cities. And Ashley Lane, senior vice president at real estate firm Perry CRE, worries all these deals could amount to a game of musical chairs — one with more chairs than players.
If the downtown office market is a game, Usdan is confident he’ll emerge a winner. Brokers say employers want amenity-rich buildings, with modern ventilation systems and outdoor spaces — just the kind of building Usdan envisions.
In fact, Midwood argues that Boston needs more buildings like this one, to ensure companies don’t leave town entirely for better digs elsewhere. Boston’s offices should be geared for the future of work, not the past.
Usdan said he looks at how properties will change in value over decades, rather than years. In the “One Bromfield” block, with its proximity to all four major T lines and the city’s cultural and social resources, Usdan believes he has found a keeper. There’s something compelling about the bustle of the big city — the camaraderie and the chance encounters — that can’t be recreated in a home office.
Yes, Usdan is making a big bet that downtown Boston will turn around. But he’s also betting that his company will play an instrumental role in that revival.