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WORK TO BEGIN ON BOSTON’S WATERSIDE PLACE

BY DEBRA HAZEL

A $400 million “minicity” is set to break ground next year on one of the last lots available for development in downtown Boston. The 12-acre mixed-use project, called Waterside Place, is to go up in the South Boston waterfront district.

“This is the missing piece,” said John Drew, CEO of the Boston-based Drew Co., which is building the project as a joint venture with Chicago-based Urban Retail Properties Co. called Core Development. “This is finishing the puzzle.”

The Boston puzzle is already made up of a concentration of retail space that includes Copley Place, The Shops at Prudential and Faneuil Hall. But recent development activity has focused on the office and multifamily sectors, so the retail vacancy rate has stayed flat at 6.3 percent. Retail rents, meanwhile, are expected to rise by 2.5 percent by year-end, equivalent to an average of $20.25 per square foot, according to research from real estate investment brokerage Marcus & Millichap.

The Waterside Place 1.2 million-square-foot first phase will include 570,000 square feet of retail and entertainment, 275 high-rise condos, a 450-room hotel, an 18,000-square-foot tourist center and parking for 2,300 vehicles. The 700,000-square-foot second phase will contain 130 condos and a 300,000-square-foot office building.

The complex will be located just off the intersection of interstates 90 (MassPike) and 93, and across from the new Boston Convention & Exhibition Center, the largest venue of its kind in the Northeast. It will also be near the World Trade Center stop on the transit system’s Silver Line.

Drew Co., which also developed the Seaport World Trade Center near the site, holds a 95-year lease.

Drew Co. and Urban Retail previously collaborated on the Ronald Reagan Building & International Trade Center in Washington, D.C. Further, JMB Realty Co., as Urban was once known, developed both Water Tower Place, in Chicago, and Copley Place. But the tenants at Waterside Place will be different from the high-end Copley and the more-entertainment-oriented Faneuil Hall. Plans call for a department store, a multiplex cinema and specialty apparel in the moderate-to-upper range. “This is a regional mall site, pure and simple,” said Ross Glickman, CEO of Urban Retail, which will handle the leasing and management.

Local design firm Kallman, McKinnell & Wood created the master plan. Some architectural details are still being finalized even as anchors are signed on, says John Gish, a design principal at Seattle-based Callison Architecture, which is designing the retail space.

The retail constitutes one long building with a glass-filled transparent spine. As such it eschews the Colonial look of much of the Boston area in favor of a contemporary style that is “much cleaner, much more transparent, with a lot more glass,” Gish said. “This is not just a giant box. Visually, it has to be inviting and welcome.”

The design will also take full advantage of the location near the waterfront. The condo towers, for example, will offer a full view of the water, as will the retail.

The developers are starting on the mammoth project just as Boston’s job market is expected to turn a corner. Marcus & Millichap predicts that the market will gain 43,500 jobs this year, recovering many of the 52,000 jobs lost in 2003.

The team expects sales to exceed $400 per square foot the first year of operation. That isn’t surprising, given the demographics. The neighborhood gets residential, tourism and business visitors from the World Trade Center complex, but the Waterside Place market extends far beyond the blocks around the complex, says Glickman.

The population within a 15-mile radius was 2.26 million as of last year. That is expected to grow to 3 million by the project’s opening in 2008. Average household income, which was nearly $76,000 last year, should grow to nearly $85,000 over the same period.

Glickman also expects heavy traffic from its location near two major interstates and its proximity to Logan International Airport (less than four miles). “Anybody who has to go anywhere in Boston,” he said, “has to go through this site.”