THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
Paul McMorrow

As Filene’s developer sits, an opportunity may pass

Construction on the Filene’s site in Downtown Crossing has been stalled for years. Construction on the Filene’s site in Downtown Crossing has been stalled for years. (Wendy Maeda/Globe Staff)
By Paul McMorrow
February 11, 2011

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ACROSS BOSTON, once-dead building projects are showing signs of reanimation. From South Boston to Chinatown to the Back Bay, ambitious residential projects that were once indefinitely stalled by the recession are now targeting spring or summer construction dates. The hectic groundbreaking schedule should prove to be a welcome test for Mayor Tom Menino, who is currently battling the twin ailments of a bum leg and a bum economy.

But it could prove to be less welcome news to the owners of Boston’s most infamous stalled project: the rotten pit at Filene’s.

The former downtown department store site was to have become a $700 million office, hotel, and condominium tower. But office and condominium construction remains all but impossible to bankroll.

Apartments are another story. Those can get built right now. And so developers, sidelined for the past three years by a busted housing bubble, are rushing headlong into apartments. No less than eight builders have said they are planning to break ground in the coming months. That list includes construction at a pair of long-delayed building sites in the shadow of Filene’s — sites that used to pass for downtown eyesores, before there was a crater festering in the middle of Downtown Crossing.

The new apartment rush is fueling hope across the city that this suddenly-rising tide could lift up Filene’s. Its owners, a partnership led by Vornado Realty Trust, pulled the plug on its development plan in 2008, and the site has been a blight ever since.

The site is now for sale, and it’s widely assumed that any new owner would structure a redevelopment plan around an apartment tower. The proof in that theory would seem to be the sudden reinvigoration of the nearby Kensington Place and Hayward Place apartment developments, as well as a slew of new residential projects that have been pitched for the Fenway, the Seaport, and the West End.

But what’s good for the rest of the city may very well be another setback for the Filene’s project. The new Boston apartment rush could easily drown any would-be developer at Filene’s. Nearly 2,100 luxury apartments are currently slated to hit the construction pipeline this year. All will hit the market, and will have to be filled, before a still-hypothetical Filene’s apartment tower would open its doors. Thousands of additional units are on the drawing board. All represent very real competition to the Downtown Crossing site.

Vornado controls the future of the Filene’s site, just as it always has. The New York-based developer was the lead investor in the Filene’s acquisition. The $16 billion company has chosen not to put its financial capacity to work in reinvigorating the stalled development.

Likewise, Vornado has always insisted on getting paid handsomely in any potential sale, even though the land its group paid $100 million for has since lost between $50 million and $70 million in value. That stance has reportedly continued since Vornado put the downtown site up for sale late last year. The company wants to retain lucrative retail space at the site, and it also insists on profiting from the rights to build a high-rise above.

There’s been no shortage of speculation about the personality politics behind Vornado’s hard line. But while Vornado’s Steve Roth has been busy shooting defiant looks at Menino, other builders have been busy preparing for an economic rebound.

So now, while Vornado still has an overpriced hole in the ground that needs building permits and construction drawings, John Drew has a new plan to build 235 apartments at Waterside Place in South Boston. Down the street, in Fort Point, the Archon Group is getting ready to build another 184 apartments. AvalonBay is preparing to plunk 188 units atop the Prudential Center. The developers of Kensington and Hayward hold permits to build 660 units between the two of them, and they both say they’ll be ready to roll soon. And that’s just the short list.

There are now 2,100 apartments that look like they’ll be in the construction pipeline ahead of Filene’s, with more cropping up every week. Boston isn’t New York. Developers can’t dump an endless supply of high-priced units on the market without consequence. It remains to be seen whether Vornado’s delays will cause it to miss the best shot yet at filling its pit downtown.

Paul McMorrow is an associate editor at CommonWealth magazine. His column appears regularly in the Globe.