New York real estate mogul Steven Roth wowed Boston in 2006 with plans for a gleaming skyscraper that would replace the old Filene’s and spark a Renaissance of downtown crossing. Five years later, the project is on indefinite hold, and the only thing Roth has delivered is a mammoth crater in the heart of the city.
The most absurd thing about the absurd, city-block-size hole in the ground in Downtown Crossing isn’t actually the hole.
It’s not the century-old building with its backside ripped off that stands next to it. It’s not even the tattered white tarps that, in an effort to make downtown Boston look slightly less like downtown Sarajevo, have been pinned onto that building and another bombed-out-looking structure to hide their crumbling guts.
No, the most absurd part of the now three-year-old hole in the heart of our city is the signage that still adorns it. Plastered on the walls and wire fences surrounding the site from Summer to Washington to Franklin streets, the signs announce the coming of something great. “One Franklin,” they proclaim, referring to the name of the $700 million, 39-story development that was planned for the spot where Filene’s used to stand. “Exceptional Offices, Stylish Residences, Fashionable Shopping, Luxury Hotel.” The seal of the City of Boston and Mayor Tom Menino’s imprimatur are hung up all around, too.
If you didn’t know better, you’d think a luxury building was going to sprout up any minute. But, of course, it’s not. Construction on One Franklin officially stopped in June 2008. James Michael Curley has a better chance of rising from the ground than does that particular building with that particular design, dreamed up, as it was, at the peak of America’s real estate wave. You know this for sure when you walk all the way around to Hawley Street, where the banners covering the wire fence run out. There you can peer through the fence directly into the hole, big enough to host at least three swim meets at once. It’s not pretty: twisted metal, wood scraps, empty bottles, and not a construction worker in sight.
When New York developer Steven Roth and his Vornado Realty Trust announced the project five years ago, the news was met with universal acclaim. The classic though dated buildings that used to be Filene’s would be replaced by an awesome tower, the linchpin of a reborn Downtown Crossing. But long after the department store came down, nothing has gone up to replace it. Instead, there’s a hole that projects a kind of shadow across the neighborhood, casting everything nearby in its squalor.
‘“It’s right outside my window,” says Dean Stratouly, a developer who works on the 11th floor of 33 Arch Street, a high-rise he built. “I call it Beirut.” He says traffic at his Arch Street garage has been off since Filene’s closed, a fact that’s rippled through businesses in the rest of Downtown Crossing. “The neighborhood without that retail isn’t as vibrant,” he says.
The damage hasn’t been limited to just that section of Boston, either. John Fish, the chairman and CEO of Suffolk Construction, the firm contracted to knock down the Filene’s buildings and put up the new one, tells me that the hole has turned all of Boston into a national joke. “We hear about that in every city we go to,” he says. “People in California, people in Virginia, people down in other parts of the country — Florida — will ask, ‘What about that big hole in the ground?’”
Menino has been asking that same question — very loudly. Powerless to force Roth and his company to do anything, he has taken to trying to browbeat them into action, alternately calling them “arrogant,” “stubborn,” and, most damningly, “those New Yorkers.” But the famously unyielding Roth has not budged. After all, he’s more used to playing the bully himself. A person forced to negotiate against him once put it this way to the New York Times: “Steve liked to begin by saying, ‘Your worst nightmare just walked into the room.’”
Now our worst nightmare sits in the middle of Downtown Crossing. Plodding through there not too long ago, I couldn’t stop asking myself, How could this have happened? The Central Artery has come down, green space is up, the Seaport is booming. Boston has never looked better. How could the most important project in the city have become such a disaster?
One Franklin does actually exist somewhere. A roughly four-foot version of it sits on a platform in the center of the lobby at developer John Hynes’s Post Office Square headquarters. When Hynes hits a button, it lights up. Unfortunately, there’s no button for making it grow.
In his office down the hall, Hynes explains how we came to have a pit as our centerpiece of urban renewal. It all began in 2005, when Federated Department Stores acquired the Filene’s chain. Federated announced that all Filene’s locations would be folded into the Macy’s line it already owned. And since there was a Macy’s right across the street from the Downtown Crossing Filene’s, the flagship Boston location (which was spread across four adjacent buildings) would be closed. Shortly after, Federated put the whole thing up for sale.
Though Vornado Realty Trust’s properties are for the most part concentrated in New York and Washington, Steven Roth saw value in the Downtown Crossing location and offered Federated $100 million for it. When that offer was preliminarily accepted, Hynes saw an opportunity for his company, Gale International. (He now heads Boston Global Investors.) A tall, athletic guy who played goalie for Harvard’s hockey team, Hynes shifts forward in his chair as he explains how he called up Vornado to sell the company on his local connections. His One Lincoln development in Chinatown had been a huge success, and with the 21-story high-rise at 101 Arch Street, he’d already shown he could build in Downtown Crossing. He should be the New Yorkers’ point man in Boston, “play quarterback” for them, he argued.
Hynes wanted in badly. There were some challenges to Downtown Crossing, with its empty storefronts and crumbling sidewalks, but Filene’s sat at the nexus of the T and the center of Boston itself. Hynes had built successful developments in town, but nothing as important as this. The grandson of the former Boston mayor of the same name, he would help jolt a neighborhood back to life and reshape the city.
Vornado said Hynes could join the deal if he could come up with half the money for the purchase. Gale wasn’t the type of business to invest big dollars itself, so Hynes, in turn, went out and recruited J. P. Morgan and the real estate firm Mack-Cali to get in, at 35 and 15 percent stakes, respectively. In other words, Hynes wouldn’t be putting any money into the deal or have any ownership. Instead, he’d work for a fee, earning a bonus if the new building made a certain amount of money. “Our job was to assemble the team,” he tells me. “To bring in the best architects, engineers, lawyers. Shepherd this thing through the process with the state and the city.”
Once the deal was finalized, Hynes and his partners wasted little time making decisions: the building’s height, use, architecture — all were determined by the end of 2006. Next it was time to seek approval from the Boston Redevelopment Authority. Navigating that process, as anyone who’s ever tried to build anything in this city knows, is a lot like getting anywhere in Boston at all: There are one-way streets, pothole-ridden roads, and dead ends everywhere. Mayor Menino keeps a tight grip on the BRA, basically using it as a mechanism for deciding what gets built and what doesn’t. The Globe once described a particularly memorable scene in which the developer of 111 Huntington, that crowned building near the Pru, let the mayor choose the design of the structure’s trademark cap as a way to win favor. It’s a questionable enough arrangement for any mayor, let alone for one famous for his scorekeeping and nursing of grudges. “A partner of mine from New York refers to Boston as a banana republic,” says one local real estate insider.
As it turned out, though, the permits for One Franklin flew: The BRA board approved the project unanimously in August 2007. Things in Boston just don’t happen that fast, but this was an instance where the developers’ interests lined up with the mayor’s. Resuscitating Downtown Crossing has been a pet project of Menino’s for years. That may explain why, as the Globe would later report, the BRA let Vornado slide on certain zoning laws and skirt some requirements in order to get the project moving quickly. The developers were even given approval to start work before they’d locked down their financing. “That’s not really normal,” says one longtime member of the Boston real estate scene. “It’s been done before. Not very often.” (BRA officials declined to comment, other than a statement saying everything was done by the book.)
“Probably the most exciting 90 days of my career” is how Hynes describes the beginning of 2008. The law firm Fish & Richardson signed on as an anchor tenant for the office space, and other tenants, including Le Méridien Hotel, followed suit. Vornado and its two money partners figured the cost of the building would be $700 million. Hynes says they planned to put up $250 million in cash combined and borrow the rest. With banks clamoring to get onboard, nobody doubted the loan would be easy to come by. Demolition began in April 2008, and as spring became summer, there was no turning back.
Then “something happened,” Hynes says. That something was Bear Stearns and Lehman Brothers going down, and the rest of the economy looking like it was headed off a cliff. “Now the banks aren’t calling us back. We’ve got a problem,” Hynes recalls. That financing that had never been locked down had vanished. Suddenly, Vornado and its partners didn’t have the money to rebuild the site they’d just spent millions tearing apart.