Luxury housing tower for Copley Place scrapped

Simon Property Group is shelving plans to build a 52-story luxury housing tower at Copley Place. Simon Property Group

After nearly a decade of trying to build a skyscraper atop Copley Place, Simon Properties is giving up.

The mall operator said it will shelve plans for a 625-foot, 52-story residential tower along Dartmouth Street above the shopping center, citing high construction costs and concerns that Boston’s luxury housing market may be getting overbuilt.

It would have been one of the tallest buildings in Boston, but was bedeviled for years by neighborhood concerns about affordable housing and engineering challenges building above the Massachusetts Turnpike and Orange Line. It was reviewed—and approved—three times by city regulators, the last in May 2015, but Simon never started construction.

In a conference call with analysts Wednesday, Simon chief executive David Simon said his company was scrapping the project due to “rapidly rising construction costs” in Boston and a worry there is more high-end housing coming than the market can support.

“I would encourage everybody to study what’s going in construction costs and what’s going on in supply and demand” in Boston, he said, according to a transcript. “It’s just not the right time to do it.”

In 2013, Simon pegged the cost of the tower at $500 million. It’s unclear what its cost would be today — a spokeswoman did not return calls seeking comment — but construction costs have escalated significantly in recent years.

Simon’s concerns come as some in the real estate community wonder if the current boom has peaked. Yet other builders are pushing ahead with high-end housing projects in Back Bay and downtown.

Just this week, Weiner Ventures unveiled plans for a 40-story condo building at Boylston and Dalton Streets, and Millennium Partners reached a deal to buy the Winthrop Square Garage for $153 million, to build a 750-foot residential tower.

And projects now under development say they’re selling well.

Pre-sales are strong at One Dalton, the Four Seasons-branded tower that Carpenter & Co. is building nearby, said veteran real estate agent Tracy Campion, who’s marketing the ultra-luxe units.

“I believe that the Simon cancellation is more a reflection on that particular project than it is on the vibrant Back Bay luxury market,” Campion said.

It’s hard to say yet if Simon‘s move is part of any broader trend, added Greg Vasil, chief executive of the Greater Boston Real Estate Board. He said he knows several builders who are holding pat, waiting to see where the market goes. But he doesn’t know of any hitting the brakes on developments that are already in the works.

“We’re probably at the peak, or bumping along,” Vasil said. “The question is, do we continue to bump along or do we start to come down. And everybody’s wondering what happens when that happens.”

Simon said it might someday bring its Copley Place tower back to life, but for now it’s on the shelf. Meanwhile the company will continue work on its expansion of Copley Place, including additions to the shops and restaurants, and to the Neiman Marcus department store, as well as a new entrance along the Southwest Corridor.