During an earnings call on Wednesday, BXP President Douglas Linde announced that the company does not plan to move forward with construction of its proposed 171 Dartmouth St. in Boston’s Back Bay within the next year. This decision was based on current rent levels and high construction costs.
Linde addressed speculation about Bain Capital potentially becoming an anchor tenant at 171 Dartmouth, stating that new building construction in Boston can cost between $1,400 to $1,600 per square foot when factoring in land value. This would require significantly higher rents than what is currently achievable for both under-construction and recently completed buildings in the Financial District and Back Bay area.
Accordingly, Linde stated that it is not financially feasible to proceed with this development at this time due to existing rent levels. The REIT has received approvals for the project which includes a 27-story office tower adjacent to MBTA Bay Station as part of a larger air-rights project featuring one of Boston’s largest approved-but-unbuilt residential developments.
In summary,BXP has indefinitely delayed launching their Back Bay office project due to high costs relative to current rent levels.
