Hub's redevelopment honcho rides rambunctious boom

It's unanimous: Boston is a boomtown. Real estate consultants, developers, city officials, and neighborhood groups agree that the Hub's current development boom may be unprecedented so far this century.

Gone are the not-too-distant days when the city had to wheedle, beg, and give tax breaks to reticent developers. Today, developers are ``knocking down the door at the BRA [Boston Redevelopment Authority],'' says a top executive at one real estate consulting firm.

But the boom is different things to different people -- and not all the expectations are good.

To developers the hot market, fueled by a pent-up demand for office space downtown, is a good chance to make short-term profits. More than $3 billion in private capital is expected to be funneled into Boston during the next five years.

To BRA director Stephen F. Coyle the boom is a ``unique opportunity for Boston to improve itself. There's positive reinvestment here,'' he says, ``and we want to fix up a lot of areas that have needed redevelopment for years.''

But in the neighborhoods reaction is mixed. Those people who put out the welcome mat for development say it will bring new jobs for local residents, increase personal income, and revitalize blighted areas. Others warn that the housing market will overheat if the downtown office market gets much hotter. Rents are already the highest of any city in the United States, and residential property values are rising at the fastest rate in the nation, notes Michael Kane, coordinator of the Boston Affordable Housing Coalition.

He is concerned that newcomers who move to Boston to fill the jobs downtown will ``displace'' longtime neighborhood residents when competition for scarce housing drives rents even higher. Displacement has already occurred in some city neighborhoods, Mr. Kane says.

The tight housing market is also worrisome to the real estate industry. Companies will think twice about locating in Boston if there is no place for their employees to live, says Thomas J. Hynes Jr., executive vice-president of the Boston real estate consulting and brokerage firm, Meredith & Grew Inc. The ``enormous inflation in housing costs'' is not a result of speculation, but of the search ``for fundamental shelter,'' he adds.

It's ironic that the pro-growth development community and the most antigrowth neighborhood groups have identified the same need: more housing. Still, because they disagree on how this need can best be met, it has fallen to the city to pave the way to affordable housing.

To the BRA's Mr. Coyle, the solution lies in requiring developers to ``build mixed developments. Build retail, office, and housing, and put it in the same building. Just be clever about it.'' In that way, he says, the city will ``lessen the burdens caused by commuting'' and will ``take the pressures off the neighborhoods that come as a result of people working in the city, wanting to live closer to their jobs.''

Coyle, who has been in charge of the city's planning agency for a full year under Mayor Raymond L. Flynn's administration, calls this sort of development ``balanced growth.'' But Coyle himself has a difficult balancing act to perform. He must walk a fine line, on one side prodding developers even to consider housing construction and on the other side trying to placate neighborhood groups who want more low-income housing and scaled-down buildings.

For now, however, Coyle is negotiating with developers from a position of strength. Boston is one of the top five markets in the nation, he says, explaining that the total return for investors in the Hub ``is very high.''

Boston ``compares favorably to all other cities,'' he says, noting that its direct competitors are Manhattan, San Francisco, and Washington. ``Demand for new office space is drawing them,'' Coyle says of developers who have flocked to Boston from other countries as well as from other states.

But what economic forces are fueling Boston's growth? And how long will the boom last? The BRA and real estate specialists, such as Mr. Hynes, give almost identical answers.

Service industries. Today financial institutions, insurance and real estate companies, advertising agencies, law firms, and support services for the region's high-technology companies provide more than half of the city's total employment. Hynes calls it ``the service sector.'' Coyle calls it ``the modern transaction economy.'' They agree that these expanding industries are driving the boom. Manufacturing, once a leading sector in the city, now employs only 9 percent of the total labor force.

Institutions. Museums. Prestigious universities. Some of the finest medical facilities in the nation. Yes, even the Boston Pops. These contribute to what Hynes describes as a ``favorable quality of life'' in Boston.

History. ``The first thing people see -- especially overseas investors -- is [that] there are a lot of comfortable ties, culturally, with Boston,'' Coyle says. ``They sense a community that reveres and respects its past. You do not always get this sense in American cities.''

Proposition 21/2. Until the tax-cutting measure was adopted in 1980, the corporate tax burden here was much higher. Currently it's running about 15 percent of gross annual income, which is akin to the national average, according to Coyle and Hynes. They note that Boston, with about 25 million square feet of premium office space, cannot compare with cities such as Manhattan (270 million square feet) and Houston (120 million).

But Hynes points out that some Sunbelt cities like Houston, which ``built with unbridled enthusiasm'' during the early '70s, have undergone ``a dramatic retrenchment after the energy market turned around.''

In Boston the problem is the opposite: not enough supply to meet demand. Coyle says this is partly attributable to the history of controls placed on the market. ``We [the BRA] have got 20 projects. We could just wave a wand and they'd all be out there -- people would be building,'' he says. ``[But] it wouldn't be good for the city. We make [developers] go through a very detailed design and review process. But it isn't slow and it isn't arbitrary.''

Of the downtown projects Coyle inherited from the previous administration, 10 have been approved. Two of those -- Rowe's Wharf and International Place -- are already under construction. In some of the projects, buildings will be smaller and mass will be reduced. Others have been completely redesigned, the BRA director says.

From a developer's viewpoint, Hynes explains, the city's review process, which includes citizen comments and environmental studies, is an extensive system of checks and balances. ``The system certainly doesn't work in the favor of developers,'' he says, adding that building in Boston requires ``commitment and deep pockets.''

But if the real estate community is not entirely satisfied, neither are some of the neighborhood groups.

Syvalia Hyman III, president of United South End/Lower Roxbury Development Corporation (UDC), says the city has not done enough to ``spread development appropriately over the land mass of the city. It's concentrated in a few neighborhoods.''

As a result, speculation is on the rise in those areas, Mr. Hyman says. In the South End, a gutted apartment building that went for $160,000 in May 1983 was sold for $300,000 and then recently resold for $400,000, he says. Neither of the first two owners invested a dime in the property, he adds. Because the new owner's acquisition costs were so high, he will probably be forced to ask high rents after he rehabilitates the building, Hyman says.

Lately the BRA's focus has turned to Roxbury, one of the poorest, most depressed neighborhoods in the city. Coyle says he hopes to redirect downtown growth into Roxbury, with emphasis on office buildings, a shopping arcade, parks, and hotel rooms.

But Roxbury residents, looking at what happened in the neighboring South End, are wary of this sort of ``investment,'' says Hyman, even though it brings jobs. Himself a Roxbury homeowner, Hyman explains that he doesn't want property values in the neighborhood to escalate so much ``that when I'm retired and living on a fixed income I won't be able to pay the [property] taxes.''

Even so, he points out that ``displacement'' need not occur in Roxbury, even with the influx of wealthier residents. The sizable tracts of vacant land in the area could be developed to provide housing for the newcomers, he suggests. Coyle endorses that concept, as well as the idea that local citizens should have a voice in determining the future of their neighborhoods. But he has already been criticized for negotiating with developers before talking with Roxbury residents.

There is no doubt that the BRA director will be closely watched by neighborhood groups -- even while he performs a delicate balancing act from his ninth-floor office at City Hall.

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