The BRA Hearts Vornado (Sort of)
By the looks of things, the great thaw has begun. Yesterday, Boston Redevelopment Authority director Peter Meade told reporters that Vornado, the owner of the big hole at the Filene’s site in Downtown Crossing, is “likely to be part of the solution” there. Though Mayor Menino and Vornado have long been at loggerheads, Meade said he was talking with the New York real estate firm and was pleased with the tone of the conversation so far. The Globe reported:
[Meade’s] comments, delivered at a Greater Boston Chamber of Commerce breakfast, marked a shift in the city’s rhetoric about the investment firm after months of rocky relations. The BRA revoked its permits for a $700 million project that would have included offices, stores, residences, and a hotel. The firm then put the site up for sale in late 2010 but has yet to attract an acceptable bid.
Meade made clear that a sale now seems unlikely because Vornado would have to unload the property at a loss, and he said Mayor Thomas M. Menino has directed him to talk with the firm’s executives about other ways to move forward.
And this comes just days after reports that Target is interested in moving into the site (though, as I reported here, as of present, that is very far from happening). At first blush, it may seem surprising that Boston officials are trying to make nice with that “scurrilous group that should not be in the real estate business,” as Menino called Vornado as recently as this summer. But it’s really not. Like I wrote about in this month’s issue of the magazine, Vornado was never going to do anything with the site that would cost them to lose money unnecessarily. Selling at a loss when they don’t have to just isn’t in their playbook. It could very well be that Vornado will end up selling off portions of the site (like the rights to build apartments) and keeping other parts for themselves (say, the ground floor retail), but, ultimately, they’ll do whatever they think will make them the most money, no matter how long it takes.
In the end, Menino never really had any significant leverage over Vornado, anyway. The New York firm, led by the famously stubborn Steven Roth, always has the ability to wait as long as they want to do something on the site. It’s not costing them much money to let it sit there, so they’re in no hurry. When they decide the time is right, the city, desperate to get that hole filled, won’t have much choice but to go along. John Hynes, the Boston developer working with Vornado on the project, told me for my story in the magazine that he thought we’d see some serious decisions made on Filene’s by the end of this fall. At the time, the site looked like such an intractable mess that I had a hard time believing him. But now, it looks like he may be right.