$435 million construction loan secured for Amazon's Seaport office
With the approval of a large construction loan, developers behind the building that will serve as the Seaport District office for Amazon.com Inc. are one step closer to making the development a reality. The news is just the latest in a string of exciting developments for the South Boston waterfront district, which has rapidly turned into the hottest new neighborhood in the city. Boston City Properties has been tracking the progress of developments across the Seaport, and we are here to bring you the latest regarding the tech giant’s most recent activities in Boston.
Photo courtesy of WS Development
At a press conference earlier this month, WS Development and PSP Investments announced that they had successfully closed on a $435-million construction loan through Citizens Commercial Banking on June 7, 2019. With funding in place, WS and PSP – an Ottawa-based Canadian investment management firm that is also known as Public Sector Pension Investment Board – are now ready to proceed full steam ahead with the project, which will provide massive amounts of workspace for the e-commerce behemoth.
Upon completion, which is slated for some time in 2021, the new building will stand 17 stories tall and will offer around 500,000 square feet of space. Located at 111 Harbor Way in the in-development Seaport Square development area, the building will be able to accommodate upwards of 2,000 workers for the tech company, whose presence has been expanding rapidly around metro Boston for nearly a decade now.
The company that provided the $435-million loan, Citizens Commercial Banking, did so because the deal is sure to turn out to be a sweet one. In a statement, the firm’s head of commercial real estate finance, Gary Magnuson, cited several of the benefits that the new development will bring about. In addition to funding the construction of the building itself, the loan will help to create new jobs in the area and will help to strengthen the Seaport District’s growth and its reputation as a major commercial area in metro Boston.
A Brief History of the Deal
The development of the new Amazon building has been covered by Boston City Properties since its inception. Long before the building’s groundbreaking, which happened in May 2019, the tech giant was in negotiations with developers and local and state officials to determine whether or not the site would suit its needs. Although negotiations for this building weren’t nearly as intense as they were for the company’s second headquarters – also known as HQ2 – the city, state and company had to make some concessions to secure the deal.
One of the conditions that was imposed by the e-commerce giant was for an option to expand into an adjacent parcel should it become necessary. The site of the in-construction building is known as Block L4 of the Seaport Square development area. Directly adjacent to it is Block L5, the site of a 610,000-square-feet building. Should the online company require more than the approximately 430,000 square feet that it’s getting with Block L4, it can expand into Block L5.
Of course, the tech giant didn’t select the site strictly out of kindness. The company will enjoy considerable tax breaks that will grow in step with how many people it hires at the new location. It will receive $5 million in municipal tax breaks for hiring 2,000 people. Should the company hire at least 4,000 people – a move that would require the expansion into Block L5 – it will enjoy $10 million’ worth of such breaks.
Amazon in MA
The new building is just the latest in what seems to be the tech giant’s continuous growth and expansion across the greater Boston region. Already – before the new building even opens – the company employs approximately 4,500 people across the state of Massachusetts. In Boston’s technology hub alone, it employs around 1,800 workers. The new building at Seaport Square will add at least 2,000 more jobs, bringing the local total to 3,800 and state total to 6,500. Should it expand into Block L5, it will employ 5,800 people locally and 8,500 across Massachusetts.
Currently, the technology behemoth has several offices in the state. Way back in 2012, it acquired Kiva Systems of North Reading for $775 million; that acquisition became the company’s wholly owned robotics subsidiary. In Boston, it employs 900 people at its office at 27 Melcher Street and hundreds more at its location at 101 Main Street in Cambridge’s Kendall Square.
Since the year 2012, the company has invested more than $3.6 billion in the state, including in new building infrastructure and compensation for its various teams, which span areas like Alexa and the company’s Web Services division. On top of that, it is estimated that the company’s activities have contributed around $2.4 billion to the state’s economy and have indirectly generated 7,000 new jobs on top of the more than 4,500 that it has directly created.
Additionally, the company has been taking steps to secure new talent well into the future. One prime example is its Future Engineer program, which is active in the Boston area. The program serves underserved and low-income students at more than 35 high schools throughout the region. It funds introductory and Advanced Placement computer science courses that help to provide students with a strong foundation from which they can pursue tech jobs, which are becoming more and more abundant across metro Boston thanks to the tech giant’s ever-expanding presence.
About Seaport Square
The new building, which will add hundreds of thousands of square feet of workspace for the e-commerce behemoth, has helped to increase the visibility of WS Development’s highly anticipated Seaport Square development area. The project has been in the works for some time. Upon completion, it will offer a total of more than 7.68 million square feet. This will include around 3.2 million square feet for residential development; around 2.8 million square feet for workspace; roughly 480,000 square feet of hotel development and around 1.12 million square feet for entertainment, restaurants and retail. The development area is also slated to include a cultural and educational center.
With the tech giant as a major tenant of a huge building there, Seaport Square is already off to a good start. The master-planned project, which spans more than 23 acres in the Seaport District, was developed by Boston Global Investors in conjunction with WS Development. Although it won’t be complete until next year, it has already acquired many notable tenants.
Seaport Square will include more than 3,000 residential units and more than 2.2 million square feet of below-ground parking that will include spots for 6,000 vehicles. The area will also include more than 1,000 hotel rooms in anticipation of its draw as a business and commercial center. Incredibly, 40 percent of the planned development will be dedicated to open space, which will include the 1-acre Seaport Common and Sea Green, a multipurpose green area that will include a kids’ play area, a dog park and a half basketball court.
Although the arrival of the tech company is a big deal, Seaport Square has already been put on the map thanks to One Seaport Square, the $600-million mixed-use development that is the largest to be developed in Boston in more than 30 years. Boasting more than 1.5-million square feet, it sprawls over 3 acres and includes two residential towers and around 250,000 square feet of retail. This includes what is known as Courthouse Square, a 17,000-square foot open space running between the two towers that is lined with retail establishments. It also provides a pedestrian link to outlying areas, which will make the area more walkable.
What Does This Mean for Seaport District Real Estate?
There’s no question that the technology company has already had a massive impact on greater Boston, but what does its arrival in the Seaport District mean for that neighborhood’s real estate market? Boston City Properties anticipates that the new building and all of its workers will only increase demand for housing in the Seaport. Demand for luxury housing, in particular, is certain to increase. Such housing is already in high demand throughout Boston – and in very short supply despite ongoing construction efforts – so we expect for real estate values to climb even higher. Apartment rents are also sure to rise even more, so the best course of option for anyone who is looking to snag a place in the Seaport is to act quickly.
How Boston City Properties Can Help
Boston City Properties expects big things from the ongoing development activities at Seaport Square in the Seaport District, and the addition of thousands of jobs for one of the world’s largest and most successful companies is just the latest example. Houses, condos and apartments in this neighborhood will become even more in-demand as time goes by, which is why it is crucial to act now if you want to experience life in one of the city’s most exciting new neighborhoods. With our huge online database of searchable MA real estate listings, including rentals, Boston City Properties is the name to trust for guidance and information when buying or renting anywhere in Boston or Massachusetts. We’re ready to help, so give us a call for more information.