Financing secured, construction of tower at Government Center Garage starts next summer
Construction on Boston’s biggest office tower in decades is poised to start next summer after the project attracted a major new investor.
Carr Properties, of Washington, D.C., is taking a 50 percent stake in One Congress, a 1 million-square-foot, 528-foot skyscraper proposed for atop part of the Government Center Garage. The investment will put developers in position to start work in 2019 and to open the building in 2022, said Tom O’Brien, managing partner of HYM Investment Group, which is leading the project.
“This is huge for us,” O’Brien said. “It allows us to move forward with the building, and we can demolish half of the garage.”
The tower is the centerpiece of HYM’s six-building plan for redeveloping the hulking garage. Work on the first building — an apartment and condo tower on New Sudbury Street — has already begun. But the office tower is key to demolishing portions of the Brutalist-style garage, which hangs over Congress Street, and will unlock space for a plaza of smaller buildings along the Rose Fitzgerald Kennedy Greenway.
National Real Estate Advisors, the real estate arm of a pension fund for union electricians, has been HYM’s lead investor on the $1.5 billion complex, known as Bulfinch Crossing, since it was proposed five years ago.
Carr, which has a $3.2 billion portfolio of office buildings in and around Washington, will partner with NREA to finance construction of One Congress.
Terms of the deal were not made public, but the building is expected to cost $800 million to $1 billion, which would value Carr’s investment at $400 million to $500 million.
Carr has been eyeing the Boston market in recent years and wants to develop and own high-quality buildings in the city, said its chief executive, Oliver Carr.
“We love the fundamentals in Boston,” he said. “It’s a really innovative market, with health care, tech, and biotech.”
“Boston is going to be a great market for years to come,” he added.
Before work starts, HYM may need to sign at least one major tenant. Launching such a large office project without an anchor tenant — or “on spec” — is relatively rare in Boston.
O’Brien and Carr said no decision has been made on whether to go spec, but that given the wave of large corporate expansions in the city, they were confident they’d have an anchor tenant lined up by summer.
“The market is so strong right now,” he said. “There are numerous tenants in the market. We fully believe that when we get to the summer of 2019, we’ll have someone.”
Indeed, a number of blue-chip companies have recently signed leases for major expansions in Boston, including Verizon, which will fill 440,000 square feet in a new office tower at North Station. Amazon has a deal to fill a new building — and possibly two — in the Seaport, while DivcoWest gambled by building on spec at Cambridge Crossing in East Cambridge, and then won the North American headquarters of Philips Healthcare, which will occupy most of a 430,000-square-foot building.
HYM is one of several developers banking on that trend continuing as they plan downtown office towers. They include Millennium Partners, with its office-and-condo tower at Winthrop Square; Houston-based Hines, which has plans for an office-and-condo high-rise above South Station; and Don Chiofaro, who says he’ll soon file plans for his long-stalled 900,000-square-foot tower on the site of the Boston Harbor Garage.
But, as Carr noted, “One Congress is really the only tower that’s ready to go. That’s a big advantage.”