With or without the 2024 Olympics, the industrial area between South Boston and the South End is going to be remade into a new neighborhood.
So said Mayor Martin J. Walsh, who is determined to see the area known as Widett Circle redeveloped to continue the kind of growth that has transformed other parts of Boston.
“I think it’s something we absolutely move forward with, whether or not we get the Olympics,” Walsh said at a meeting at The Boston Globe Tuesday. “We have very little land mass to actually grow our city,” he said, adding that once redeveloped, Widett Circle could generate more than $100 million in taxes annually.
Getting to that point, however, would involve a building plan not often used in Boston: choosing a master developer, a single entity responsible for assembling all the different properties into one grand building scheme —
A master developer is the brainchild of Boston 2024, the group behind the bid for the Summer Games, as a way to privately fund the $1.2 billion cost of preparing Widett Circle for a temporary Olympic stadium.
In exchange for providing the financing for the area that Boston 2024 is calling Midtown, the master developer would enjoy sole rights to redevelop it as an 18-block neighborhood with thousands of residences, offices, new parks, and transit service. Boston 2024 said it designed the plans so they could be used even if the city is not named two years from now as host of the Olympics.
The master developer could be a single real estate company or a consortium of interests, but certainly would need to prove that it can access more than $1 billion in capital to get the project off the ground and that it has the experience to see a nearly two-decades-long construction schedule to completion.
“We have spoken with a few entities that have the track record and the financial wherewithal to do projects of this scale, and tried to incorporate their comments into how we’re thinking about it,” said Mahmood Malihi, copresident of Leggat McCall Properties, who helped Boston 2024 draft the Widett Circle plan.
Malihi said bidding would be open to local companies but he expects several national or international ones with deep pockets to step up.
“I think it would have great international, global appeal,” said Virginia Greiman, a Boston University professor who specializes in large infrastructure projects. “I don’t think you could limit yourself to just local developers because you need a very strong conglomerate to be able to carry this off and make sure the plans are viable.”
Michael Smith, managing director at the Boston office of the Canadian real estate firm Avison Young, said the site’s central location is sure to draw interest.
“So many developers and investors that come into our office come in and say, ‘Where’s the next area we need to be thinking about?’ ” Smith said. “They see what’s going on in the Seaport. They see the growth out from Cambridge into Somerville. A lot of people feel like they’ve missed the boat on these opportunities.”
While the payoff could be huge — 8 million square feet of valuable new real estate — the challenge is steep. The developer would have to relocate the 21 businesses at the New Boston Food Market in Widett Circle and a nearby cold storage facility, plus build a massive deck over the many railroad tracks crossing the 83-acre site to support Olympic activities and future development.
The master developer would pay for the deck construction, property assembly, and other site work. In return, it would get property tax breaks for as long as 40 years, as well as certainty from the city about how much it could build there.
A master developer could make it easier to line up financing, development specialists said, and the rezoning and permitting needed to increase the density allowed at the site. It could also choose to farm out pieces of the project to other companies.
Using a master developer doesn’t avoid all risks, though.
Andrew Glincher, chief executive at Nixon Peabody and a specialist in commercial real estate law, said it’s tough to estimate what construction costs would be just a few years from now, let alone after 2024, when most of the building would get underway.
Even tougher to predict: whether the city’s booming real estate market will remain hot enough to sustain as much as 8 million square feet of new development.
Walsh cited the Hudson Yards project in New York City as an example of the role a master developer could play. A joint venture of Related Cos. and Oxford Properties Group is building a massive mixed-use project over rail lines in an area that had also been considered for an Olympic stadium.
In Massachusetts, Somerville picked a master developer last year to redevelop much of Union Square, while master development rights for the former South Weymouth Naval Air Station have been held by a few different companies over the years.
Widett Circle, now seen as a prime development opportunity, was essentially hiding in plain sight for years, until Boston 2024 started hunting for an ideal spot for the main Olympic stadium. The focus turned to Widett last year.
“The Olympics definitely served to put the spotlight on Widett Circle,” said Michael Vaughan, a consultant who is working with the food wholesalers. “Anything that happened prior to this was speculative. The conversation around the Olympics really brought to the forefront what a significant and important site this is. This is the front door for the city of Boston.”