Ringed by barbed wire, the decrepit factory on New Street was fallow for decades, an emblem of the untapped potential of East Boston’s waterfront.
For years, real estate companies proposed transforming the four-acre site, only to delay because of financial difficulties or broader concerns about taking the redevelopment lead in a rundown corner of the city.
But on Wednesday, construction will finally begin on a $132 million effort to rebuild and expand the former confectionery plant into a 259-unit apartment complex. The 16-story development will include a new section of the public HarborWalk and retail space overlooking the water.
“We’re investing in East Boston because we think it’s got a great future,” said Kelly Saito, the president of Gerding Edlen, a Portland, Ore., development firm. “We see this as the beginning of a lot of changes that are going to start happening.”
The complex will be the tallest building on the East Boston waterfront, with seven stories added to the existing nine-story industrial building. The redevelopment will create a water taxi landing and 158 parking spaces.
The project, at 6 New St., is one of several developments on the streets around Maverick Square. Next door, the city is rebuilding LoPresti Park, and another developer, Roseland Property Co., is leasing 176 new apartments at the Portside at East Pier complex. Other large residential developments are planned for Clippership Wharf, the Hodge Boiler Works property, and sites along Border and Sumner streets.
While the projects are revitalizing the waterfront, some neighbors worry they are already inflating rents and exacerbating the divide between current residents and newcomers who can afford to pay $2,000 to $3,000 a month to live on the waterfront.
“These prices have ramifications for our neighborhood,” said Gloribell Mota, lead organizer of Neighbors United for a Better East Boston. “How do we ensure that people can coexist and that the families that currently live here get to stay?”
In July, her organization wrote a letter calling on the Boston Redevelopment Authority to halt projects on East Boston’s waterfront until better agreements can be reached to increase the supply of affordable housing and provide other economic benefits for residents.
The letter also called on Gerding Edlen to offer construction jobs to East Boston residents and set aside 25 percent of the units as affordable housing. City regulations require developers to designate 15 percent of their units as affordable — or pay to have those units built elsewhere.
Saito said the company has opted to pay $7.8 million to have about 39 units built elsewhere. He said that will allow him to lower the rents on market-rate units at 6 New St.
“Our strategy is to offer the units at some discount to what you would otherwise pay downtown,” Saito said. “If I have all the affordable units on site, it forces me to raise the rents on all the rest of the units, so the discount goes away.”
Rents for the units at 6 New St. — studios and one- and two-bedrooms — have not been set. Saito said the units will be several hundred dollars a month less than apartments under construction downtown. Comparable new units in downtown Boston are renting for $3,000 to $5,000 a month.
He also said Gerding Edlen has recommended the $7.8 million payment be used to help build affordable units at Coppersmith Village, a complex of apartments and townhomes on Border and Liverpool streets.
Mayor Martin J. Walsh, who recently announced the goal of building 53,000 housing units in the city by 2030, has offered strong support for Gerding Edlen’s project.
“The 6 New St. project . . . will help us get hundreds of units closer to our housing construction goals,” Walsh said in a statement. “The retail amenities, connections to green space, and activation of the HarborWalk are benefits for the entire East Boston community.”
Casey Ross can be reached at email@example.com.