In the past week, the Boston Globe reported a series of new developments in the pipeline for Boston. As the credit markets froze over, many such developments in the city were put on hold, perhaps most infamously the redevelopment of Downtown Boston's Filene's building. The shell of the old department store was only recently covered with a tarp to prevent further damage while a gaping hole yawns immediately to the north.
However, with credit easing even as high unemployment persists, investors and banks are starting to open their wallets. Where they have not done so the Commonwealth of Massachusetts seems more than willing to do so. In particular are three projects, which have been resuscitated and/or unveiled that point to a resurgence of development in Beantown. Unfortunately, these projects may not be in the long-term interests of the city or, as symbols of similar developments elsewhere, the overall economy.
The projects in question are the relocation of upscale retailer LouisBoston to the South Boston waterfront; the Fenway Center to be built over the Turnpike near Kenmore Square and Fenway Park; and more generally, the redevelopment of the Boylston Street area near Fenway Park.
Not too long ago, the Globe reported that LouisBoston would vacate its Newbury Street building upon the expiration of its lease for a then-unspecified trendier location. The Globe article dates to before the worst of the recession hit, however, there were concerns about a number of retailers vacating the simultaneously posh and offbeat shopping strip. Coming to a head well before the financial crisis, numerous commercial landlords on Newbury had bought their properties for now-overpriced amounts. It forced hefty increases in rents and pushed many retailers away. Only after landlords realized that they couldn't expect such rents and their mortgage holders understood likewise did rents drop. Even so, many vacancies remain.
LouisBoston is, however, in a prime spot, which will probably attract attention from larger retailer interested in getting into the Boston Market. However, the move to South Boston is most troubling. Although touted as a Renaissance, the South Boston waterfront redevelopment, underway ever since the Ted Williams tunnel went online, cannot be described as much more than a natural outgrowth of downtown. Indeed the further away from downtown you go, the more desolate and semi-industrial the landscape becomes. A satellite view reveals the ocean of parking. The proposed spot for Menino's thus-far stillborn City Hall relocation rubs shoulders with piers, construction equipment and seafood wholesalers.
The Globe blurb on the relocation to Fan Pier (the specific site) notes that it is part of a larger project that includes restaurants, residences, and office space. These offices and more importantly residences will be geared primarily to the higher end of tax brackets. This is not at all surprising, given that any waterfront property will have prime prices and undemocratic as it is, that's the way the market goes. What is troubling is the sudden jump of a retailer across the city to unproven territory. If our insights are correct, LouisBoston will not start a trend, but if it does, what becomes of Newbury Street? What becomes of still-suffering Downtown Crossing? Even the rich can only spend their money in so many places.
Another project of note is the Fenway Center. Unveiled some time ago, the project calls for converting a swath of parking and (with the help of a platform over the highway) the nearby stretch of the Turnpike into offices, residences and amenities. The project stalled along with others like it, in part because of the cost of building a platform over the Turnpike. Governor Deval Patrick's administration recently announced state support for the platform's construction. The cost will be paid back in the form of lease payments, but somehow it will end up costing taxpayers something. Aesthetically, the project is designed to integrate into the area well. It will respect much of the low slung space nearby and is a model for transit oriented development. However, it is doubtful that the offices and residences will do much for any, but the wealthy who can afford such space. The public green space and other public areas notwithstanding, its stated goals to weave transportation at Kenmore Square and a redeveloped Yawkey Commuter Rail station will likely not be very affordable for most people who ride commuter rail or get boxed in on Pike traffic.
Additionally, the influx will, assuming the Red Sox and Boston University retain their fans and students respectively, dramatically inflate real estate prices. Affordable, family oriented food service could easily dry up once current leases are up. Students at BU and the other nearby colleges, not all of whom are flush with Mommy and Daddy's money, could find themselves priced out of the establishments that take the place of the old. Perhaps more insidiously, if economic conditions falter again, which of course they will albeit perhaps not as badly, a turnover of higher end establishments will create turmoil in an otherwise stable economic area.
On top of the Fenway Center there exists a push, emanating largely from City Hall to scale up the overall Fenway neighborhood, largely because that is where Fenway Park is. Why this is so necessary is hard to say. The Fenway area is not the city's best or most polished. It is a grab bag of students and professionals who have chosen it for its proximity to schools and medical facilities. That alone has led to an increase in real estate prices, but not changed the character of the neighborhood dramatically. Crime is not overwhelming, but noticeable and the Fens, the park from which the baseball park and neighborhood get their name, is notorious for late-night, ahem, couplings, shall we say? Either way, Fenway Park is in a decent neighborhood compared to Yankee Stadium and is better integrated into the overall urban landscape, than the Sports Complexes in South Philadelphia.
Some recently built structures like Trilogy between Brookline Avenue and Boylston have integrated themselves nicely into the neighborhood. Another building further up Boylston, 1330, has struggled, but is finding ground-level tenants at least.
Menino's push for redevelopment would eradicate the garages and other dowdy businesses like the Howard Johnson's motel. The question again is who will buy and/or rent these expensive new apartments and patronize the high-priced shops and restaurants. The story of 1330, opened in the middle of the worst of the economic turmoil, suggests very few. Developers of a project built over the Green Line's D portal had to lease apartments directly after sales foundered during summer 2008.
All of these developments point to a policy coming out of the Mayor's office that is encouraging Boston's move toward what a recent copy of TimeOut's Boston guide called a "boutique city." In other words, a city that increasingly caters to its wealthiest residents and few if anybody else. Tourists, rich and poor, will fall into this group as well. Let's face it, whether your vacation is on a budget or an expense account, it is coming from some discretionary source. Boston is not alone in this venture. Similar charges are leveled against New York, not just on Manhattan, but recently in Brooklyn and Queens as well. Mayor Bloomberg has implied that the added income from property taxes can be used to help the poor with services. The jobs generated from such developments, however, will never allow them to move beyond any need, however real, for those services.
Whether this is Menino's intention or not is uncertain. Nonetheless, as Boston has generally charted a development path similar to New York's over the past decade and Menino essentially is emperor of development if not the whole city, it is possible. The question also must become can a city sustain such a widening swath of luxurious retailers, hotels, restaurants, and residences? Boston has incredible wealth and it a recent report that upmarket retail sales are up nationally. Upmarket in the report is considered the top 10% of retail prices.
That news should be taken with the proverbial grain of salt. The rich have always weathered these storms better than most. Even during the depression, the temporary loss of investment income for the wealthy only slowed, not ended their overall income. Moreover, luxury retailers and wholesalers could weather a storm better than their downmarket cousins for a simple reason. Their markup was higher and they could simply opt to buy less good and their distributors and the manufacturers could make like changes until conditions improved.
There is, however, a stark difference between now and then. A chronic tendency for Americans of all income brackets to overspend. The last year may have instilled some humility in consumers, but not necessarily enough or at all in those who may not make a fortune, but still have $10,000 credit line and the will to use it. In other words, that luxury market may not be exclusively powered by high-powered stock brokers, lawyers, doctors, and Indian chiefs. Living beyond your means points to middle income earners, particularly those without families yet, to spend and charge hundreds of dollars not just because they can, but because it is there.
Imagine the financial crisis of 2008, except at a to be determined date in the future. A credit card crisis could be just as devastating to the economy, if not more so. Cascading off of that would be a commercial real estate crisis, something all but the sunniest of economist fear remains a possibility even now. Above all else, almost the entire labor market remains weak and will remain so for months if not years.
Now. Let's put all of this gloom and doom aside and remember something else. It goes back to the "boutique city." Is that what we really want? A city that caters to the wealthy and increasingly excludes its most vulnerable citizens in an effort to save them while driving out everybody in between? Some legacy for the birthplace of American freedom.
Bill Dusty's Springfield Intruder recently wrote in "Build Now, Build New" about how there is an impulse in Springfield and elsewhere to build something new even if there is not obvious need for it, pointing to the Courthouse or new school buildings. If such government building programs are the crack of Springfield, leaving it poor and with bills to pay, then many of the luxury buildings and developments in Boston are that city's cocaine. Sexy and refined, but just as dangerous in the long run, these developments are pushed and supported out of a need to find new revenue (and jobs)...anywhere it can. Recall what WMassP&I noted a few months ago re Longhill Gardens. Cities simply cannot afford to give up any chance they have for money. In Boston's case, longterm, the new will replace, not compliment the old. The old suffers a decline turning the city into a "Whack-a-Mole" game. Strike one economically stagnant mole another pops up elsewhere on the board...or on the map. As in the case of Chestnut Accelerated School, mentioned on the Intruder, little if any economic preventative maintenance is made to keep Downtown Crossing and maybe Newbury from disintegrating as shopping districts.
The answer is not simple and we do not pretend to have it. There are of course monumental special interests involved some of which Dusty mentioned in the Intruder like contractors and the construction unions. Others are the banks and landlords and any-greedy-body with a stake in the process. Lip service is paid to undoing damage done by highway projects like the Turnpike. The Fenway Center's website calls it suturing, but unlike the Central Artery in Downtown, the MassPike merely widened a cut built eons ago by the Boston and Albany Railroad's ancestor companies. Any wounds go back to well before the errors of highway construction.
A lot of emphasis is put on affordable housing, which is of course presently a hot button issue in Springfield. Boston could certainly do more, but it should also look to steering middle-income housing developments to encourage a growth in the middle class. Springfield, by comparison, has no shortage of middle class housing, unlike the state's capital, but then again the Pioneer Valley largely lacks any demand for luxury developments. Boston should do what it can to make more of the city affordable to families--working and middle class--and not resign itself to exiling them to the suburbs.
There are forces out there guiding this beyond just the Boston Redevelopment Authority, the city's primary planning, development, and job creation agency. However, as the gatekeepers, they set the tone. "They," the individuals that run the BRA owe their position and ultimately their allegiance to largely one-man: Thomas M. Menino, Mayor of Boston.
*Mastercard, Bethesda, MD, and Menino photos from Wikipedia.