Design for Real Estate: Contemporary Topics (2025)

Timothy Love

Design For Real Estate

Contemporary Topics

Timothy Love

Design For Real Estate

Contemporary Topics

Foreword

This course provides a comprehensive understanding of the role of design and design professionals in real estate, from project conception to project delivery to postoccupancy evaluation. The goal is to provide developers and owners with the knowledge and methodological tools arising from design to conceive and execute distinctive, financially successful, socially responsible, and environmentally sustainable projects. The course explores the programmatic and spatial interdependency of the components that make up real estate, along with a variety of methods for integrating financial analysis and design considerations.

For the final project of the course, 2-3 students collaborated on a project of the student group’s choosing. The projects fell into two overarching categories - a Development Proposal or a Research Report. These projects focused on an issue at the intersection of real estate development finance and design.

Students with different disciplinary backgrounds, including finance, planning, and design, were encouraged to work together, cumulating in unique and diverse perspectives relating to their chosen topics. The compendium of essays that resulted provides a fascinating snapshot of the preoccupations of students who are, in many cases for the first time, learning about the many ways that financing strategies, regulations, and design considerations intersect to shape individual projects and the contemporary city.

Course Instructor

Timothy Love

Teaching Associate

Justin Joel Tan

Student Contributors

Muram Bacare, Kofi Bempong, Salman Bin Ayyaf, Jason Boyle, Yuki Cao, Catherine Chun, Pauline Colas, Crystal Cui, Porsche Dames, Ava Dimond, Alexander Dragten, Adam Drummond, Nelson Duque, Costa Enriquez Teran, Lily Friedland, Xinyu Gao, Yupeng Gao, Karen Garcia Ibarra, Noah Garcia, Brandon German, Matias Griffiths, Peihao Jin, Yanjia Jin, Noah Johnson, Kwangmin Ki, Luna Kim, Phil Kim, Adrian Kombe, Jae Young Lee, Shawn Lee, Mook Lim, Zamen Lin, Zack Lively, Josh Mccarthy, Lydia Melnikov, Ilias Metaxas, Maria Jose Moreno, Daniela Morin Vazquez Mellado, Francis Motycka, Benjamin Orf, Yuli Ouyang, Jeewoo Park, Jackson Peacock, Benjamin Perla, Cole Peterson, Advait Reddy, Lucas Ryder, Tejas S, Eesha Sanghrajka, Paul Schulman, Megha Sharma, Phil Smith, Pranav Subramanian, Stacey Tsai, Joe Tu, Marko Velazquez, Peggy Wu, Alex Yang, Jerry Zhang, Leo Tianju Zhang, Wenbo Zhang, Caroline Zou

If readers are interested in a particular project, they can reach out to the instructor for more information.

Preface

Foreword

Development Case Studies

I. Adaptive Reuse / Conversions

The Feasibility Gap: Chinatown’s Office-to-Resi Dilemma

Alexander Dragten, Jackson Peacock, Joe Tu

95 Berkeley: Office to Residential Conversion: Exploring the development’s opportunities, incentives & limitations

Philip Smith, Costantino Enriquez, Jerry Yonghao Zhang

133–169 N Washington Street: Redevelopment Proposal

Jaeyoung Lee, Brandon German, Yupeng Gao

Kingston St.: Office to Residential Conversion

Yuki Cao, Lucas Ryder, Caroline Zou

The Overbuilt Life Science Sector in Boston: Redevelopment Report

Crystal Cui, Peihao Jin, Zamen Lin

II. Ground Up Development

A New Class of Housing: The World’s Healthiest Home

Ava Dimond, Francis Motycka, Pranav Subramnian

35-75 Morrisey Boulevard: Ugly Duck Studios Redevelopment

Matías Griffiths, Josh McCarthy, Cole

Peterson

The Bgend: From Transit Hub to Community Hub

Marko Velazquez, Kwangmin Ki, Jeewoo Park

Hark, hark! The Wharf at 440 Atlantic: A Development Proposal for the James H Hook Lobster Site at 440 Atlantic Ave, Boston

Yuli Ouyang, Tejas Sampath, Wenbo Zhang

A Future Proof Typology: Development Test Fit at 56 Fulton Street

Kofi Bempong, Porsche Dames, Alex Yang

Research Projects

The Strategic Art of Anchoring: High-End Art Institutions as Urban Catalysts

Adrian Kombe, Benjamin Perla, Catherine Chun

A New Vision for LaSalle: Comparing Adaptive Reuse Across Different Office Building Typologies

Pauline Colas, Lydia Melnikov, Advait Reddy

Conversion of Real Estate Assets to Hospitality: The Liberty Hotel Case Study

Salman Bin Ayyaf, Mook Lim, Ilias Metaxas

Super-Tall Skyscrapers: New York, Middle East and Asia vs. LATAM

Karen Garcia, Luna Kim, Maria Jose Moreno

Billionaire’s Row Architecture and Valuation Analysis of NYC Super Tall Typology

Daniela Morin, Megha Sharma, Paul Schulman

Odd Lots: Lessons for Infill Housing Development

Jason Boyle, Noah Johnson, Zack Lively

The Great Repositioning: How Policy and Economics are Reshaping New York City through Office-to Residential Converisons

Phil Kim, Shawn Lee, Benjamin Orf

High-rise Mixed-use Hotels: Four Seasons Hotels in the U.S., China and Middle East

Peggy Wu, Muram Bacare, Yanjia Jin

What Is Green Worth?

Performance, Policy, and the Price of Sustainability in Three Office Markets

Noah Garcia, Stacey Tsai, Nelson Duque

Wellness Design: What We Can Measure, What We Can’t, & Why It Matters

Lily Friedland, Adam Drummond, Eesha Sanghrajka

San Gabriel Valley, the First Ethnoburb, the Ability to Invest Leo Tianju Zhang

Adaptive Reuse / Conversions Development Case Studies

The Feasibility Gap

Chinatown’s Office-to-Resi Dilemma

The Feasibility Gap: Chinatown’s Office-to-Resi Dilemma

Introduction

Cities across the United States are stuck with a basic mismatch: there is far more office space than today’s economy needs, and nowhere near enough housing for the people who want to live in these urban cores. Office demand has weakened as hybrid and remote work have taken hold, leaving large chunks of the existing office stock underutilized or obsolete. At the same time renters face a severe shortage of reasonably priced apartments. This imbalance is especially visible in dense neighborhoods like downtown Boston and Chinatown, where aging office buildings sit half empty while renters compete fiercely for limited units. At the same time, the financial gap between owning and renting has rarely been wider, which tilts households toward renting and increases the urgency of new multifamily supply. Nationally, the typical monthly payment needed to purchase a starter single-family home now exceeds the cost of renting by roughly $962. As long as high prices and limited for-sale inventory keep homeownership out of reach for many households, more people will remain renters for longer, and the pressure on the rental housing market will intensify.

Source: John Burns Research and Consulting, LLC

Solution

The core of the solution is fairly straightforward: take underused office buildings and turn them into housing, with help from smart public

policy. At 73 Essex Street, that means reusing the existing structure, converting it to apartments, and leaning on Boston’s office-to -residential incentives to make the project closer to being financially viable.

Adaptive reuse does a few important things at once. Keeping the building’s shell in place avoids demolition, cuts construction time, and meaningfully reduces hard costs compared with starting from scratch. It also significantly cuts embodied carbon compared to demolition + new construction, which is a policy goal of the city of Boston.

Policy support is the other piece that draws this project closer to being financially viable. Boston’s Office to Residential Conversion Program offers a 75% tax abatement for 29 years. It also offers expedited project approvals that allow building permits to be issued within 12 months and a step down in tax rate from office to residential. Together, these tools improve cash flow and reduce entitlement risk enough to attract private capital into a nichey, execution-heavy asset class. Directing this framework toward multifamily housing also ties the project back to the city’s broader housing and affordability goals. The program at 73 Essex adds 79 new units, including 14 affordable units, in the country’s 10th most unaffordable city1.

History of Chinatown

Chinese immigrants began settling in the South Cove area in the late nineteenth century, building housing, businesses, and institutions that anchored the neighborhood’s cultural life. During the 1950s and 1960s urban renewal projects and the construction of the Central Artery and Turnpike displaced hundreds of residents and carved highways through the district, disrupting the community.

In the decades that followed, residents and community organizations fought to hold onto the neighborhood’s remaining housing and commercial base. At the same time, rising land values and waves of investment incited gentrification, mak-

ing the area steadily less affordable to long-time households. Against that backdrop, repurposing underused office buildings like 73 Essex into housing offers a way to add badly needed units while keeping the existing urban fabric.

Boston Market Outlook

Boston’s multifamily market remains tight and relatively resilient, which underscores the need for additional rental housing. Downtown Boston has posted healthy rent growth over the past five years, with cumulative gains of roughly twenty percent2.

Vacancy in the downtown multifamily submarket has hovered in the low- to mid-single digits, averaging about five percent with a current level just over four percent, indicating that new supply is being absorbed and renters continue to favor well-located urban product2. Job growth in the metro has been modest, tracking below the national pace, but capital markets still price downtown Boston apartments aggressively, with cap rates clustered around the mid-4 to low-5 percent range and expected to remain com-

positioned to lease into a fundamentally undersupplied market.

Market Stats & Target Tenants

The surrounding neighborhoods at 73 Essex are dense, relatively young, and high income, with median household incomes into the six figures within a one-mile radius to the site and strong renter affordability at levels consistent with upper-middle-income urban households. The existing housing stock in this radius skews toward smaller formats, with a large share of one-bedroom units, and the population is predominantly White and Asian, reflecting the combined influence of downtown employment, nearby universities, and Chinatown’s long-standing cultural base. In this context, the project is likely to target renters-by-choice who value proximity to the CBD and transit (young professionals, graduate students, and dual-income couples without children) along with some moderate-income households qualifying for units restricted around 60 percent of area median income.

Current Zoning & Incentives

pressed relative to many other markets. In this context, new, well-designed units created through office-to-residential conversions are

The site sits in a Community Commercial zoning district, with allowable heights in the roughly 80- to 100-foot range and floor area ratios on the order of six to seven. On top of the base zoning, Boston’s Office to Residential Conversion Program layers on a set of powerful incentives: a long-term property tax abatement

of 75 percent for 29 years, an expedited permittin track that targets building permit issuance within roughly twelve months, and a step-down in the tax rate when an asset shifts from office to residential use. Together, the underlying entitlements and these programmatic benefits reduce entitlement risk, improve after-tax cash flow, and make an adaptive reuse of 73 Essex more feasible.

Site

Zooming into our site, located at 73 Essex Street in Boston’s Chinatown, the parcel sits at a pivotal edge condition — a few blocks aways from Boston Common. Its position places it just outside the densest core of Chinatown, yet within clear reach of its commercial and cultural energy.

The existing building presents a Chicago School–influenced Beaux-Arts façade, occupying roughly one-third of the block. Its architectural expression recalls a period of classical commercial urbanism, yet the ground floor currently remains vacant, signaling an underutilized urban

frontage with potential for reconsideration. To contextualize its surroundings, we examine a 3D heat map of ground-floor activation in the neighborhood. Areas such as Beach Street, Harrison Avenue, and Bedford Street register high levels of street-level engagement. By contrast, our site falls within a local low zone of activity — a quieter stretch with limited

pedestrian draw and minimal ground-floor programming.

Our takeaway is clear: ground-floor activation is not merely a compliance measure required for tax abatement. Rather, it represents a strategic opportunity — a means to reinvigorate the street edge, enhance neighborhood vitality, and ultimately generate value for both the development and the community.

Design Strategy

Introduction

Jumping into the design chapter, we frame the process through three essential questions: What is the massing? What is the layout? And what is the style? For each question, we developed a computational model designed to help us rigorously evaluate options and arrive at defensible decisions.

Massing

When first exploring massing strategies, we tested multiple scenarios — relocating the core to the least active edge of the site, or adding two additional floors to reach the zoning height cap. These moves were focused on increasing unit yield and driving more favorable returns. However, none of the expanded envelopes proved financially viable.

We therefore maintain the original building envelope, which reduces our spatial freedom and demands a highly strategic approach to floor area allocation and sensitivity to market.

To navigate this challenge, we built a machine-learning–based agent model that simulates market response to our design proposals, providing insights on stabilized rent and occupancy with the timeline. This model establishes a baseline economic feedback loop that remains active throughout the design process.

Layouts

Turning to layout, we inherit a floor plan with three separated cores pushed into different corners of the structure and a non-orthogonal column grid — conditions that compromise both efficiency and usability. Our approach was to generate a series of plan variations, testing how each manages circulation, structure, and unit performance.

We selected 20 top-performing candidates and fed them into a custom genetic algorithm optimizer. The optimizer iteratively recombines and evaluates these solutions, seeking the scheme that maximizes revenue potential and unit count while balancing risk exposure in the marketplace. This process led us to a scheme defined by a strong one-bedroom mix, complemented by two premium two-bedroom units on the upper floors and a carefully balanced distribution of studios and standard two-bedrooms. It consistently outperformed other candidates in both projected

Genetic Algorithm Optimizer: Coded and deployed for the project to select most competitive floor plan layouts and combinations.

revenue and feasible unit count, while maintaining a measured risk profile — a “sweet spot” in the probability universe.

Style

Finally, we ask: What is the style, and how will people feel inside these spaces? The building’s large, rounded structural columns resist concealment, and the wide existing corridors present challenges — yet also opportunities. We embraced the generous hallway as a shared amenity zone for remote work and casual social interaction, reflecting contemporary lifestyle needs.

From the very earliest stages, we integrated real-time rendering into the plan development process, allowing interior qualities to directly inform spatial decisions. These qualitative assessments loop back into our agent-based sentiment model, which functions as a predictive tool for tenant preference and environmental appeal.

For the amenity hallways, we developed ten distinct interior design style packages, each evaluated through automated sentiment analysis to estimate market receptivity. Importantly, sentiment scoring is not a prescriptive driver — but a decision-support indicator, guiding design and development teams toward choices that are both spatially compelling and market-aligned.

Building Programming

In the final proposal, floors two through eight are dedicated to residential use. The basement level is allocated as tenant-focused amenity space, including rentable storage units that

support everyday convenience and contribute to overall building value.

Ground Floor Strategy

At street level, the design introduces a flexible retail environment. During daytime hours, the ground floor operates as an open-plan café and co-working space, encouraging casual activation and contributing to the public realm. After 6:00 PM, as office workers leave the district and residents return home, the space transitions to a tenant-exclusive amenity. It becomes a secure, community-serving zone — a place for gatherings, children’s birthday parties, and everyday social life.

Additionally, the venue can be rented for special events, local workshops, or community programming, ensuring that the ground floor supports both economic productivity and neighborhood vitality.

1BR unit plan with market simulation in stabilized rent and occupancy rate

Structure and Façade

Our floor plans strictly follow existing structural column grids and preserve the rhythm of the historic façades. This approach minimizes

costly structural intervention while maintaining architectural integrity. At the same time, we ensure that unit layouts remain proportionate and livable, carefully navigating spatial constraints to optimize the residential experience.

Unit Economics

Zooming into the one-bedroom typology, the units are modest in size, reflecting the constraints of the existing building. However, based on outputs from our market-simulation model, rents for this unit type stabilize at mid-market pricing, driving higher projected occupancy rates compared with larger one-bedroom alternatives. In other words, these units strike a performance balance — financially efficient, market-attuned, and highly leasable.

Design Conclusions

Across this study, our intent has been to show that design and finance are not opposing forces, but interdependent systems that must be evaluated together. The computational tools we built — from agent-based market simulations to genetic optimizers and sentiment-informed style assessments — do not reduce design to numbers; rather, they clarify the implications of our choices and ensure that every move is grounded in both economic reality and human experience.

By applying equal rigor to massing, layout, and style, we establish a workflow where qualitative ambition and quantitative discipline continually shape one another. Market response guides spatial allocation, interior character informs plan geometry, and emotional resonance loops back into feasibility. This calibrated feedback loop transforms design into a way of testing futures rather than simply drawing them.

Above all, our process reflects a belief that datadriven design is only meaningful when it elevates lived experience. We use computation to protect spatial quality within tight constraints — making modest units livable, corridors social, and amenities responsive to both Chinatown’s rhythms and residents’ needs. In a context defined by tight envelopes and unforgiving pro formas, the challenge is not just making the numbers work, but ensuring that what works on paper works for people.

The Financials

The 73 Essex Street conversion illustrates both the opportunity and fragility of office-to-residential redevelopment in Boston. The proposed 79-unit program capitalizes on sustained multifamily demand, a favorable downtown location, and an unusually strong NOI margin enabled by the conversion program’s 29-year tax abatement.

The Costs

The total conversion is expected to cost approximately 37.8 million dollars of which 72% is driven by hard costs. Including a 4% contingency budget for both soft and hard costs, a reserve for unanticipated demolition or trash removal (due to vacancy), market rate development fees and standard financing fees drive the economics.

The Income

The unit mix was ultimately determined by the design optimization working in conjunction with the probabilistic rental rate. The project is expected to achieve average gross rental rates of 3,270 dollars per month per unit. After adjusting the income for inclusionary zoning, the average rental income falls to approximately 3,000 dollars per unit per month.

73 Essex is located proximally to two other multifamily assets, representing the spectrum in which the converted project would sit. Two projects, The Radian, and 81 Essex were utilized to benchmark the appropriate and likely rental rate for the asset in question. The underwritten rental rates are lower than the superiorly located and amenitized Radian and are at a premium to

The Expenses

The asset is expected to achieve a 75% stabilized NOI margin due to the reduced tax burden. This margin outperforms conventional multifamily assets by c. 10-20%.

The Challenge

Financial feasibility is highly sensitive to policy. When inclusionary zoning (“IZ”) requirements require 17% of units at 60% AMI, NOI declines meaningfully, exit valuations compress, and return targets diminish. Without inclusionary zoning, the project is estimated to underwrite to a 17% IRR, and a 6.4% YoC, whereas with the inclusionary zoning restriction the project achieves a 12% gIRR and a 5.8% YoC. While the project still operates efficiently, IZ

redistribution erodes the development spread from approximately 160 bps to 110 bps which may now be insufficient to compensate for conversion risk, construction complexity, and exit uncertainty.

The Drivers

Determining the “right” exit cap rate is paramount. While tax abatements enhance near-term cash flow, it creates a valuation distortion for buyers. Underwriting must reflect the eventual normalized tax burden, appropriately adjusted for the remaining economic benefit associated with the abatement, leading to an upward adjustment in the exit cap rate of roughly 20 basis points after the hold period. Limited transaction history for conversions in Boston, investor caution regarding floor plate sizing, floor plan layout, and liquidity concerns may push cap rates for this product type beyond the estimated 20-bps adjustment outlined above. Sensitivity testing shows that restoring feasibility (achieving the same return outcome without inclusionary zoning) under IZ may require adjustments largely outside the developer’s control—significant cap rate compression, double-digit cost reductions, or sustained above-inflation rent growth. These conditions may materialize, but reliance on them constitutes heavily speculative underwriting and weakens competitive positioning.

Strategically, the underwriting demonstrates that office-to-residential conversion can be nearly viable under market-rate conditions but becomes economically strained when affordability mandates apply without additional subsidy. Given the inclusionary zoning requirement, base year rental rates would need to elevate by 9% to achieve the same return profile as the project achieves without inclusionary zoning. The gap is structural: IZ removes revenue without reducing costs or risk. Other subsidy programs such as 4% LIHTC and HUD financing can improve feasibility, but extend delivery timelines, increase carrying costs, impose compliance burdens, and have term limitations and funding caps that must be managed. These elements of additional subsidies fundamentally change the project profile.

Risks & Mitigants

The 73 Essex conversion carries a distinct set of risks, but many of them can be addressed through creative design and conservative underwriting. The first concern is physical: not every office building converts cleanly to housing, and deep floor plates and limited

natural light can create long, inefficient units that are hard to lease. In this case, test fits demonstrate that the existing structure can be divided into a functional mix of studios and one- and two-bedroom units with adequate light and circulation. Execution risk is another concern, since office-to-multifamily conversions are complex and can be prone to cost overruns and delays, particularly as this strategy is still new. The strategy here is to lean on lessons from comparable Boston conversions at 281 Franklin, 263 Summer, and 129 Portland, using their cost, schedule, and design outcomes as benchmarks to tighten contingencies and reduce the chance of unpleasant surprises.

There are also clear income-side risks. Groundfloor retail may prove difficult to lease in the current environment, which could leave the frontage inactive and put downward pressure on residential rents if the streetscape feels inactivated. To mitigate that, the underwriting treats retail economics conservatively, effectively targeting break-even on the commercial space and viewing it primarily as a tool to activate the block and support the residential program. Exit and capital-markets risk is another concern. The buyer pool for converted assets is still relatively shallow, and the eventual expiration of the tax abatement may push investors to demand wider cap rates. The pro forma responds by baking in a higher residual cap rate, including an explicit premium for the transient nature of the tax benefit. Finally, there is the basic question of rent risk: whether the projected rents are achievable in this corner of the downtown market. Here, comps at nearby assets such as the Radian and 81 Essex support the underwriting, and sensitivity analysis shows how returns behave under lower rent-growth assumptions.

Development Conclusion

Adaptive reuse offers an opportunity to transform underutilized office space into critically needed housing. Yet the underwriting makes clear that project feasibility depends on achieving alignment among revenue, cost, financing, and policy conditions. Even with critically efficient design, unit mix optimization, and cost mitigation, market-rate execution nearly achieves these requirements while inclusionary zoning does not (absent additional subsidy or arguably “aggressive” underwriting assumptions). As Boston explores office-to-residential conversion as a housing strategy, aligning affordability policies with financial reality will be essential to enabling more projects of this type. Is inclusionary zoning impeding the develop -

ment of these sites? It is possible to manipulate the pro-forma, the question remains, how far will developers be willing to push it?

Bibliography

1 Colliers. Greater Boston Multifamily Report, Q3 2025. Colliers, November 2025. Accessed December 7, 2025. https://www.colliers. com/download-article?itemId=4eef66ae3198-4de1-96e9-4794e97b05e1.

2 CoStar Group. (2025). Downtown Boston Multi-Family Submarket . CoStar Markets & Submarkets. https://product.costar.com/ market/search/detail/submarket/USA/ type/1/property/11/geography/6763/slice

3 OpenStreetMap contributors. (2025). Planet OSM Extracts / Map Tiles. Retrieved from https://download.geofabrik.de/

4 Radford, A., et al. (2021). Learning Transferable Visual Models From Natural Language Supervision (CLIP). OpenAI. https://openai.com/research/clip

5 U.S. Census Bureau. (2023). TIGER/Line Shapefiles. Retrieved from https://www. census.gov/geographies/mapping-files/ time-series/geo/tiger-line-file.html

6 U.S. Census Bureau. (2023). American Community Survey 5-Year Estimates, Table DP04: Selected Housing Characteristics. Retrieved from https://data.census.gov

7 Visual Capitalist. “Mapped: America’s Most (and Least) Affordable Cities in 2025.” Published November 23, 2025. https://www.visualcapitalist.com/ americas-most-and-least-affordable-cit-

ies-in-2025/

8 Wolf, T., et al. (2020). Transformers: Stateof-the-Art Natural Language Processing. Proceedings of EMNLP. HuggingFace. https://huggingface.co/transformers

95 Berkeley: Office to Residential Conversion

Exploring the Development’s Opportunities, Incentives & Limitations

95 Berkeley: Office to Residential Conversion

Introduction

95 Berkeley is a historic 1920 masonry building located in Boston’s South End, recently renovated in 2020 with restored brickwork and newly installed windows. The structure offers efficient 16,000 SF floor plates, 34 parking spaces, and a strong urban presence within the protected South End Landmark District. Our vision is to transform 95 Berkeley into a vibrant multifamily community that brings new residents, creativity, and public life to the South End. Through adaptive reuse and contextual design, the project will deliver modern homes for young professionals and families, activate the ground floor with retail and cultural uses, and introduce publicly accessible creative spaces where artists can live, work, and engage with the neighborhood. The property is eligible for Federal and Massachusetts Historic Tax Credits, the BPDA’s Residential Conversion Pilot Program, and new state-funded initiatives supporting office-tohousing conversions, all of which strengthen its suitability for redevelopment. This analysis evaluates two potential pathways—(1) converting the existing structure and (2) adding density through vertical expansion—while examining how incentives, zoning, and regulatory frameworks shape project feasibility and financial performance.

The South End & 95 Berkeley

The South End was laid out in the mid1800s with uniform Victorian brick rowhouses and park squares for Boston’s elites. As railroads and industry began to infiltrate the neighbourhood in the late 1800s, wealthy residents gradually moved to the newly developed Back Bay, with the 1872 great fire and the 1873 financial panic serving as catalysts. Jewish, Italian and AfricanAmerican immigrant households, working in local factories or along the docks and railroads, took their place and oftentimes subdivided the homes into tenements or lodging houses (Trust for Architectural Easements, 2025) (Global Boston, 2015). After World War I, Syrian, Greek and Armenian immigrants moved into the area. After World War II, the South End was impacted by suburbanization and began to decline, suffering from population declines, underinvestment and structural deterioration. In the 1960s and 1970s, the South End was identified as an urban renewal area and the city presided over significant demolition and re-development activity

that displaced many families. Despite activist movements, development and gentrification has continued and driven out many low-income and immigrant families.

95 Berkeley was built in 1920, during a time of significant industrialization in the South End, and boasted a cast-in-place and poured concrete structure, high ceiling heights and large windows. It was used as office space for a long time and was renovated in 1988 (Nerej, 2016). In 2016, CIM Group purchased the building from the Community Builders for $48M (Costar, 2016) and renovated the building in 2020 (Costar, 2025), attempting to reposition it as premium “brick-and-beam” office space. However, the post-COVID collapse in office demand (WBUR, 2024) hampered CIM’s leasing efforts and the building’s occupancy languished at 12% (Costar, 2025). In 2025, CIM sold the site to Aden Capital for $24M and the new owner plans to convert the building into a 92-unit residential development with 1,700 SF of 1st floor office space. Aden’s strategy embodies Boston’s broader pivot: transforming stranded office assets into new housing in one of the city’s most historic neighborhoods.

The Demographics

The South End’s current demographics reinforce why 95 Berkeley is a strong candidate for an officetoresidential conversion. The neighborhood houses a wealthier, higher educated and more white-collar demographic than Boston overall, with a renterheavy housing stock and

a large share of adults in prime working ages. Together, these patterns point to deep demand for welllocated, transitaccessible apartments of the type the building and site can deliver.

Exhibit 10 (median household income) and Exhibit 12 (housing occupancy) show that the South End has a higher renter share and sub-

stantially higher median household income than the city. This gap has grown between 2010, 2020, and 2023 as neighborhood median household income pushes toward $200K. Resultantly, it can be expected that rents in the South End are higher than Boston as a whole.

Exhibit 3 (education levels) and Exhibit 9 (occupation) reinforce the median income story: the South End has a larger share of residents with bachelor’s and graduate degrees and a higher proportion in whitecollar jobs, with bluecollar and service work shrinking over time.

Exhibit 2 (age distribution), Exhibit 6 (marital status), and Exhibit 8 (employment status) all point toward smaller, highearning renter

households who value flexibility and proximity over space. The South End has a concentrated age bracket of 25–44, with more single residents, higher employment and higher “workfromhome” rates than Boston overall, especially after 2020. This supports demand for flexible 1-bed, 1-bed+den, 2-bed and 2-bed+den typologies.

Finally, Exhibit 5 (migration patterns) suggests there is a continuous and manageable inflow of newcomers, indicating long-term tenancy and a neighborhood that values community.

Enrique, Jerry Zhang

Philip Smith, Costantino

Market Analysis

The pricing of recent sales in the surrounding area and a limited new-construction pipeline, as can be seen in Exhibits 13 and 15, reinforce that South End is one of Boston’s strongest multifamily submarkets. Institutional assets in Back Bay, Bay Village, and the South End are trading at high per-unit values and achieving top-ofmarket rents, driven by consistent demand for well-located buildings close to transit, jobs, retail, and daily-life convenience. Any new supply will likely be absorbed without softening market rents or having a material impact on the demand profile of the area.

South End’s demographics show why the area is such a strong submarket: the neighborhood is wealthier, more educated, and more white- collar than Boston overall, with a large, renter-heavy population in prime working ages and a growing work-from-home population that values high- quality space and building amenities. Together, these market and demographic conditions position 95 Berkeley to capture a deep pool of high- earning renter households and support high rents, as can be seen in Exhibit 14. Rents at comparable properties built after 2014 average $4,193 per month ($5.84 PSF).

Recent pricing of stabilized assets is $675,000 per unit on average. However, all-in development pricing in the Boston market is $750,000 per unit

for wood product up to 70 feet and $0.9-1.1M for high-rise product (Oxford Properties, 2025). When market pricing is below replacement cost, investors typically prefer to buy, not build. Aden Capital’s purchase indicates significant confidence in the project’s prospects.

Exhibit 17: Comparables (CoStar Group, 2025)

18: Recent Sales (CoStar Group, 2025)

Berkeley Comparables

Regulations & Incentives

Zoning Regulations

95 Berkeley is in the South End Neighborhood Zoning District’s Community Commercial Zoning District. governed by Article 64 of the Boston Zoning Code. A variety of different uses are allowed, including multi-family dwellings (95 Berkeley OTR, LLC et al., 2025). There are no minimum lot size requirement or lot area minimum for additional dwelling units. The allowable floor area ratio is 4.0 and the maximum height is 70 feet. In addition, while there are no front or side yard requirements, there is a rear yard requirement of 20 feet and an open space requirement of 200 square feet per residential unit. The conversion of the existing conforms to all of the above regulations with the exception of the open space requirement, for which a variance would need to be sought.

Four zoning overlays are applicable to the site: (1) Groundwater Conservation Overlay District (GCOD); (2) Restricted Parking District; (3) Restricted Roof District: South End; and (4) Coastal Flood Resilience Overlay District (CFROD). GCOD is intended to preserve water levels in Boston, and a conditional permit will need to be obtained from the Zoning Board of Appeals (ZBA). Provisions under the Restricted Parking District are not triggered in relation to the conversion. The Restricted Roof District restricts the alteration of any roofs and also requires a conditional permit from the ZBA if triggered. The CFROD seeks to protect structures from rising sea levels and encourages certain design solutions in this regard that need to be pursued (95 Berkeley OTR, LLC et al., 2025).

Most importantly, the site is located within the South End Landmark District and the South End District as listed in the state and national registers. All proposed exterior work is subject to the review and approval of the South End Landmark District Commission (SELDC). Any height addition would be subject to lengthy review processes and potential outright rejection. See Exhibit 16 for a contextual map, showing 95 Berkeley, height additions in the landmark district, and the height transition between the South End and Back Bay, Bay Village, and Chinatown areas to the north.

Finally, given that the site is in the City of Boston, any multifamily development is subject to the Inclusionary Development Policy (IDP), which requires 20% of units to be affordable for up to 50 years.

Government Incentives

The project is eligible for multiple incentives from the local, state and federal governments in support of an office-to-residential conversion.

Firstly, the Boston Planning & Development Authority (BPDA) recently announced an extension to its Downtown Residential Conversion Incentive Pilot Program. The program offers as-of-right conversions, a property tax abatement of up to 75% for 29 years, and a streamlined approval process for Article 80 review. In support, the state of Massachusetts will provide up to $215K per affordable unit with a cap of $4M per project (Boston Planning & Development Agency, 2025).

As part of the Affordable Homes Act (AHA), the state has a separate Commercial Conversion Tax Credit Initiative (CCTCI) and will award up to 10% of a qualified project’s development costs (practically $2.5-3.0M per project) (Boston Planning & Development Agency, 2025).

95 Berkeley, as a contributing historic building to the South End Landmark District, is a highly likely candidate for the Massachusetts Historical Rehabilitation Tax Credit and the Federal Historic Preservation Tax Incentive program, each of which provide up to 20% of the cost of certified rehabilitation expenditures. The building has to be listed on the National Register of Historic Places and while 95 Berkeley itself is not listed, the project would likely be approved by the Massachusetts Historical Commission.

Lastly, the United States Department of Housing and Urban Development (HUD) guarantees FHA 221(d)(4) loans for multifamily rehabilitation projects. These loans come with high leverage (up to 90% loan-to-cost), low and fixed rates, lengthy amortization periods (up to 40 years) and are non-recourse, with a 3-year interest-only period during construction. They are also assumable, helping with valuation and liquidity at disposition. That said, they have lengthy funding timelines and are costly to originate.

Project Proposal

The Site

On the existing site, the first floor consists of a mix of office and retail. Mass Design Group, an architecture firm in Boston, occupies the east corner of the building. There are 5 floors of offices above and an underground car park. The existing building has a concrete structure with a column grid in the interior and a structural masonry facade. There are two elevator cores in the center of the building and two fire stairs on either side of the building.

To convert the office building into apartments, the hallway connects between the elevator cores and fire stairs in a double loaded corridor set

addition of a bike room. There are 36 parking spots.

In shaping the ground-floor strategy for 95 Berkeley, the design team drew direct inspiration from The Ray Philly, a residential project celebrated for integrating artist studios, maker spaces, and publicly accessible creative programming into a residential. The Ray apartments, where living, making, and exhibiting coexist, offered a compelling precedent for how culture-driven ground floors can support both residents and the surrounding neighborhood. Our team thought this would be the best use of the first floor. It reinforces the South End’s identity as a neighborhood where creativity and everyday life intersect, echoing both its historic mixed-use character and its contemporary arts ecosystem.

Precedent Reaserch

As part of our research into adaptive reuse and residential conversions, our team spoke with Ellen Anselone, Principal and Vice President at Finegold Alexander Architects. Ellen has led some of Boston’s most significant and complex adaptive reuse projects, several of which directly informed the direction of our proposal for 95 Berkeley. Her experience offered valuable guidance on both the architectural and regulatory challenges associated with converting historic structures into contemporary multifamily housing. She was also the project and development lead on some of the projects we took inspiration from, which includes Resident at Penny Saving Bank, The Lucas at 135 Shawmut St, and 226 Causeway Street.

Residences at Penny Savings Bank: A transformative redevelopment of a historic bank building that combines restored masonry with carefully integrated new construction. The project demonstrated how bold architectural interventions can coexist with preservation requirements, particularly when adding new windows, creating a rooftop addition, or repositioning internal cores.

The Lucas at 135 Shawmut Avenue: A benchmark adaptive reuse project in the South End involved inserting a completely new residential structure within the preserved shell of a historic church. The Lucas taught us about the technical and community challenges of adapting heritage buildings, and how contemporary design can complement, not imitate, the historic fabric.

226 Causeway Street: A mixed-use redevelopment that balances commercial, residential, and public-facing functions while navigating complex zoning overlays. We were particularly interested in 226 Causeway Street because it is most similar to our project. The project used to be a biscuit manufacturing plant, and then it was converted into a mixed office, retail, and residential. Also similiarly, the structure in 226 Cuseway was also in very good condition, additional floors of residential could be added directly on top using a steel structure.

Ellen emphasized that successful adaptive reuse projects require a disciplined balance between preservation constraints and architectural innovation. Given the building’s location within the South End Landmark District, Ellen stressed the importance of early and thorough dialogue with the South End Landmark District Commission (SELDC). Her experience illuminated the key principles SELDC prioritizes: façade preservation, window rhythm, material specificity, and sensitivity to massing. Her advice helped shape our strategy for designing an addition that is contemporary yet deferential. Her perspective, grounded in decades of adaptive reuse experience across Boston, helped validate our assumptions and sharpen our design direction.

Our Design

Our team also experimented with implementing a steel 5 story addition on the top of the building. Most historic buildings, including 95 Berkeley, were constructed with robust masonry and concrete systems capable of carrying additional loads. Adding new floors allows the team to leverage this structural inheritance rather than replicating it in new construction. Our early demographic research helped inform our unit mix of most 1 bed, 1 bed + den, and 2 bed units.

Our proposal for 95 Berkeley introduces five new residential floors atop the existing historic structure. The design strategy is rooted in three core principles: structural compatibility, architectural continuity, and respectful differentiation. By using a lightweight steel structural system, aligning our structural grid with the existing building, and developing a façade that responds to the original masonry rhythms, the addition becomes a natural extension of the building while maintaining a clear old-and-new dialogue. The top addition is subtly set back from the original parapet, reducing visual impact from the street and reinforcing the reading of the historic building as the primary object.

As part of the five-story vertical addition, our team introduced a sky lounge and outdoor balcony terrace—a new amenity layer that elevates the building’s residential experience while strengthening its relationship to the South End’s urban landscape. The sky lounge functions as a communal living room for the entire building. Positioned on the lowermost level of the addition, it offers panoramic views toward Back Bay, the South End brownstone district, and the broader Boston skyline.

Financial Analysis

Conversion of Existing Structure

To determine the financial feasibility of converting the existing structure, assumptions were made in regard to timing total development cost, rent, operating model, valuation, and financing.

The duration of the conversion is as good as it gets in Boston, as the site has received BPDA approval in November 2025 and is expected to clear approvals in January 2026. Overall, the project will take 2.5 years from land closing, January 2026, and stabilization, anticipated for July 2028. A 4-month pre-development period is assumed prior to construction start in May 2026. The conversion works are expected to take 18 months. Lease-up of the residential units is anticipated to begin in Sept. 2027, 2 months before certificate of occupancy, and take 3 months. Maker spaces are anticipated to lease-up upon certification of substantial completion, Nov. 2027, and is anticipated to take 8 months. (See Appendix A For Timeline)

Regarding total development cost (TDC), the team used the $24M acquisition price that Continuum Developments, a local developer, paid for the building in October 2025. Another local developer, Oxford Properties, provided high-level feedback that total development costs, inclusive of land, range from $750K per unit for wood-frame construction and between $0.9-1.1M per unit for high-rise construction (70’ and higher). Given that the existing building was rehabilitated in 2020 by the prior owner CIM Group, a construction cost of $500 PSF. Inclusive of building permit fees and a 5% contingency, total hard costs are $540K per unit. Consultant fees were assumed to be 3.8% of hard costs. Insurance was assumed to be $1,000,000 and property taxes were calculated using the building’s current assessed value and tax rates. Developer and project manager overhead total $40K per month of construction and a developer fee of 4% of hard and soft costs was assumed. Deal costs for the maker spaces were assumed to be $50 PSF. Inclusive of financing costs and an operating reserve, TDC is $74.7M ($934K per

unit). A line-by-line breakdown can be seen in Appendix A.

To triangulate market rents, the team reviewed asking rates at two recently completed projects in South End: Troy Boston, a 378-unit institutional multifamily product, and Ink Block, a 315-unit upscale loft style product. Troy Boston is averaging $3,510 per unit and Ink Block $4,000 per unit. The rents were skewed towards Ink Block, with a slight discount on monthly rents due to a smaller unit size. All-in, untrended (i.e. today) monthly rents average at $3,962 per unit ($5.80 PSF). Unit-by-unit rents can be seen in Appendix A. Year-over-year rent growth of 3% was assumed.

Rents for the affordable units were pulled from public sources. 17% of the units must be made available to the public at an average of 60% of Area Median Income (AMI) and 3% for households that qualify for mobile housing vouchers at no higher than the Small Area Fair Market Rent (SAFMR) for 95 Berkeley’s zip code. The AMI data is published by the City of Boston Mayors’ Office of Housing (MOH) and SAFR by HUD. On average, affordable rents in the building are $1,981 per unit ($2.90 PSF) – exactly 50% of market rents. Unit-by-unit rents can be seen in Appendix A. AMI and SAFR were also assumed to increase by 3% year-over-year.

Maker spaces were assumed to be triple-net leases (i.e. common area maintenance, property taxes and utilities are paid by them), with 5 year lease terms at a $30 PSF starting rent. Annual rent escalation was assumed to be 3%, with rate increases happening at the start of year 3 and year 5. 3 months of free rent was provided to provide financial flexibility during their ramp-up.

The operations of the building will be overseen by a third-party property management company for a fee of 3% of rent receipts. The operating model will be lean, with no concierge and no on-site leasing manager after full occupancy. Residents will have access to an access control application that will allow for secure entry into the building and parcel lockers as well as amenity reservations. Operating contracts total $175K per year ($2,200 per unit) and include access control, common area janitorial services, parking operations, trash and recycling, landscaping and snow removal, elevator maintenance, fire and life safety, pest control, IT, software, and communications. Salaries totaling $100K annually were assumed for a full-time maintenance manager

and a fractional leasing manager. Repairs and maintenance for unit turnover and common areas was assumed to be ~$1,300 per unit ($104K annually). Property and liability insurance was assumed to be $68K per year, common area utilities $98K per year and miscellaneous expenses at $26K per year. Property taxes are based on an assumed assessed value of $37.3M, with the residential component totaling $416K per year. However, with the 75% tax abatement offered by the City, residential property taxes are reduced to $104K per year. The blended growth rate for all operating expenses is assumed to match rent growth at 3% per year. All-in, at stabilization, the operating expense ratio is 22.5% of rent receipts, 8.8% lower than a scenario without the property tax abatement. See Appendix A for line-by-line operating expense assumptions.

In terms of asset valuation, market cap rates in the South End are averaging 4.6%. Continued supply shortages in Boston and declines in the 10-year Treasury rate are anticipated to put downward pressure on market cap rates. While CoStar predicts a 4.4% cap rate for the South End / Back Bay sub-market in 2028, the assumption used for 95 Berkeley is 4.3% due to its location and quality. At stabilization, the gross asset value is expected to be $71.7M ($896K per unit).

Financing is based on typical market lending terms. The construction loan is anticipated to be $33.4M (45% of TDC), sized by the property’s stabilized NOI and a typical debt service coverage ratio floor of 1.25. This leaves a $41.2M financing gap (55% of TDC). The state and federal historical tax credit programs are anticipated to cover a combined $13.2M and the Pilot Program incentive funding $3.4M. Net of these incentives, investors can expect a total check size of $24.6M (33% of TDC). The construction loan interest rate, which floats at a spread over the secured overnight financing rate (SOFR), is anticipated to average 6.0%. The takeout loan is assumed to have a 30-year amortization period and a 6.2% fixed interest rate (175 bps over the 5-year Treasury rate).

Overall, the returns are not compelling. If the project were to be sold at stabilization, the net sales proceeds would be less than TDC, resulting

in negative development profit of $3.5M. The yield-on-cost and cash-on-cash returns are 4.1% and 2.5%, respectively. The unlevered IRR for a sale at stabilization (i.e. development-period IRR), the likely route for a merchant developer, is -0.2%. Adding in tax incentives and leverage, the IRR increases to 15.7% (gross of fees and/ or promote). Finally, the development-period equity multiple is 1.4x (gross of fees and/or promote). A typical return profile for this type of development would be a 20-25% profit-on-cost and 20%+ levered development-period IRR, well above the returns generated by 95 Berkeley.

Additional 5-Storey Structure

With the additional 5-storey structure and 57 units, a few modifications needed to be made to the assumptions.

The construction duration is extended by 12 months, increasing the overall project duration from 2.5 years to 3.5 years. (See Appendix A For Timeline)

TDC increases from $74.7M to $120.8M, driven by an additional $700 PSF of construction costs for the added structure. The $200 PSF premium is driven by the fact that the entire structure is deemed as high-rise, which triggers mandatory safety upgrades such as pressurized stairwells, emergency generators, and automatic sprinklers. Hard cost contingency, consultant costs, development fes, developer and project manager overhead, and financing costs all scale due to increased scope and project duration. Land cost, however, stays fixed at $24M. As such, TDC per unit decreases from $934K to $881K per unit – density truly does decrease proportionate costs! A line-by-line breakdown can be seen in Appendix B.

To account for height premiums in the added structure and the added sky lounge amenity area, the average untrended market rents were increased to by $105 per unit ($0.13 PSF) to $4,067 per unit ($5.93 PSF). Average rents for affordable units change immaterially due to the modification in the overall unit mix. Unit-by-unit rents can be seen in Appendix B.

While salaries stay the same, operating contracts, insurance, utilities and miscellaneous property taxes are scaled proportionate to the number of units. The result is an operating expense ratio of 21.1%. See Appendix H for line-by-line operating expense assumptions.

Given that the building will now stabilize one year later, the cap rate is expected to compress another 10 bps to 4.1%, resulting in a gross asset value at stabilization of $948K per unit ($130.0M total).

The construction loan increases to $58.7M (49% of TDC), with a financing gap of $62.0M (51% of TDC). State and federal historic tax credits cover a combined $12.8M and the Pilot Program incentive funding $4.0M (it reaches the cap). Net of these incentives, investors can expect a total check size of $45.2M (37% of TDC).

Overall, the returns improve with the additional structure but are still below investor expectations. The project now generates a positive development profit of $8.3M. The yield-on-cost increases 40 bps to 4.5%. The levered development-period IRR decreases from 15.7% to 13.8% due to added construction loan interest carry resulting from 12 added months of construction. The development-period equity multiple increases to 1.5x.

Policy Changes to Make Conversions

95 Berkeley is a best case scenario for office-to-residential conversion projects. It can almost certainly take advantage of federal and state tax credit programs due to its location in the South End Landmark District. The recent renovation by the previous owner reduces hard cost requirements. The floor plate depth is relatively shallow and the column grid is regular and wide, allowing for good unit layouts. The columns indicate structural bearing capacity, perfect for a 5-storey addition. Conversion of the existing building has already been approved by the BPDA, meaning development permitting risk is mitigated.

Despite all of these positive attributes, heritage tax credits and new office-to-residential conversion incentives from the city of Boston and state of Massachusetts still do not result in a feasible project.

Mayor Wu has a few options available to make conversions more feasible.

Go back to Governor Maura Healey and Lt. Governor Kim Driscoll to ask for double the existing state funding ($215K per unit, with a cap of $4M). If the state agrees, this could add 210 bps to the levered development-period IRR

Adjust the IDP by increasing the percentage of AMI to 80%. The rationale for this policy change could easily be explained and is less politically fragile than adjusting the overall requirement. If

the percentage of AMI is increased by 20%, 220 bps could to the levered development-period IRR

Further adjust the IDP by reducing the requirement from 20% to 10%. While this is a much more significant policy change than simply adjusting percentage of AMI, it is much better than eliminating the requirement entirely. Making this change would add 200 bps to the levered development-period IRR

Work with the unions to reduce their labour rates by 10% on office-to-residential conversions, while making union labour a requirement for all projects benefitting from the city’s incentive program. Mayor Wu has created a positive relationship with the Greater Boston Building Trades Unions and the North Atlantic States Regional Council of Carpenters and could use this as leverage, while providing the trades with a pipeline of projects. Reducing labour rates by 10% would add 270 bps to the levered development-period IRR

Conclusion

The redevelopment of 95 Berkeley represents both a rare opportunity and a broader model for how Boston can reposition its aging office stock to meet urgent housing needs while honoring the architectural character of its historic neighborhoods. While financial feasibility remains challenged even with substantial incentive programs, the study makes clear that targeted policy adjustments could unlock a scalable pathway for future conversions.

Bibliography

1 CoStar Group. (n.d.). Property summary 19759347. https://product.costar. com/detail/all-properties/19759347/summary

2 CoStar Group. (2025). 95 Berkeley St: Rent comparables and construction survey [PDF]. Prepared for Harvard University Graduate School of Design.

3 Boston Planning & Development Agency. (n.d.). 95 Berkeley Street. https://www. bostonplans.org/projects/development-projects/95-berkeley-street

4 CBT Architects & CIM Group. (2024, August 6). 95 Berkeley: SELDC presentation [PDF].

5 WBUR. (2024, July 8). Converting Boston’s offices to housing is tricky, but it’s starting to happen. WBUR. https://www.wbur.org/ news/2024/07/08/office-housing-conversions-residential-boston-real-estate

6 Global Boston. (n.d.). The South End. https://globalboston.bc.edu/index.php/ home/immigrant-places/the-south-end/

7 CBT Architects, Continuum Partners, & Fortium Partners. (2025, October 15). 95 Berkeley Street: Office-to-residential conversion public meeting presentation [PDF].

8 Trust for Architectural Easements. (n.d.). South End Historic District. https:// architecturaltrust.org/easements/aboutthe-trust/trust-protected-communities/ historic-districts-in-massachusetts/ south-end-historic-district/

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Marital Status) [Data sets]. https://www. census.gov/programs-surveys/acs

14 U.S. Census Bureau. (2010–2023). American Community Survey data (Table S1501: Educational Attainment) [Data sets]. https:// www.census.gov/programs-surveys/acs

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19 FAA Inc. (n.d.). Residences at Penny Savings Bank project. https://www.faainc.com/project/residences-at-penny-savings-bank

20 FAA Inc. (n.d.). 226 Causeway Street project. https://www.faainc.com/project/226-causeway-street

21 FAA Inc. (n.d.). The Lucas – 136 Shawmut Ave project. https://www.faainc.com/project/the-lucas-136-shawmut-ave

133–169 N Washington Street

Redevelopment Proposal

133–169 N Washington Street: Redevelopment Proposal

Executive Summary: The Conversion Challenge

This report evaluates the feasibility of converting a portfolio of vacant and distressed office buildings in Boston’s North End into multifamily residential housing. As Boston confronts rising office vacancies and a critical housing shortage, adaptive reuse has emerged as a vital strategy. However, the financial viability of such conversions remains constrained.

Recent studies, including the City of Boston’s Demystifying Development Costs, highlight that construction costs have surged, with per-unit development costs frequently exceeding $500,000 due to material price escalation, labor shortages, and high interest rates . Furthermore, the Office-to-Residential Conversion Program study notes that persistent feasibility gaps— driven by costly code upgrades, inefficient floorplates, and regulatory requirements—often render projects unprofitable without substantial

subsidies.

For this specific project, acquisition pricing serves as a compounding barrier. Despite the distressed nature of the assets, the current asking price does not reflect the economic realities of residential conversion. Consequently, the project faces a “dual burden” of high acquisition costs and elevated construction expenses. This report analyzes whether tax incentives and strategic design can bridge this feasibility gap.

Project Introduction

The proposed redevelopment site comprises 133–169 North Washington Street (Boston, MA 02114), a collection of six adjacent parcels in the historic North End. The site currently consists of four distinct structures:

• Two vacant commercial office buildings.

• One residential single-family home currently in bankruptcy.

• One single-story commercial office building

listed separately.

The combined asking price for these aggregated parcels is $11.3 million. Given the City of Boston’s strong policy support for adaptive reuse, this proposal explores transforming these underutilized assets into a cohesive multifamily development. The analysis is grounded in urban design principles, zoning review, market research, and architectural feasibility.

Site Description & Neighborhood Context

Site Characteristics Prominently located along North Washington Street, the site serves as a key connector between the North End, West End, Downtown, and the Greenway. While the existing commercial structures are aging, they benefit from robust masonry construction and intact roof assemblies. Crucially, the lot configuration allows for parcel aggregation, creating a contiguous development site that enables shared circulation, unified massing, and optimized residential layouts.

Neighborhood Fundamentals The North End is one of Boston’s most desirable and historic neighborhoods, characterized by high walkability, cultural vibrancy, and dense European-style streetscapes.

• Transit Access: The site offers immediate access to Haymarket and North Station (Green/ Orange Lines and Commuter Rail), providing direct connectivity to the Financial District.

• Amenities: Residents benefit from proximity to

TD Garden, waterfront parks, the Harborwalk, and a diverse mix of dining and retail options.

• Demographics: The area supports a strong housing market with a predominant base of renter households, ensuring long-term demand.

Development Incentives

Redeveloping this site aligns with several city and state initiatives, particularly Boston’s Office-to-Residential Conversion Program. This program was launched to address high downtown office vacancies and the city’s persistent housing shortage.

a. Key Incentive Programs

• City of Boston Office-to-Residential Conversion Program

• Up to 75% property tax abatement for 29 years

• Eligibility for as-of-right conversions

• Expedited permitting and review

• Historic Preservation Incentives

b. The site lies within the North End Historic District, making the project eligible for:

• 20% Federal Historic Tax Credits

• 20% Massachusetts Historic Tax Credits

• Affordable Housing Credits (LIHTC)

c. Depending on the final program mix, the project may utilize:

• 4% Federal and State LIHTC

• 9% Federal and State LIHTC

These incentives significantly improve feasibility and support adaptive reuse of existing structures, aligning private development goals with public policy priorities.

Existing Conditions and Site Challenges

A detailed site walkthrough revealed that the existing buildings, though outdated, possess structural qualities conducive to conversion rather than full demolition. The masonry facades are in strong condition, and the roof assemblies show no signs of critical failure. However, several challenges must be addressed:

a. Structural and Architectural Issues

• Uneven floor plates across buildings

• Inconsistent floor-to-ceiling heights, complicating uniform residential layouts

• A party wall separating structures and limiting corridor continuity

• Narrow and outdated stairwells requiring demolition and replacement

• Absence of an elevator, which must be added for residential use

b. Flood Resilience and Environmental Constraints

The site is within the Coastal Flood Resilience Overlay District. Therefore:

• The basement requires substantial waterproofing and floodproofing upgrades

• Mechanical equipment must be relocated or elevated

• Openings must meet flood-resilient design guidelines

These constraints introduce complexity but do not prohibit redevelopment. Instead, they require targeted upgrades that are typical for adaptive reuse projects in historic districts.

Zoning Analysis

Before exploring any design alternatives, we first examined the regulatory conditions governing the site within the North End Neighborhood District’s Community Commercial Subdistrict. This zoning review quickly clarified which directions were viable and which would require special approvals.

Although the existing building has long operated as an office property, the district’s current regulations restrict the site to commercial use only. Introducing residential units—whether fully multifamily or a mixed commercial-residential program—would therefore fall outside the permitted uses and necessitate a variance. The massing of the structure also exceeds what is allowed by right: the zoning caps FAR at 3.0 and a height of 55 feet. The project proposes a FAR of 6.21, and height of 71 feet.

The North End subdistrict imposes no minimum lot area, no minimum width or frontage requirements, and no mandated setbacks except for a modest rear yard condition. Notably, there is also no parking requirement, an important advantage given the property’s direct

proximity to North Station and high-frequency transit.

Taken together, the zoning review showed a mixed regulatory landscape: while use, FAR, and height variances are unavoidable, the absence of parking and dimensional restrictions provides considerable flexibility for a conversion. These conditions guided our test-fits and helped evaluate which redevelopment scenarios could realistically move forward.

Test-Fits

To evaluate which program could realistically support a repositioning strategy, we compared two parallel paths: a five-story office configuration and a six-story multifamily conversion. Although the office test-fit was limited to one fewer floor, its deeper floorplates and lack of corridor or unit demising requirements produced 35,268 RSF, slightly exceeding the 35,135 RSF achieved under the multifamily layout. In other words, the inherent efficiency of office floorplates allowed a lower building to match— and even marginally exceed—the rentable area of a taller residential scheme.

However, when we translated these massing differences into financial terms, the distinction between the two options became much clearer. The redevelopment cost for the office scenario totaled $31.65 million, only slightly below the $32.79 million required for the multifamily conversion. The reason: although office requires less structural and interior work, the concessions needed to secure tenants in Boston’s current office market are extraordinarily high. We assumed seven months of free rent and a tenant improvement package of $99.16 PSF, resulting in more than $3.49 million in concession-related outlays for the office scenario. In contrast, the multifamily option required just $48,820 in concessions, reflecting significantly lower turnover costs and a more stable demand base.

Construction costs followed a similar logic. Office reuse required fewer interventions, resulting in hard costs of $12.03 million (approximately $300 PSF). The multifamily buildout, by contrast, required new residential systems, shafts, egress, and unit partitions—producing hard costs of $14.91 million (around $350 PSF). Even with this higher expense, the total project costs between the two scenarios remained closely aligned once concessions were factored in.

The most consequential difference emerged at exit. Using market-consistent assumptions, the stabilized office building generated an estimated Year-6 NOI of $1.83 million. However, applying a market cap rate of 7.9%, the resulting exit value was only $23.15 million, producing a very modest $3.75 million net value after accounting for project costs. By contrast, the multifamily conversion, despite a slightly lower NOI of $1.68 million, benefited from a much healthier valuation environment. Applying a 5.0% cap rate yielded an exit value of $33.69 million, resulting in a substantially stronger $12.39 million net value—more than three times that of the office scenario.

Taken together, the quantitative comparison made the direction unmistakably clear. Office reuse faces three structural disadvantages in today’s Boston market:

• Cap rates nearly 300 bps higher (8.0% vs. 5.1% for multifamily, Source: Costar)

• Vacancy levels four times greater (24.3% vs. 6.3%, Source: Colliers)

• Turnover costs that reset with every lease cycle (7 months free rent + $99 PSF TI, Source: Avison Young)

Multifamily, in contrast, offers lower concessions, lower vacancy risk, and a valua-

tion environment that rewards stability. Even though it requires more construction investment upfront, the long-term financial performance overwhelmingly favors a residential conversion.

Market Analysis

The North End is one of Boston’s most historic and walkable neighborhoods, known for its dense urban fabric, rich Italian-American heritage, and proximity to major employment centers such as Downtown, the Financial District, and the West End. With exceptional mobility scores (Walk Score 99, Transit Score 100, Bike Score 90), the area offers residents unmatched access to transportation and daily amenities.

According to City of Boston Planning Department Research Division 2025 Estimates, Demographically, the North End is an affluent and professionally oriented submarket. The median household income is $114,115, significantly higher than the citywide average, and more than 33% of households earn above $150,000. Approximately 70% of the employed population works in management, business, science, or arts occupations, indicating a stable, high-income tenant base that favors rental housing in this neighborhood.

The neighborhood is also heavily renter-driven, meaning more than 74% of households are renters . Commuting patterns further reinforce the suitability for multifamily housing; a city of Boston survey indicated that 3,421 residents walk to work, 1,306 use public transit, and over 2,114 work from home, all of which point to strong demand for transit-oriented, amenitized multifamily apartments.

Given its demographic strength, renter dominance, walkability, and proximity to North Station, the North End presents favorable conditions for office-to-residential conversion / multifamily redevelopment. The proposed unit mix, primarily 1B1B and studio units, aligns well with the neighborhood’s tenant profile and supports long-term absorption and rent stability.

Proposed Development Plan

To establish a development strategy grounded in realistic site conditions, we

reviewed comparable listings along North Washington Street and combined this with our own field measurements. Nearby properties at 169 N Washington St and 153–155 N Washington St are currently listed for $9.5 million, while 145–147 N Washington St is offered at $1.8 million. Because the broker was unable to provide floor plans or detailed building documentation for our subject property, we conducted an on-site survey and produced our own area estimates. Based on this assessment, we estimate the existing building to contain approximately 28,335 GSF.

For the purposes of this proposal, we assume the demolition of the two adjacent structures at 169 N Washington St and 145–147 N Washington St, allowing the three parcels to be consolidated into a single redevelopment footprint. Under this scenario, we propose a new six-story mixed-use building that maintains ground-floor retail while introducing 53 residential units on floors two through six. The basement level would accommodate 53 dedicated storage units, providing residents with added utility while generating ancillary income for the project.

Following the consolidation of the parcels and the new massing configuration, the total building area increases meaningfully. The redevelopment would yield 42,915 GSF, representing an estimated 51.5% increase from

Programming

The proposed program results in a total of 54 units, combining 53 residential, 1 retail, and storage spaces that align with both market demand and the physical constraints of the site. The unit mix prioritizes smaller, efficiently planned one-bedroom units, which are wellsuited to North Station’s renter demographic and the narrow footprint of the building.

The residential component consists primarily of 1-bedroom units, including eight 1B+Den apartments averaging 801 SF, and thirty-four standard 1-bedroom units averaging 462 SF. Together, these units comprise the majority of the rentable residential area and are projected to generate approximately $136,000 in annual rent. To satisfy the City of Boston’s affordability requirements while protecting the project’s long-term financial performance, we designated the smallest unit types—ten studio units averaging 335 SF and one 431 SF

Renderings

1-bedroom—as the affordable set-aside. By allocating affordability to the lowest-SF unit categories, the project minimizes rental income loss while still meeting the 20% inclusionary requirement. These 11 affordable units collectively contribute approximately $19,000 in annual revenue and help strengthen the entitlement pathway for the conversion.

Ground-floor retail is preserved in the program, maintaining 4,882 SF of commercial space that contributes an estimated $18,000 in annual rent. This retail presence not only activates the street edge but also supports the mixed-use character encouraged in the immediate neighborhood context. In the basement, residents are provided with 53 dedicated storage units, totaling 2,703 SF. Although modest in size, these storage units contribute meaningful ancillary revenue, producing roughly $47,700 annually, and enhance the competitiveness of the residential offering by addressing a common storage shortage in dense urban multifamily buildings. In total, the program delivers 33,521 SF of residential and income-generating areas, with an average residential unit size of approximately 696 SF and total projected annual revenue of $178,119 across all components. This balanced mix of unit types, affordability, and ancillary spaces supports both financial

feasibility and alignment with Boston’s broader housing objectives. In addition to the residential and retail components, the program incorporates amenity spaces on the second and third floors, which were intentionally reserved for non-residential use. These levels receive limited natural light and are positioned directly against an adjacent building at the rear, conditions that would make them less desirable for residential units from both a leasing and livability standpoint. Instead, we programmed these floors with a community room and a fitness center, amenities that add value for residents without relying heavily on direct sunlight or exterior exposure. This approach optimizes the building’s spatial efficiency by placing residential units on the higher, better-lit floors, while ensuring that the portions of the structure with constrained daylight still contribute meaningfully to the overall tenant experience.

Profitability Analysis

The financial feasibility of our proposal emerged as a central determinant of what could realistically be designed and built at the North Station site. Although the building’s location offers strong transit accessibility, its lack of on-site parking and the high construction costs associated with increased height placed clear economic limits on our options. Each design iteration, whether adjusting massing, unit mix, or amenity allocation, was shaped by the tension between regulatory allowances and the financial realities of conversion. In

this sense, our work exemplified the core intersection of development: where zoning, capital sources, construction cost, market demand, and design ambition must be reconciled through a disciplined financial lens.

For our feasibility and profitability analysis, we consulted three industry professionals, Jason Arndt (Principal of Zephyr Architects), David W. Thunell (Sr. Vice President of Construction at WinnDevlopment), and Dan Hubbard (Principal and VP of Finance at Causeway Development), to establish realistic construction cost assumptions. Based on their guidance, we adopted a $350–$400 PSF range for non-union hard costs, with union labor potentially increasing costs by 30% or more (approximately $520–$650 PSF). We also incorporated a 10% contingency and allocated 20–30% of construction costs toward soft costs. These parameters formed the baseline for evaluating the financial feasibility of both the office and multifamily scenarios.

a. Key Assumptions

Our underwriting incorporated several key assumptions that together form the basis of our profitability analysis. On the revenue side, we adopted aggressive rental rate assumptions, projecting rents approximately 15% above comparable properties, reflecting the need for strong performance to support project feasibility. For stabilization, we assumed a 5% multifamily vacancy rate, consistent with market norms in Boston, and modeled lease-up with all 53 units pre-leased over seven months (approximately eight units per month), offering one month of free rent as an initial concession.

On the cost side, we applied conservative construction assumptions vetted by industry consultants: hard costs of $350 per square foot, soft costs equal to 20% of hard costs, and a 10% contingency. These inputs, combined with the requirement that 20% of units be designated as affordable (with regulated rents increasing 1% annually), create a realistic framework for evaluating the project’s economics. Our underwriting also incorporates property tax considerations, which have a material impact on annual operating performance. We assumed that all redevelopment CapEx would be fully capitalized into the post-construction assessed value of the building. To allocate the new tax base, we divided total value proportionally between the residential and retail components based on their respective floor areas. Under

Boston’s residential tax policy, the residential portion of the asset qualifies for a 75% tax exemption, substantially reducing the effective tax burden on the project. As a result of this allocation framework, the project realizes more than $140,000 in annual tax savings, strengthening ongoing cash flow and improving overall investment feasibility.

When these assumptions are applied to the current market listing price of $11.3 million, the project generates a levered IRR of only 7.2%, far below return thresholds expected by investors for a mixed-use conversion with renovation and entitlement risks. Because such a return profile would not secure equity commitments, we evaluated a purchase price aligned with recent comparable conversion transactions. Using the benchmark of $211 per square foot, we arrive at a recommended acquisition price of approximately $4.85 million. At this basis, the project produces a levered IRR of 18.3%, a return level consistent with investor expectations for similar projects. Taken together, these assumptions lead to a clear conclusion: the project is financially feasible and competitive only at a materially lower acquisition price, and the $211 PSF benchmark represents a defensible basis for both valuation and investor interest.

b. Sources & Uses of Funds

The total development budget for the proposed conversion amounts to $26.05 million, as detailed in the Sources & Uses schedule. On the “uses” side, the largest components are the recommended acquisition price of $4.85 million and total construction expenditures. Construction costs are based on hard costs of $350 per square foot, resulting in $14.91 million, along with $2.98 million in soft costs, representing 20% of hard costs. A further 10% contingency, or $1.79 million, is included to account for unknown conditions typical in adaptive reuse projects. Additional budget items include closing costs ($218,250), shortfall carry during lease-up ($164,732), a letter-ofcredit fee ($18,000), capitalized interest of $1.07 million, and a modest tenant improvement allowance of $48,820, given that the residential program requires minimal TI relative to commercial office space.

On the “sources” side, the capital structure is anchored by a senior loan covering 64.89% of total costs, equivalent to $16.9 million. During the construction and lease-up period, this loan assumes an 8% interest rate, consistent

with risk-adjusted pricing for transitional assets. Following stabilization, the project is refinanced at a 4% permanent loan rate. The remaining equity requirement totals $9.15 million, split between the sponsor (Team Brandon) and limited partners. The sponsor contributes 1.76% of the total capitalization, or $457,297, reflecting a 5% share of the total equity stack. Limited partners provide the remaining 33.36% of total project costs, amounting to $8.69 million, consistent with a typical joint-venture structure where institutional or private equity investors hold approximately 95% of the equity. Together, this capital stack supports a cost basis aligned with the recommended acquisition pricing and provides a financing structure capable of delivering the projected 18.3% levered IRR under the underwriting assumptions.

c. Exit Assumptions

For the exit analysis, we assumed a fiveyear hold period, with disposition occurring at the end of Year 5. The terminal value was calculated using the stabilized Year-6 NOI of $1,684,509 and a terminal cap rate of 5%, consistent with current market expectations for well-located multifamily assets in Boston. This results in gross disposition proceeds of $33.69 million, from which we deducted standard selling costs of 3.5%, yielding net disposition proceeds of approximately $32 million.

Because the property is situated in a historic district and the redevelopment preserves key elements of the existing façade, the project becomes eligible for both federal and state Historic Tax Credits (HTC). To reflect this, we assumed that 50% of hard costs qualify as eligible rehabilitation expenditures—equal to $7,454,895 in our underwriting. Under the HTC program, both the federal and state governments provide 20% credits on eligible costs, resulting in $1,490,979 in federal credits and an additional $1,490,979 in state credits. These credits can be monetized through sale, producing a combined $2,683,762 in proceeds.

The integration of Historic Tax Credits strengthens the exit profile by generating incremental value outside the traditional sale proceeds. When combined with the terminal valuation based on NOI and market cap rates, these credits meaningfully enhance the

project’s overall returns and improve its attractiveness to equity investors.

d. Distribution & Sensitivity Analysis

The project’s return distribution follows a three-tier IRR hurdle waterfall, under which profits are allocated differently to LPs and the sponsor once certain thresholds are achieved. Although the overall deal generates a levered IRR of 18.3%, the limited partners receive 17.8%, while the sponsor—through promote participation— achieves an enhanced return of 35.1%. Equity is deployed upfront, with the balance of the capital stack funded through the senior loan, and key operating metrics such as DSCR and Debt Yield remain within acceptable ranges throughout the hold period, indicating that the project is financeable from a credit perspective. Despite its highly favorable location—less than a block from North Station and proximate to key amenities in the North End—the viability of the deal is heavily dependent on the accuracy of multiple assumptions. Entitlement approvals, construction cost containment, lease-up velocity, rental rate premiums, and construction duration must all align closely with projections for the economics to hold together. As our sensitivity analysis demonstrates, the project is feasible only if acquired at the recommended basis of $4.85 million. At the current market listing price of $11.3 million, even under optimistic assumptions, returns fall to approximately 7.2%, far below investor requirements for a redevelopment of this complexity.

In short, while the project has the potential to deliver strong returns under the optimized underwriting scenario, it is fundamentally a high-risk, high-dependency deal, one in which the feasibility—and the investor appeal—hinges on securing the asset at a materially discounted acquisition price and executing the business plan with precision.

Community Benefits

The proposal offers substantial community and urban benefits:

• Adds new rental housing in a neighborhood with extremely limited supply

• Preserves historic structures while revitalizing vacant buildings

• Enhances street-level activity through upgraded retail frontage

• Supports transit-oriented living, reducing car dependency

• Aligns with climate resilience goals through basement flood-proofing and sustainability

ECONOMIC LOSSES (OPERATIONS

• Promotes adaptive reuse, reducing demolition waste and contributing to environmental sustainability

The project contributes directly to Boston’s broader policy goals, including increasing housing stock, strengthening walkable neighborhoods, and repurposing underutilized commercial assets.

Conclusion

The redevelopment of 133–169 North Washington Street presents a rare opportunity to transform distressed commercial buildings into high-quality multifamily housing in one of Boston’s most constrained rental markets. While the project benefits from strong neighborhood fundamentals and favorable market trends, a rigorous financial analysis reveals critical challenges at the current market valuation of $11.3 million. Due to high construction costs and limited rentable square footage, the projected Internal Rate of Return (IRR) falls below 10% at this price point.

Exploring higher-density options to offset these costs proved unfeasible; increasing the building height is constrained by the context of surrounding structures, and a condo conversion strategy was ruled out due to the critical lack of parking and the prohibitive cost of constructing underground facilities. Furthermore, the current high-interest-rate environment significantly limits the pool of potential buyers.

Therefore, this report proposes a 6-story multifamily development as the optimal strategy, balancing architectural integrity with market realities. To achieve financial viability and align with private investment goals, we recommend a revised acquisition price of $4.85 million. This adjusted valuation allows the project to leverage adaptive reuse effectively, meeting the city’s objectives for sustainable growth while securing a profitable outcome for investors.

Bibliography

1 Avalon North Station, Research: Apartment Floor Plans, Amenities, Asking Rents www.avaloncommunities.com/ massachusetts/boston-apartments/ avalon-north-station/

2 Avison Young Market Intelligence, Greater Boston Occupiers see a trade-off in rent concessions as construction costs rise, and landlords become more cash constrained https://www.avisonyoung.us/

3 City of Boston Mayor’s Office of New Urban Mechanics (MONUM). Demystifying Development Costs www.boston.gov/departments/housing/ demystifying-and-decreasing-development-costs

4 City of Boston. Office-to-Residential Conversion Program, Q3 2025 www.bostonplans.org/projects/ office-to-residential-conversion-program

5 City of Boston Planning Department, North End Neighborhood District, Article 54 https://library.municode.com/ma/boston/ codes/redevelopment_authority?nodeId=ART54NOENNEDI

6 City of Boston Planning Department, North End Neighborhood District, Table D https://library.municode.com/ma/ boston/codes/redevelopment_authority?nodeId=ART54TA_TABLE_ DNOENNEDIDIRENEBUSU

7 City of Boston Planning Department Research. Zoning, Neighborhood Demographics, Maps www.bostonplans.org/research

8 Colliers, Greater Boston Office Market Report | 2025Q3 https://www.colliers.com/

9 Colliers, Greater Boston Multifamily Market Report | 2025Q3 https://www.colliers.com/

10 CoStar Market Research Analysis, Market: Boston. Asset Class: Office and Multifamily, Submarkets: Downtown, North End www.CoStar.com

11 Costar Market Data, Boston https://www.costar.com/

12 David W. Thunell, Sr. Vice President of Construction at WinnDevelopment (In person discussion)

13 Dan Hubbard, Principal, VP of Finance, Causeway Development (Phone Call)

14 HR&A Advisors. BPDA Downtown Office

Conversion Study, 2023 www.hraadvisors.com/portfolio/city-ofboston-downtown-office-conversion-study

15 Jason Arndt, Principal of Zephyr Architects. Architect of record for North Washington Street project with previous developer prior to bankruptcy (Zoom Call)

16 One Canel Apartments, Research: Apartment Floor Plans, Amenities, Asking Rents

www.liveonecanal.com

17 Pinergy MLS, Massachusetts. Rental Market Analysis: North End Neighborhood www.mlspin.com

18 The Victor by Windsor, Research: Apartment Floor Plans, Amenities, Asking Rents www.windsorcommunities.com/ properties/the-victor-by-windsor/

19 Walk Score Search: 133–169 North Washington Street Boston, MA. 02114 www.Walkscore.com

20 Zillow, Rental Market Analysis: North End Neighborhood www.Zillow.com

Kingston St.

Kingston St

Introduction

1.1 Context: Downtown Boston’s PostPandemic Office Crisis

Since the COVID-19 pandemic, Downtown Boston has faced a structural decline in office demand driven by hybrid work, weak tenant absorption, and rising long-term vacancy. Legacy office districts such as the Financial District, Midtown, and Chinatown edge areas have struggled to re-attract tenants, resulting in underutilized buildings and declining asset values. Across the city, absorption has remained negative, new office deliveries have stalled, and the market has shifted decisively toward smaller, flexible spaces. In response, the City of Boston has positioned office-to-residential conversions as a key strategy in its post-pandemic recovery, offering tax abatements, streamlined Article 80 review, and zoning flexibility for qualifying projects submitted before 2025.

1.2 Why Kingston Street Is an Ideal Case Study

Within this context, Kingston Street represents the struggling prewar office typology at the heart of Boston’s downtown transition. Surrounded by Chinatown, the Leather District, and the Financial District, the site sits at a critical urban junction where demographic diversity, transit connectivity, and mixed-use intensity converge. Yet the building typology—deep floor plates, outdated cores, inconsistent daylighting, and inefficient upper-floor layouts—reflects the broader challenges facing Boston’s aging office stock. As such, it offers a representative and analytically rich case for assessing conversion feasibility.

1.3 The Central Problem

This essay investigates the core question: How can a century-old, deep-floor-plate office building be transformed into viable residential use, and what trade-offs arise between near-term financial returns and long-term urban value?

2-column wide graphic / image

1.4 Structure of the Essay

The essay proceeds by evaluating Kingston Street’s urban context, existing building constraints, zoning envelope, and market forces. It then analyzes residential demand, demographic patterns, retail strength, and office weakness to position conversion as a market-supported strategy. Four alternative design schemes are proposed and assessed through financial modeling, followed by a discussion of policy incentives. The essay concludes with an integrated recommendation that balances feasibility with long-term urban benefits.

Site & Urban Context

2.1 Urban Location & Connectivity

The Kingston Street property is located within one of Boston’s most transit-rich districts, with rapid access to South Station, Downtown Crossing, and multiple MBTA subway lines. Its immediate surroundings combine commercial activity, Chinatown’s retail corridors, small businesses, and emerging residential clusters. The neighborhood’s walkability and fine-grain urban texture provide strong support for higher-density, mixed-use development. Given the site’s adjacency to regional rail, commuter lines, and major employment centers, its conversion to residential use aligns with Boston’s broader goals for transit-oriented urban growth.

2.2 Existing Building Form & Character

Originally constructed in 1910 and renovated in 2016, the building maintains its brick industrial façade and historic character while incorporating updated mechanical systems. Internally, however, the typology reflects the typical challenges of prewar office structures: deep floor plates that limit daylight penetration, aging service cores, and inconsistent interior space flexibility. Several upper floors remain vacant, and existing tenants—primarily architecture, design, and tech firms—occupy fragmented spaces. The structure’s blank party walls and underutilized interior volume diminish its competitiveness as office space but simultaneously create opportunities for reprogramming, light-cutting interventions, or vertical additions.

2.3 Zoning & Development Envelope

Current zoning allows commercial and mixeduse development, with generous height and FAR potential relative to the existing six-story massing. The building is significantly underbuilt for its location and carries substantial air-rights capacity that could support a vertical tower addition. This regulatory flexibility, combined with

Boston’s conversion incentives, positions the site as a strong candidate for a larger-scale residential or mixed-use redevelopment rather than a minimal office retrofit.

Market Analysis

2. Residential Market Conditions: Vacancy, Absorption, Rent Levels, and Construction Activity (CoStar, 2025).

3.1

Residential Market Demand

Midtown and Chinatown exhibit strong structural demand for compact urban living. Market data show tight supply, with only 21 vacant units and nearly no new deliveries despite 77 units currently under construction. Asking rents remain high—averaging roughly $4,160— with occupancy around 92% even as broader market absorption fluctuates. Studios and one-bedroom units dominate demand, reflecting renter preferences among young professionals. Rent trends show sustained upward movement over the past decade, indicating resilience despite short-term softening. For Kingston Street, a studio-heavy residential program therefore aligns directly with market needs and offers the strongest absorption potential.

Figure 3. Market Asking Rent per Square Foot by Unit Type (2015–2030, with Forecast).

3.2

Demographic Drivers

Leather District and Chinatown residents are largely young professionals aged 25–40, with

typical household incomes between $80,000 and $100,000. Most households consist of single individuals or two-person units, further reinforcing

demand for high-efficiency units and adaptable live–work formats. This demographic alignment suggests that a converted Kingston Street building can capture existing market preferences with minimal programmatic friction.

3.3 Retail Market Dynamics

The Chinatown retail corridor remains one of Boston’s strongest small-business ecosystems, supported by constant pedestrian activity and stable demand for food-and-beverage spaces. Retail activation at the ground floor would not only enhance residential value but strengthen urban vibrancy and reinforce the district’s mixed-use character. This commercial stability— despite weaknesses in the office sector—supports a hybrid development approach where groundfloor F&B tenants anchor a predominantly residential program.

3.4 Office Market Weakness

Downtown Boston’s office market shows persistent structural weakness. Vacancy continues to rise, absorption is negative, and tenant preferences lean toward flexible, smaller footprints rather than traditional deep-floor-plate space. Asking rents for offices have remained mostly flat even as residential and mixed-use rents have grown steadily. With roughly 66% occupancy and fragmented tenants, the Kingston Street building exemplifies the declining viability of older office assets. Maintaining the current program would likely result in long-term underperformance.

3.5 Policy Incentives

Boston’s office-to-residential conversion program offers powerful accelerators. Projects that apply before 2025 qualify for up to 75% property-tax reduction, streamlined Article 80

review, and zoning modifications that favor residential density and mixed-use intensification. These programs explicitly encourage transformative conversions rather than superficial retrofits. For Kingston Street—already underbuilt and in a mixed-use district—the regulatory environment strongly favors a larger-scale redevelopment strategy incorporating both residential units and active ground-floor uses.

Site Constraints & Design Opportunities

4.1 Parcel Geometry and Development Constraints

The Kingston Street site presents a complex combination of parcel geometric, climate, structural, and urban conditions that fundamentally shaped the logic of office-to-residential conversion. The parcel measures approximately 73 feet by 278 feet, with a total area of 20,294 square feet. The long and narrow geometry limits both the unit layout and circulation organization. The existing building has a depth of 70.5 feet, with a surface parking lot remaining behind it. This brings a rare infill opportunity within the dense Boston downtown area, which offers additive room for new vertical development without demolishing the entire existing structure.

The current office building has an FAR of 5.02, within the current Article 43 - Chinatown District Commercial Chinatown Subdistrict, the maximum FAR could be 6.0. However, if this office-to-residential conversion appeals to the city through Large Project Review under Article 80, it can even reach 7.0 FAR. As a result, the structure is substantially underbuilt if converted to a residential building. This underutilization of the site’s development capacity points to a central issue: while a pure retrofit strategy may achieve strong short-term financial return, it leaves substantial zoning potential untapped. Conversely, new construction on the rear lot allows the project to leverage the site’s full value and respond to the city’s pressing need for more downtown housing.

4.2 Climate, Daylight Limitation and Existing Plan

Aside from parcel constraints, climate conditions add another layer of complexity. By using Ladybug climate analysis, 5 massing studies were tested to evaluate how different volumetric configurations perform within Boston’s continental climate (Figure 6). As a key objective for conversion, the design strategy should not just simply to maximize buildable area and profit, but also be responsive to best thermal and daylight performance. Since the Kingston Street parcel is located just 51.74 feet North-west to the Radian building, the existing building’s entire East facade will be mainly impacted and shaded during the day. Even more, the closenessness to the adjacent structure on both the North, West and East side would also severely limit the daylight for low-rise units, leaving the South side as the optimal solar performance and primate location. Therefore, the studies demonstrate that a compact, vertically stacked tower placed on the South parking-lot side performs significantly better than a full-building extrusion. This climate-informed logic directly supports the added tower strategy explored later in scheme 3 and scheme 4.

Internally, the existing building’s depth also poses daylighting challenges. With only Kingston Street’s and Edinboro Street’s facade offering limited window exposure, one can naturally speculate that a double-loaded corridor typology would be most efficient for daylight penetration. Beyond 30 feet deep into the plan zone, the interior becomes an uninhabitable experience for residential uses without carving in additional skylight. To a greater extent, the existing column grid also suggests unit layout

without substantial intervention. Any structural bay under 19 feet will be tight for one bedroom but correlate well with daylight thresholds and unit size for studio units.

4.3 Structural and Circulation Implications

The existing office core presents another critical obstacle for conversion. Office buildings were built for maximizing efficiency in floor plate utilization, with their cores on the side. However, this configuration that works best for commercial tenants conflicts with the requirement of residential corridors. By using a double-loaded corridor, the typology would allow units to be placed on both sides of a central spine to generate maximum sunlight and ventilation to all the units. In addition, the original office building was built in 1910, without advanced building construction technology and techniques, the column grids were relatively tight, spanning 14-22 feet and 11-12 feet horizontally (Figure 7). This does not correspond to the modular unit widths needed for residential plans. These misalignment clearly indicate that major circulation and core intervention would be required to fully convert the building to residential use. Thus, the tower scheme resolved many of these issues by introducing a new vertical core located on the parking-lot portion of the site, which would be discussed more in-depth within

4.4 Urban Opportunities

Although facing several design constraints, the site’s urban position offers strong ground-floor opportunities. With all around public-facing edges, the redevelopment can meaningfully activate the streetscapes. Currently suffering from limited transparency and pedestrian engagement, the site is well-positioned at the seam between the active commercial Chinatown area and the emerging residential life of the Leather District. This brings it the opportunity to act as a micro-neighborhood connector. By locating the tower on the rear lot, the design will respect the existing street life and maintain the historic street wall while allowing height and density to be placed where the site can absorb it most effectively and least disruptively. In short, the constraints and opportunities that naturally grow from the site deliberate a clear architecture and urban logic: retrofit efficiently where feasible and the vertical massing gives a chance to achieve density and long-term performance.

Design Strategy and Scheme Comparison

5.1 Design Strategy

The entire Kingston Street office-to-residential conversion project will be driven by three core design strategies:

(1) ensuring sunlight and habitability; (2) reshaping the urban interface of the ground floor; and (3) utilizing the current inherent development potential.

First, sunlight for inhabitants was central to all decisions. Due to the deep plan and limited window frontage, the redevelopment plan relied heavily on single-sided lighting. Therefore, after new division walls are added, any rooms without sunlight will need to carve out additional windows to support dwellers’ needs and be code-compliant.

Second, the design should activate the ground floor interface as a micro-neighborhood anchor. The existing ground floor was relatively enclosed, contributing little to the street and hindering pedestrian flow between Chinatown and the Leather District. The proposed solution included adding a more transparent retail interface to the street level, improving community interaction and emphasizing entrance visibil-

ity. In the tower design, the original building is preserved as a podium, creating a friendly pedestrian scale on the street level, while the new tower will operate through setbacks and staggered volumes to reduce its impact on the streetscape.

Third, the design strategy will test out how to leverage zoning potential and FAR utilization for the growth potential for decades to come. This would align to the City of Boston’s goal of increasing downtown housing and growing the urban core. In this sense, the design strategy is not only an architectural response but also an urban and policy-driven one.

5.2 Scheme 1 - Retrofit Studio Lite

The retrofit studio lite scheme represents the regeneration with the least intervention. It relies on a straightforward conversion of the existing structure, with unit layouts dictated by structural bays and facade constraints. The overall unit mix emerges from what the building can accommodate rather than an optimized strategy, with a total of 120 units and unit mix heavily weighted 61.3% on 1 bedrooms. This is the highest-IRR option due to its fast delivery and minimal capex. However, its reliance on deep, single-aspect units means that interior daylight remains limited, and the building risks becoming an underperforming residential asset over time. It is a short-term solution with considerable long-term drawbacks.

5.3

Scheme 2 - Retrofit Studio Heavy

Adjusting according to scheme 1, the second option re-evaluates unit mix to a more balanced proportion, having around 33% for each type. The east-facing units that are most affected by overshadowing from the adjacent Radian building are converted into studios, which are more tolerant of single-aspect daylight. Compared to scheme 1, it performs programmatically but still performs limitedly to achieve a transformative outcome.

5.4

Scheme 3 - Tower with Studio Heavy

The tower studio heavy scheme offers a more comprehensive response to both site challenges and city policy goals. This scheme retains the existing building as a podium, but introduces a new tower on the underutilized parking-lot portion of the site. The tower is served by a new high-rise core, supported by the podium core, both work together to create a clean stacking and efficient residential plates (Figure 8). The scheme delivers 76 studios, 44

one-bedrooms, and 38 two-bedrooms, balancing density, livability, and long-term value creation.

Showing on the floor plan, the red-marked indicate structural wall retained for resume and embodied carbon efficiency, while the blue-marked windows indicate new openings added specifically to meet daylight requirements (Figure 9). By rising above surrounding shadows, the tower provides superior daylight and views, significantly enhancing the living experience. This scheme fully leverages the site’s development potential and aligns with BPDA’s emphasis on downtown housing production.

5.6 Scheme 5 – Family-Oriented Mid-Rise Strategy

Scheme 5 proposes a mid-rise addition on the rear parking-lot portion of the site, intentionally keeping the massing under seven floors to avoid the cost escalation associated with high-rise structural systems and allowing construction costs to remain closer to retrofit levels. This moderated height enables the project to introduce larger 2B2B and 3B2B units without the financial burden of a tower, directly responding to a documented market gap in Downtown and Chinatown, where most recent conversions skew heavily toward studios and single-adult households. The demographic data shows a growing share of multigenerational families and middle-aged renters who prefer to live near elderly relatives in Chinatown, yet currently lack appropriately sized units. Scheme 5 meets this need by organizing the floor plate to support family living, placing larger units on the best daylight exposures while maintaining efficient circulation and a residential scale that respects the existing streetwall. Although the unit count is lower than the tower schemes, the program caters to a more stable tenant base,

5.5 Scheme 4 - Tower with Studio Lite

Scheme 4 follows the same overall logic as Scheme 3, with the same tower volume but less units, 252 units in total. While it introduces some daylight and massing benefits, the reduced scale in one bedroom units prevents it from effectively subsidizing construction costs. As a result, it produces the lowest IRR and the weakest long-term value proposition. It lacks the transformative impact of Scheme 3 and does not take full advantage of the site’s latent capacity.

reduces turnover risk, and achieves a balanced return by combining lower structural cost with a differentiated market position. In doing so, Scheme 5 offers a financially disciplined and socially responsive alternative that strengthens the housing diversity of the neighborhood.

5.7 Design Scheme Implication

Taken together, the five schemes reveal that the Kingston Street site is defined less by a single optimal massing solution than by the tension between three competing forces: the limitations of the inherited office structure, the hidden value of the rear parking-lot footprint, and the shifting demographic profile of the downtown housing market. The retrofit schemes show that rapid conversion alone cannot overcome the structural inefficiencies embedded in the existing building, while the tower schemes demonstrate that maximizing zoning capacity requires a willingness to absorb higher construction complexity and longer delivery time. Scheme 5 introduces a third path, one that reframes the parking-lot addition not as an opportunity for height but as a vehicle to recalibrate the unit program toward a more diverse urban household profile—an insight that neither pure retrofits nor high-rise massing capture. What becomes clear across the five options is that development value on this site is not purely a function of square footage, instead it emerges from aligning structural intervention, construction cost thresholds, and household demand into a coherent strategy (Figure 10). The full comparison therefore underscores the central decision facing Kingston Street: whether its future should prioritize financial returns, capacity, or demographic need, and how each choice produces a fundamentally different trajectory for the building’s long-term performance in Chinatown.

Financial Discussion & Feasibility Analysis

6.1 Redevelopment Cost and Schedule Implications

Our feasibility analysis assumes an owner-operator model where the current owner undertakes the redevelopment. Consequently, land cost is modeled at $0. While this significantly improves project returns compared to a speculative acquisition, it is critical to note that the opportunity cost of not selling the asset “as-is” is not factored into this specific calculation. Furthermore, while there is no acquisition cost, the project must carry substantial holding costs, specifically property taxes, throughout the pre-development and construction phases.

This 74% premium for vertical expansion highlights the steep penalty Boston’s construction market imposes on new density. These costs are compounded by timeline variations:

•Scheme 1 & 2: 16 Months

•Scheme 5: 24 Months

•Scheme 3 & 4: 32 Months

The extended timeline for Scheme 3 severely drags the Internal Rate of Return (IRR) by delaying revenue recognition and extending the period of negative cash flow.

6.2 Methodological Assumptions

To isolate the impact of physical design and unit mix on performance, rent, financing, and exit assumptions were standardized across all schemes.

In a real-world scenario, these metrics would dynamically adjust to risk. For instance, Scheme 3 involves significantly higher construction execution risk and would likely command a higher interest rate or lower LTV

The capital requirements vary drastically between the intervention strategies:

6.3 Comparative Performance

The comparative analysis reveals a divergence between financial optimization and planning viability.

•The “Spreadsheet” Winner: Scheme 1

1. Lowest capital exposure, fastest stabilization, and high density of efficient studio units (120 units).

2. This scheme relies heavily on small units, which contradicts current planning priorities for family housing.

•The “Political” Winner: Scheme 5

1. While returns are over 200 basis points lower than Scheme 1, this model includes a Tax Abatement, assuming that the inclusion of family-sized units (2-3 bedrooms) aligns with Boston’s Article 80 and housing priorities.

2. Despite the lower IRR, the presence of larger units creates a clearer path to entitlement. Without the tax abatement, the lower rent per SF of large units would likely render this scheme unfeasible.

•The Underperformer: Scheme 3

1. The “vertical premium” is fatal here. The additional density (278 units) cannot generate enough incremental revenue to offset the $785/SF construction cost and the 32-month timeline. In the current high-interest environment, time is too expensive to justify this level of density.

6.4 Sensitivity Analysis

We selected Scheme 5 for sensitivity analysis as it represents the most realistic “approvable” project. The data indicates that the project is hypersensitive to Hard Costs.

Sensitivity Analysis Reducing Hard Cost

Sensitivity Analysis Increasing Annual Revenue Growth

This sensitivity underscores that Boston’s feasibility crisis is a supply-side cost problem, not just a demand-side revenue problem. This reflects Boston’s current real estate development context, underscoring the need for future efforts to reduce construction expenses.

Conclusion

This financial exercise demonstrates that the “highest and best use” in Boston is no longer a simple function of density.

Across the three development strategies, each scheme offers a distinct balance of feasibility, market fit, risk, and long-term value. Scheme 1 emerges as the cost-effective baseline, delivering the fastest approvals, lowest construction exposure, and strongest IRR while relying on leasing demand for small units. Its financial simplicity also makes it the most financeable option in today’s high-interest-rate environment. By contrast, Scheme 3 represents a high-ambition, high-impact alternative. It maximizes FAR through rear-lot expansion, generating the largest GFA and unit count while offering the greatest long-term value creation and the strongest contribution to addressing the broader housing shortage. Its introduction of a new vertical tower also enhances the district’s skyline presence, reinforcing the neighborhood’s evolution toward higher-density living.

Finally, Scheme 5 aligns most closely with Boston’s policy direction and community objectives. By supplying much-needed 2–3 bedroom units, it addresses a clear gap in the submarket while fitting comfortably within existing regulatory constraints. Although returns are slightly lower than the Scheme 1, this option benefits from greater stability due to supportive approvals and potential incentives.

The analysis confirms that the current development climate in Boston is structurally hostile to conversion. The stringent Article 80 approval process, requiring family-sized units, directly conflicts with the financial reality that density and small units are required to offset the region’s exorbitant construction costs. For this project to proceed, Scheme 5 is the only viable path, but only if the modeled tax abatements and streamlined approvals are guaranteed.

Bibliography

1 CoStar Realty Information Inc. 2025. Household Income by Age (5-mile radius, 2024).

2 CoStar Realty Information Inc. 2025. Household Income Distribution (2024–2029 forecast).

3 CoStar Realty Information Inc. 2025. Household Size Distribution (2024).

4 CoStar Realty Information Inc. 2025. Housing Occupancy: Owner vs. Renter (2024).

5 CoStar Realty Information Inc. 2025. Per Capita and Average Household Spending (5-mile radius, 2024).

6 CoStar Realty Information Inc. 2025. Market Asking Rent Growth (YOY), 2015–2030 Forecast.

7 CoStar Realty Information Inc. 2025. Market Asking Rent per SF, Inflation Adjusted.

8 CoStar Realty Information Inc. 2025. Market Asking Rent per SF (2015–2030).

9 CoStar Realty Information Inc. 2025. Vacancy Rate, 2015–2030 Forecast.

10 CoStar Realty Information Inc. 2025. Current Tenants and Stacking Plan.

11 Boston Planning & Development Agency. 2023–2025. Downtown Officeto-Residential Conversion Program: Guidelines, Incentives, and Article 80 Modifications.

12 Boston Planning & Development Agency. 2021. Article 80 Development Review Guidelines.

13 City of Boston. 2023. Inclusionary Development Policy (IDP) Guidelines.

14 Massachusetts Bay Transportation Authority. 2024. MBTA Transit Network Overview.

15 City of Boston Assessing Department. 2024. Property History: 109–129 Kingston Street.

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17 Boston Planning & Development Agency. 2024. Boston Zoning Code: Downtown, Chinatown, and Leather District Articles.

The Overbuilt Life Science Sector in Boston

The Overbuilt Life Science Sector in Boston: Redevelopment Report

Boston’s Life Science

Boom and Its Structural

Turning Point

Over the past decade, the Boston-Cambridge metropolitan area has established itself as the most competitive and capital-intensive life science cluster in the world. The region’s ecosystem is anchored by world-leading scientific research institutions such as MIT and Harvard University, globally dominant pharmaceutical companies, and a dense network of medical research hospitals. This concentration of talent, intellectual property, commercialization pipelines, and venture capital has created a uniquely powerful innovation economy (JLL, 2023). As scientific breakthroughs moved rapidly toward clinical application, commercial demand accelerated for research facilities, specialized wet labs, and technically advanced workspaces. Laboratory real estate became not merely a market product but a strategic infrastructure supporting innovation and national biomedical advancement.

The COVID-19 pandemic intensified these dynamics. Between 2020 and 2023, unprecedented federal funding for vaccine development, diagnostic technologies, and biopharmaceutical research (NIH, 2023) dramatically increased the velocity of biotech creation and accelerated the spatial expansion of research enterprises. Venture capital surged into early-stage biotech companies, and private developers rushed to build premium lab buildings to meet escalating demand. During this period, laboratory vacancies near zero were common, particularly in Cambridge, and rents surpassed historic highs. The market began to behave as if scientific funding would remain perpetually expansive.

However, a structural shift emerged beginning in late 2022 and continuing through 2024-2025. A sharp contraction in life science IPO activity, rising interest rates, and a decline in venture capital caused a mismatch between

the delivery of new laboratory buildings and the financial ability of companies to occupy them. The market suddenly faced what many have termed an “overbuilt” condition: a rapid rise in vacancy rates, a surge in sublease offerings, and a slowdown in leasing velocity. Yet the current imbalance should not be mistaken for a collapse of underlying demand. Long-term research activity continues, and the foundations of the regional life sciences economy remain intact. The true issue is temporal misalignment, between supply cycles and capital cycles, not a structural weakening of the sector itself.

This report examines the macroeconomic and investment conditions that catalyzed the shift and evaluates submarket differences across Cambridge, the Seaport District, and Allston/ Brighton. Through these cases, it becomes clear that the market’s challenge is not one of obsolescence, but of strategic management: how can existing life science buildings be utilized productively in the short term while preserving their relevance for future industry resurgence? This question sets the stage for the architectural and adaptive strategies that follow in the next section of our group project.

Macroeconomic Environment: High Capital Costs and Rising Vacancy

Life science markets do not respond to macroeconomic indicators in the same way as conventional commercial real estate. They rely heavily on projected research funding, venture capital activity, and scientific commercialization, not short-term revenue streams. Nevertheless, the cost of capital fundamentally shapes both tenant growth and speculative development. As of 2025, Boston’s economic indicators reflect moderate overall stability: 4% unemployment, 2.2% GDP growth, and steady business expansion (Oxford Economics, 2025). However, elevated long-term interest rates of approximately 4.4% have had disproportionate consequences for the life science sector. High

borrowing costs constrain lab development financing, limit start-up expansion, and increase debt service requirements across the industry (Pivo & Fisher, 2020).

While demand temporarily slowed, a surge of supply, originally financed under pandemic-era expectations, continued to deliver into the market. This mismatch is visible in vacancy trends, where regional laboratory vacancies rose from nearly 1% in 2021 to almost 30% by mid-2025.

Market reports corroborate this interpretation. Cushman & Wakefield (2025) documented a historic 33.9% vacancy rate and noted that 1.6 million square feet of speculative lab construction remained underway, with nearly 90% uncommitted by tenants. CBRE (2025) similarly recorded a 27.7% vacancy rate driven by a flood of newly delivered lab buildings without pre-leasing, despite leasing activity increasing 150% quarter-over-quarter. Cresa (2025) further quantified the scale of imbalance, estimating 14.4 million square feet of vacant lab space, almost triple the amount available just three years prior.

Academic literature has long warned that high-tech real estate markets exhibit cyclical oversupply when capital expectations outpace long-term research fundamentals. Pivo and Fisher (2020) describe the role of capital cycles in misaligning supply with absorptive capacity, particularly for high-cost asset classes. Kerr and Robert-Nicoud (2020) argue that innovation clusters tend to experience “speculative expansions” tied to capital exuberance rather than proven demand. These frameworks help explain why Boston’s current imbalance is not a sign of structural decline but a predictable phase in a capital-driven real estate cycle. Supply overshoot, followed by absorption, is inherent to districts whose growth is anchored to long research and commercialization timelines.

Venture Capital as the Primary Driver of Laboratory Demand

Unlike office markets that are driven by revenue-producing operations, laboratory leasing is largely dependent on capital inflow. Most early-stage life science tenants lease space not because they are profitable, but because they have raised investment rounds to fund research. Their ability to pay rent relies on venture financing, private equity, or federal grants, not product sales (Lerner & Nanda, 2020). As a result, fluctuations in venture capital translate directly into real estate absorption velocity. Life science funding peaked in 2021, then

entered a prolonged decline from 2022 through 2024. The downturn halted expansion plans, reduced hiring, and reduced pre-leasing for speculative developments.

Funding contraction had several immediate effects on real estate. The number of new biotechnology firms fell sharply, limiting net new demand for lab space. Existing companies began to sublease excess space to reduce operational burn rates, leading to more than three million square feet entering the sublease market between 2023 and 2025 (JLL, 2024). Additionally, with the IPO window largely closed, companies no longer pursued aggressive growth trajectories requiring early pre-leasing of laboratory facilities.

Importantly, recent data suggests the beginning of stabilization. CBRE (2025) reported that Q3 2025 venture funding increased 58% from the previous quarter and that six Boston-based companies raised more than $100 million each. Cushman & Wakefield (2025) similarly noted that 2025 leasing volume had already reached 95.6% of 2024’s annual total by mid-year. These signals indicate that demand has not disappeared; it has been temporarily deferred. Powell (2022) observes that life science markets follow scientific cycles rather than short-term financing curves, highlighting that research progress and regulatory pathways often outlast capital corrections. Thus, current conditions reinforce the necessity of treating laboratory space as long-term innovation infrastructure rather than a purely transactional commodity.

Case Studies

Cambridge: A High-Value Market in Temporary Surplus

Cambridge, particularly Kendall Square, remains the global nucleus of life science research. For years, vacancy rates were effectively zero, and rents reached world-leading levels (Colliers, 2023). Yet the delivery of pandemic-era projects has raised vacancy levels across the submarket. According to Lincoln Property Company (2025), vacancies have increased over nine consecutive quarters. Despite this increase, Cambridge’s market is fundamentally strong. Cushman & Wakefield (2025) reported that while regional vacancy reached 33.9%, Cambridge’s vacancy remained at 19.9%, significantly lower than any other submarket, and its rent premium remained 15.9% above the market average. The tenant base

remains dominated by large pharmaceutical companies, research consortia, and institutions with stable funding models. Instead of exiting the market, these organizations are simply deferring expansion until financial conditions stabilize. Therefore, Cambridge illustrates not a weakening demand but a short-term imbalance. Developers have already begun pausing speculative projects, preserving future capacity rather than abandoning laboratory typologies altogether.

Seaport: Speculative Risk in a NonInstitutional Market

By contrast, the Seaport District expanded primarily through private development without the institutional anchors that characterize Cambridge (Katz & Wagner, 2014). Its identity as an “innovation district” originated from branding and commercial positioning rather than research lineage. Consequently, the Seaport suffered disproportionately during venture capital contraction. Cushman & Wakefield (2025) found that 89.8% of Seaport laboratory space under construction lacked a tenant, and vacancy surged to 33.9%, one of the highest levels recorded among U.S. life science clusters. These challenges stem not from poor building quality, the Seaport boasts some of the most advanced lab facilities in the nation, but from reliance on early-stage companies that are more vulnerable to funding volatility. Even so, the Seaport’s location adjacent to downtown Boston and Logan Airport provides unique advantages. As capital conditions normalize, the district is well-positioned to host a broader spectrum of research-adjacent industries, such as robotics, biomanufacturing, computational biology, and digital health engineering. The strategic question is not whether the Seaport should abandon life sciences, but how it can remain flexible enough to accommodate innovation until financing fully recovers.

Allston/Brighton: Immense Long-Term Potential, Underdeveloped Short-Term Ecosystem

Allston/Brighton represents an emerging research district largely driven by Harvard University’s Enterprise Research Campus and related development. However, its tenancy pipeline has not yet matured, and speculative construction moved faster than ecosystem growth. Cresa (2025) recorded vacancy rates nearing 70%, and Bisnow (2025) reported that multiple completed laboratory projects remained unleased months after delivery.

Unlike the Seaport, Allston’s challenge is not high cost but premature development rel-

ative to its research commercialization base. The district is better understood as future capacity under construction, requiring time to develop tenant density, entrepreneurial networks, and commercialization programs capable of sustaining occupancy. The most effective strategy is not full conversion but reversible occupation that allows facilities to serve broader research-production hybrids, robotics labs, materials testing facilities, engineering fabrication, and academic incubation spaces, without foreclosing future laboratory uses. Allston demonstrates that overbuilding can be treated as opportunity space, provided the market maintains flexibility rather than attempting immediate traditional leasing absorption.

Lessons from Boston’s Recent Life Science Development Cycle

The trajectory of Boston’s life science real estate market over the last decade illustrates how scientific innovation, capital investment, and urban development can become deeply intertwined. As the largest global biotechnology cluster, Boston’s experience offers critical lessons for policymakers, developers, institutional stakeholders, and investors seeking to navigate both the volatility and long-term resilience of research-driven real estate. The recent period of rapid expansion followed by a pronounced oversupply was not simply a market fluctuation; it reflected structural dynamics that reveal what the region has done exceptionally well and where its vulnerabilities became visible.

One of the most significant positive outcomes of Boston’s development cycle is the advancement of specialized infrastructure that will sustain long-term innovation capacity. The construction of advanced laboratory facilities, high-floor-load buildings, and robust MEP systems, including mechanical, electrical, and plumbing, represents a form of durable economic capital. As observed by Pivo & Fisher (2020), innovation infrastructure continues to create value through multiple cycles, even when short-term demand fluctuates. The region now possesses a built environment capable of supporting next-generation biotech, biomanufacturing, and hybrid computational research, assets that extend well beyond the needs of any single financial cycle. In this sense, the creation of physical research capacity, like university endowments or patents, is a long-term investment that strengthens Boston’s global competitive advantage.

However, Boston’s development cycle also illustrates the risk of speculative

misalignment between the financing of science and the financing of buildings. Many developers relied on pandemic-era assumptions that venture capital and IPO markets would maintain unprecedented growth trajectories. Venture funding pressures created a surge in speculative construction, particularly in non-institutional submarkets like the Seaport, where leasing strategies depended heavily on early-stage firms lacking stable commercial maturity. This overreliance on start-up tenants, whose leasing capacity is directly tied to capital cycles rather than revenue (Lerner & Nanda, 2020), exposed how real estate actors failed to differentiate between long-term research anchors and shortterm speculative demand. Future development must therefore calibrate pipeline delivery to funding momentum, not solely to scientific optimism.

Another lesson emerging from the recent cycle concerns the uneven impact of oversupply across submarkets. Cambridge demonstrated the stabilizing force of research institutions and pharmaceutical anchors, maintaining relatively low vacancy and rent premiums even as the broader market softened (Cushman & Wakefield, 2025). The Seaport, by contrast, revealed the vulnerability of a market driven by branding, private development, and reliance on unstable tenants. Allston/Brighton showed the risk of premature capacity-building ahead of a mature commercialization ecosystem. Together, these cases reveal that life science markets are not monolithic; submarket resilience depends on institutional depth, not speculative enthusiasm. Successful life science clusters form around layered ecosystems of universities, hospitals, training programs, corporate anchors, and capital networks (Katz & Wagner, 2014). Boston’s future will depend on reinforcing these networks, not merely building space.

Finally, Boston’s experience highlights a strategic opportunity: the importance of reversible or adaptive laboratory design. The current oversupply has demonstrated that buildings need interim uses without losing long-term research value. Assets that can temporarily accommodate allied innovation industries, from robotics to materials testing to computing labs, create revenue continuity without abandoning future biotech cycles. As Powell (2022) argues, scientific commercialization moves in timelines longer than financial cycles, meaning that real estate must remain flexible through downturns until research breakthroughs create new waves of demand. Boston’s future development should

therefore favor multi-functional laboratory typologies that support both high-specification research and adjacent engineering or prototyping uses, enabling dynamic occupancy as capital markets fluctuate.

In sum, the recent life science cycle teaches that scientific clusters cannot be built through real estate investment alone; they must be rooted in institutional ecosystems, patient capital, and reversible infrastructure. Boston’s oversupply is not a failure but a reminder that innovation real estate must be aligned with scientific timelines rather than financial peaks. The city’s challenge and opportunity lie in using its current surplus not as an excess burden but as future-ready capacity that can absorb the next generation of biotech breakthroughs, whenever they arrive.

Adaptive Strategies for Short-Term Reuse: 30 Hampshire Street in

Kendall Square

The market imbalance outlined in the previous sections suggests that the current phase should not prompt irreversible conversions of laboratory buildings, but rather strategic, reversible adaptations that allow these facilities to remain economically productive while preserving their scientific capacity. This approach is most applicable within the urban and institutional density of Cambridge, where long-term demand is likely to recover as venture capital stabilizes and commercialization cycles progress. Within this context, the redevelopment of 30 Hampshire Street offers a model for short-term adaptive reuse in a premium life science submarket, demonstrating how under-utilized lab assets can operate as hybrid innovation infrastructure without forgoing their core laboratory identity. Strategic Location within an Innovation Corridor

30 Hampshire Street occupies an exceptional position within Kendall Square’s dense innovation geography. Situated between MIT, Harvard research collaborations, and multiple pharmaceutical and technology anchors, the building participates in a network of institutional and entrepreneurial actors who continually generate spin-outs, prototype development, and computation-intensive research. This location makes the building valuable even in downturn

periods, because its users are not solely early-stage biotech tenants but also robotics teams, computational drug discovery firms, materials research groups, and fabrication-oriented ventures that may not require certified wet labs. The surrounding ecosystem therefore positions the building as an ideal candidate for hybrid occupancy that accommodates fluctuating demand while maintaining laboratory capability for future reactivation.

Reversibility Through Heavy Laboratory Infrastructure

Laboratory buildings such as 30 Hampshire Street possess architectural and mechanical specifications far exceeding typical commercial building standards. Floor systems designed for live loads exceeding 125 pounds per square foot, heavy cast-in-place concrete slabs providing vibration resistance, oversized ventilation shafts, and high-capacity mechanical, electrical, and plumbing (MEP) systems give the building an intrinsic robustness not found in office typologies. These characteristics are costly to install and difficult to replicate, but they do not impede interim leasing to non-lab users. Instead, they provide “over-performance” that supports a spectrum of equipment-heavy and prototype-driven uses without altering core systems. This overperformance means that the current oversupply of lab space represents not obsolete inventory, but dormant scientific infrastructure that can be utilized productively with minimal intervention until demand rebounds.

Spatial Logic Enabling Rapid Adaptation

Life science buildings are typically organized around a dense mechanical and service core containing exhaust shafts, freight circulation, hazardous material pathways, and dedicated supply routes. This core creates a spatial division, separating former wet-lab zones from adjacent office areas, thereby offering a natural allocation for temporary hybrid programs. The former laboratory areas can serve fabrication, materials testing, robotics workshops, or digital manufacturing facilities that require access to utility infrastructure, while the office side can be subdivided into suites for start-ups, computational research, entrepreneurial teams, or AI-assisted drug design. A similar adaptive logic applies vertically. Floor-to-floor heights between 16 and 18 feet, combined with MEP plenum depth, allow new equipment, intermediate occupancy, and future laboratory reconversion without modifying macro-systems, Repositioning the Building as Community

Innovation Infrastructure

A viable adaptive reuse strategy for laboratory buildings requires more than mechanical selection or space subdivision; it must rethink how these buildings operate as part of the public realm of research. Historically, life science districts have developed as corporate enclaves, privileging intellectual property protection, regulatory separation, and proprietary research environments. These imperatives have often produced architecture with limited permeability, single-tenant use, and restricted public interface. While these qualities served the needs of established pharmaceutical and biotech corporations during periods of growth, they now limit flexibility in a market experiencing vacancy shocks and broader entrepreneurial diversification. A new spatial attitude is therefore necessary, one in which lab buildings become civic contributors to innovation ecosystems rather than isolated corporate machines.

A precedent for this shift is the transformation of Alderley Park in the United Kingdom. Once a closed pharmaceutical research campus under ICI, its adaptive redevelopment retained technical laboratory facilities but embedded them within a larger social and entrepreneurial framework. Ground floors, previously dominated by security desks and sterile circulation, were redesigned to support active community engagement: continuous public corridors, expansive atriums with controlled natural light, and public amenities such as cafes, retail, lecture theatres, and event spaces. These additions did not diminish the building’s scientific rigor; instead, they enabled a culture of collaboration that complemented the technical work above. The result was a spatial ecosystem where informal interactions, chance meetings in cafes, spontaneous discussions after public talks, shared working lounges, operated as drivers of innovation. The building thus shifted from a closed vessel of research into a shared civic platform for scientific culture. Applying this logic to Kendall Square, the repositioning of 30 Hampshire Street would similarly rely on establishing a public-facing ground floor that invites social exchange and supports the multifaceted rhythms of research culture. Rather than prioritizing private lobbies or corporate formalism, the building should emphasize flexible commons: furnished social seating, group work tables, a public cafe-bar that transitions from morning study to evening networking, bookstore and convenience retail catering to the research district, and a lecture/event space designed for exhibitions, talks, or pop-up showcases of prototypes. This shift transforms the

building from a static property asset into a lively “innovation institution,” even during downturns when laboratory tenants delay expansion. In other words, community programming becomes a bridge between scientific cycles and economic cycles, sustaining value when research funding contracts and amplifying connectivity when it expands.

Proposed Adaptive Program for 30 Hampshire Street

The strategic reuse of 30 Hampshire Street does not seek to erase the building’s life science identity, but to activate it temporarily through reversible spatial overlays. The existing leasing plan, which emphasizes wet labs, controlled environments, and ready-to-occupy research suites, remains valid as a long-term configuration. Yet current funding constraints mean that fewer tenants are willing or able to lease fully equipped laboratory space. Rather than waiting passively for a market rebound, the building can diversify its workload by inviting a broader range of research-adjacent groups while preserving full laboratory potential for later reconversion. The building’s value therefore lies in its ability to “hold scientific space open” through active economic use

Ground Floor as Public Interface

The enhancement of the ground floor is not a cosmetic change, but a strategic intervention that links building function to urban value. A redesigned public level would not only serve as a shared amenity, but as a mechanism for tenant attraction and retention, improving leasing velocity without high-cost construction. Food service, community lounges, an evening bar program, and an academic event venue diversify user engagement, increasing building foot traffic and making innovation culture visible within Kendall Square’s everyday life. Importantly, these spaces encourage start-ups, visiting researchers, and small teams to use the building even if they do not lease space in it, positioning 30 Hampshire Street as a node of cultural gravity. This public interface establishes a new economic model commonly referred to as “amenity-driven tenancy,” where the social life of a building becomes a driver of leasing performance. Research firms increasingly prefer environments that nurture recruitment, informal collaboration, and institutional visibility;

therefore, amenity strategy becomes a financial strategy. The building’s transitional state thus becomes an asset: a testbed for social innovation programming that strengthens its desirability when laboratory leasing fully returns.

Flexible Tenant Fit-Out Options (Three Reversible Models)

To reconcile short-term diversification with long-term laboratory potential, three reversible interior configurations demonstrate how floors can operate productively without altering core systems. These models are not speculative fantasies but actionable low-capex solutions aligned with current Cambridge tenant demand in robotics, computation, materials research, design technology, and prototyping industries.

The first model transforms former open laboratory space into a culinary and craft prototyping environment (Plan 01). This configuration leverages existing exhaust, drainage, and mechanical systems to support high-load equipment and experimental production such as food biotech, fermentation research, materials kitchens, or crossdisciplinary “food + robotics” fabrication. These emerging fields represent fast-growing sectors that value lab-style infrastructure but do not require full certification. Thus, food science and material studios are not thematic anomalies, but logical extensions of laboratory architecture.

The second model proposes a digital media and computational hub (Plan 02), targeting AI-assisted drug design, computational chemistry, graphics-based visualization of molecular structures, gaming-engine simulation in biomedical modeling, and creative coding firms whose work intersects scientific visualization. These tenants require office-like spatial conditions but benefit from access to freight logistics, mechanical redundancy, and higher floor loads for server racks, imaging equipment, or VR prototyping. Computational biotech is one of the few subsectors growing during capital contraction, making it an ideal transitional tenant class for Cambridge.

The third model introduces a coworking and prototyping collective (Plan 03), combining shared fabrication tables, rentable small offices, and common logistics support. Rather than traditional co-working centered on laptops and soft furniture, this configuration accommodates research teams with equipmentintensive workflows. Shared fume hoods, reservable prototyping bays, common chemical storage, and collective safety infrastructure

allow start-ups to operate in a facility they could not independently afford. This model therefore supplies an intermediate step between garagescale prototyping and full wet-lab commitment, providing a revenue stream while nurturing the very tenants who may later lease laboratory suites.

Across these configurations, laboratory readiness is never removed. Ventilation shafts remain intact, high-capacity MEP risers remain operational, wet-wall locations are preserved, and freight infrastructure continues to support hazardous or heavy material movement. With minimal cost, these reversible overlays enable the building to serve Cambridge’s broader innovation district now and fully return to wet-lab use when the next financing cycle accelerates.

Future Scenarios: Toward a Reversible, Sustainable, and Community-Embedded Life Science Market

As Boston transitions from rapid expansion into a period of oversupply, the future of life science development will no longer be defined by building more laboratory space, but by how effectively existing scientific infrastructure is managed through market cycles. By acknowledging laboratory buildings as long-term research assets rather than short-term commercial commodities, the region gains the opportunity to reimagine its innovation districts as flexible, community-engaged systems whose value persists whether venture capital is expanding or contracting. The next phase of Boston’s life science market will therefore be shaped by reversibility, sustainability, and public integration, transforming what appears as excess supply into strategic scientific capacity.

The most plausible near-term scenario is the gradual absorption of vacant space through diversified tenant types drawn from adjacent research-intensive industries. Robotics manufacturing, data-driven drug discovery, materials science, advanced prototyping, artificial intelligence, and fabrication-based media represent fields that require parts of the mechanical rigor of laboratories without meeting full wet-lab criteria. These industries will likely fill interim occupancy gaps while generating the exact firms that later mature into biotechnology tenants. In this model, reversible infrastructure functions as a business incubator: the building does not merely house future lab users; it helps produce them. As funding recovers, some of these hybrid start-ups will transition into traditional wet-lab tenants without needing relocation or capital-in-

tensive modifications, reinforcing the advantage of low-intervention reuse over permanent conversion.

Future market absorption will also depend on how laboratory districts relate to their urban context. Historically, life science buildings operated as closed, institutionally controlled workspace, providing little public value beyond economic clustering. Yet in a post-pandemic innovation economy, scientific production increasingly relies on interdisciplinary and civic interaction, not corporate isolation. Integrating public amenities, such as ground-floor marketplaces, cafés, fabrication bars, exhibition areas, and educational hubs, creates civic interfaces that democratize access to scientific culture. Such environments encourage students, residents, local entrepreneurs, and research workers to interact in shared space, broadening the talent pipeline and promoting cultural sustainability alongside economic recovery. These shared spaces, through a proposed public groundfloor program, are not merely architectural amenities; they are instruments for community wealth-building and knowledge transfer. Sustainability further reinforces this shift. Laboratory buildings are among the most carbon-intensive real estate typologies due to ventilation requirements, energy-heavy fume hoods, and material-intensive structure. Reversible reuse reduces embodied carbon by avoiding demolition and heavy reconstruction while simultaneously limiting waste from short leasing cycles. Reusing oversupply as adaptable proto-lab and innovation space is therefore not only an economic strategy but a climate response. As energy-conscious technologies, such as variable air change ventilation systems and heat recovery infrastructure, continue to advance, existing lab buildings can be retrofitted efficiently and incrementally. This ensures that carbon-intensive systems remain future-ready, minimizing waste while preserving research capacity.

For public institutions and municipal agencies, future market governance must treat laboratory buildings as a form of shared infrastructure. When public policy supports reversible retrofitting rather than conversion or obsolescence, scientific districts become resilient rather than speculative. Through zoning allowances that maintain lab capability during interim use, tax incentives tied to mechanical retention, and funding that encourages community-facing program space, the region can stabilize innovation real estate across financial cycles without compromising future research demand. Under

such a framework, buildings do not merely respond to the market; they actively cultivate the tenants, networks, and public support needed to sustain it.

Boston’s oversupply therefore opens a new development paradigm: laboratory assets as flexible public innovation infrastructure embedded within urban communities. In this future, vacant space is not a liability but a stocked reservoir of scientific and entrepreneurial potential, preserved through reversibility, sustained through environmental stewardship, and activated through civic participation.

Pro Forma Analysis

Long-Term Operating Performance of the 30 Hampshire Street Redevelopment

To evaluate the financial stability of the proposed redevelopment at 30 Hampshire Street in Kendall Square, a stabilized five-year pro forma as prepared (see Table 1). The objective of this analysis is not to speculate on short-term asset appreciation or exit capitalization, but to assess the property’s ability to operate as a durable income-producing asset during a volatile phase in the regional life science market. This approach aligns with the broader investment thesis outlined earlier in this report: Boston’s current oversupply represents a temporary misalignment rather than structural decline, suggesting that well-positioned assets should be evaluated based on operational performance rather than disposition timing.

The underlying assumptions in the pro forma are derived from market data provided by CoStar, Colliers, and macroeconomic projections from Oxford Economics, ensuring that rental growth expectations, vacancy rates, and operating expenses reflect broader market conditions. As demonstrated throughout the market analysis, Cambridge’s vacancy rate has risen but remains materially lower than other Boston submarkets, driven by proximity to research anchors such as MIT and Harvard. This localized demand supports the use of modest yet reliable revenue growth in the operating forecast. A 3% annual rent growth factor is therefore applied, consistent with current industry projections for stabilized laboratories and hybrid research assets in Cambridge (CBRE, 2025; Cushman & Wakefield, 2025).

The asset is modeled as a long-term hold without a sale event. This decision reflects the investment logic that laboratory-capable buildings operate as infrastructure supporting long scientific cycles, and therefore should not

depend on liquidity windows for value realization (Powell, 2022; Kerr & Robert-Nicoud, 2020). The lack of disposition and the emphasis on recurring income structurally align the pro forma with the needs of a marketplace recovering from an external capital contraction, not a demand collapse.

Operating Assumptions and Income Dynamics

The redevelopment program generates income from a mix of market-rate office space,

retail, and parking. Rent levels were calibrated against CoStar’s Cambridge submarket data and adjusted downward to reflect conservative expectations in a capital-constrained leasing cycle. Office and retail vacancy rates of 10% and 6%, respectively, mirror current absorption challenges documented in the macro analysis and supported by industry vacancy reports (Cresa, 2025; Lincoln Property Company, 2025). This conservative vacancy assumption prevents artificially inflated income projections and parallels the increasing use of sublease space across the region, which has exerted competitive downward pressure on rents since 2023 (JLL, 2024).

The resulting income levels increase gradually across the stabilization period, rising from $1.296 million in Year 1 to $1.459 million in Year 5 (see Table 2). This growth trajectory is not driven by aggressive leasing assumptions but by incremental rent growth, stabilized occupancy, and controlled concessions consistent with current market realities. The fact that income expansion is achieved without relying on speculative tenant turnover reinforces the long-term sustainability of the asset’s operating model.

Expense Structure and Net Operating Income Growth

Operating expenses were modeled using industry standards for mixed-use commercial properties, including $18 per square foot in operating costs, $7 per square foot in property taxes, and $1 per square foot in reserves, escalating annually at 3%. This ratio of expense to income, between 35% and 37%,aligns with established norms for comparable Cambridge

The pro forma indicates a ROTA of 8.9%, falling within the expected investment performance range for stabilized Boston commercial properties and exceeding current yields on premium office assets. As ROTA measures income relative to total asset value, its strength underscores the building’s operational efficiency, rather than reliance on speculative appreciation.

Furthermore, the ROE of 8.29% reflects a stable return profile for equity investors in a

mixed-use developments (CBRE, 2025; Colliers, 2024). Consistent expense ratios are particularly important in downturn periods, when operational margins often reflect asset quality more accurately than rent premiums alone.

Net Operating Income (NOI) increases from $787,600 in Year 1 to $886,451 in Year 5 (as outlined in Table 2). This steady NOI growth illustrates the property’s resilience to fluctuations in external capital markets. In a period marked by limited venture funding and delayed expansion cycles, the capacity to generate organic NOI improvements through operating fundamentals rather than speculative rent spikes is financially meaningful. If the scientific cycle resumes its expansion trajectory, as anticipated in the VC rebound forecast discussed earlier in this paper, these NOI gains would be augmented by future demand without requiring design reinvestment or programmatic overhaul.

Return Metrics: Asset Efficiency and Equity Stability

Two return metrics demonstrate the financial viability of the project: Return on Total Assets (ROTA) and Return on Equity (ROE).

low-volatility environment, supporting the thesis that a conservative, hold-based strategy is preferable in a market temporarily oversupplied yet fundamentally strong. ROE stability is especially notable given elevated debt costs, demonstrating that the redevelopment remains profitable even under constrained capital conditions.

Strategic Significance of Pro Forma Findings

The financial analysis of 30 Hampshire Street reinforces several key themes of the broader report. First, it demonstrates that laboratory-capable buildings in Cambridge retain value not through immediate absorption but through their ability to perform reliably during financing troughs. Second, it confirms that longterm return generation remains possible even as short-term vacancy correction unfolds. Finally, it illustrates that adaptive reuse toward hybrid research-supportive programming can sustain financial performance without sacrificing future laboratory conversion potential.

The pro forma does not attempt to time the market; it positions the asset to operate as durable innovation infrastructure, capable of generating consistent returns today and captur-

ing upside during future scientific expansion cycles. As Boston’s recent downturn illustrates, the lesson for investors is not to abandon laboratory-oriented real estate, but to underwrite it with patience, flexibility, and operational depth.

Conclusion

The current surplus in Boston’s life science market reveals not a failing industry, but a mismatch between capital volatility and the slower, cumulative nature of scientific progress. The physical infrastructure built during the pandemic boom, high-performance laboratories, structurally reinforced research floors, and MEP-intensive innovation shells, should not be dismantled or prematurely converted. Instead, these buildings must be leveraged as long-term scientific assets capable of supporting diverse, adjacent research sectors during funding downturns while remaining ready for laboratory reactivation as capital returns.

Reversible adaptive reuse offers a path that stabilizes financial performance, sustains research ecosystems, expands community access, and reduces carbon waste. By embedding public amenities, supporting interdisciplinary tenants, and planning through a lens of infrastructural resilience rather than speculation, Boston can transform oversupply into opportunity. The future of innovation real estate lies not in predicting biotechnological cycles, but in designing buildings and districts that remain productive and civic through every phase of them. In aligning architecture, policy, and community engagement with the realities of scientific time, Boston strengthens its position not just as a leading life science hub, but as a durable and inclusive engine of discovery.

Bibliography

1 Bisnow. (2025). Lab vacancy surpasses 50% in some Greater Boston clusters as demand shifts back to Cambridge.

2 CBRE. (2025). Boston Metro life science figures Q3 2025.

3 Colliers. (2023). Boston life sciences real estate outlook.

4 Colliers & PitchBook. (2025). Greater Boston life science funding and vacancy trends.

5 Cooke, P. (2020). Evolutionary economic geography and innovation clusters. Routledge.

6 Cresa. (2025). 2025 Market insight report: Greater Boston life sciences.

7 Cushman & Wakefield. (2025). Boston Biobeat Mid-Year 2025.

8 JLL. (2023). Life sciences industry report: U.S. cluster rankings.

9 Katz, B., & Wagner, J. (2014). The rise of innovation districts. Brookings Institution Press.

10 Kerr, W., & Robert-Nicoud, F. (2020). Tech clusters and economic geography. NBER Working Paper.

11 Lerner, J., & Nanda, R. (2020). Venture capital’s role in innovation. Journal of Economic Perspectives.

12 Lincoln Property Company. (2025). Lab market report: Boston Q1 2025.

13 NIH. (2023). Biomedical R&D funding trends.

14 Oxford Economics. (2025). Boston macroeconomic outlook.

15 Pivo, G., & Fisher, J. (2020). The role of capital cycles in commercial real estate risk. Journal of Real Estate Economics.

16 Powell, T. (2022). Biotech market cycles and innovation ecosystems. MIT Press.

Ground-Up Development Development Case Studies

A New Class of Housing

The World’s Healthiest Home

A New Class of Housing: the World’s Healthiest Home

Introduction

Homes are the spaces we find ourselves at our most vulnerable; desiring safety, peace, and relief from the outside world. However, residential buildings are often not optimized for human wellbeing. While the suburbs lure families with the promise of open space and fresh air, they also perpetuate a sedentary, isolated, car-dependent lifestyle [1]. Urbanites benefit from active transportation and vibrant communities, but many multifamily apartment buildings are defined by the double-loaded corridor, limiting residents’ access to sunlight, cross-ventilation, and social connection. Across the board, traditional construction utilizes building materials that make some look askance, and it would not be the first time widespread use of materials previously thought innocuous— like lead or asbestos— became the subject of study, controversy, and regulation.

While cases of outright illness, such as sick building syndrome, are still rare, knowing your brand-new unit must have all its harmful gases baked off for several days prior to your arrival doesn’t inspire confidence in the healthiness of your home. Since the national conversation around health and wellbeing reached a fever pitch in 2020, millions of Americans retain a deep sense of unease around the mysteriousness of many industrial products, from food to clothing to body care. Studies show that many are stressed or anxious about potentially harmful ingredients in contemporary consumer goods [2]. Today, a conscious consumer has to think about pesticides on their vegetables, forever chemicals in their sodas, carcinogens in their baby powder, and microplastics in their underwear, to name a few. Multibillion dollar industries have sprung up in response, touting their “clean,” “natural,” “non-toxic,” “organic,” and-the-like-versions of every consumer product you can think of [3].

The Problem with the Real Estate Industry’s Solution

In some ways, the real estate industry is no different. In 2014, the International WELL Building Institute launched the WELL Building Standard V1.0 as part of their mission to “bring human health to the forefront of building practices” [4]. WELL’s comprehensive certification system focuses on quantifying a building’s score on evidence-based metrics for ten “impact categories” such as materials, movement, and air. The certification has proved especially popular amongst corporations looking to optimize their office spaces— 83% of WELL-certified buildings are for commercial, rather than residential, buildings [5].

However, despite launching a WELL for Residential enrollment program in 2024, WELL’s metrics stop at the property boundaries, failing to take into account the larger context in which a home is located. While WELL’s framework for materiality is thorough and suitable for well-resourced companies, it’s more complex than most consumers wish to delve into when it comes to searching for their home.

As such, unlike the labels which populate our consumer products, most residential buildings do not come with a promise of intentionally healthy materials, siting, or design. Ironically, consumers can easily optimize for health with nearly every product, except that product which they spend the most money on— housing [6].

Introducing Honeycomb. Honeycomb is a real estate platform that gives people the agency to choose a healthy home, community, and lifestyle. We endeavor to become a trusted brand by emphasizing the presence of common sense, positive ingredients, from materials to siting and design, rather than merely the absence of suspicious ones.

Introducing Our Real Estate Platform: Honeycomb

Our platform focuses on designing multifamily developments where sunlight, fresh air, clean water, natural materials, and a community scale allow residents to breathe easy with the

knowledge that they and their families can trust the homes they live in. At Honeycomb, amenities and style blend the best of the urban lifestyle— active, vibrant, sustainable, with convenient access to the city— with the best of suburban and rural living— access to green spaces, quiet, spacious, and neighborly. Beyond complex metrics that serve as mere proxies for wellbeing, our projects make a healthy lifestyle easeful, naturally.

Honeycomb distills healthful homes down to five key categories for evaluation: light, air, water, nature, and people. These key categories will be consistent from project to project, supported by strategies that can scale and adapt to different contexts. So, what makes for a Honeycomb home, and why do we prioritize these factors for well-being?

Air: Honeycomb homes let you breathe easy through intentional siting, cross-ventilation, and premium air filtration. Clean air is associated with fewer chronic respiratory health issues, asthma attacks, allergies, and sinus issues due to lower levels of dust, mold, and allergens; it can also promote higher cognitive performance [7].

Water: Honeycomb homes filter out common contaminants found in unfiltered tap water. Safe, clean water supports hydration, physical health, and cognitive function, while reducing exposure to contaminants like lead, bacteria, and industrial chemicals that can cause illness or chronic health problems [8].

Light: Honeycomb homes are soaked in sunlight, no matter where they’re found on a floor plan. Ample daylight and views of nature are associated with reduced stress, improved focus, and better mood [9].

Nature: Honeycomb homes embrace nature, inside and out by prioritizing green sites, landscaping, natural building materials, and biophilic finishings (wood, clay, stone, etc.). Access to nature and natural elements in the home are associated with reduced stress and enhanced physiological wellbeing [10].

People: Honeycomb homes promote social connection through design and siting meant to encourage casual encounters with neighbors. Whereas chronic loneliness has proven as dangerous to our wellbeing as smoking cigarettes, meaningful social connection is associated with everything from lower risk of heart disease,

cognitive decline, and depression [11].

Honeycomb’s design is based on the principle that every room, particularly living rooms and bedrooms, should receive as much sunlight and fresh air as possible.

By centering these factors in every siting, design, and building material decision, Honeycomb will develop a distinct brand identity that consumers will learn to recognize and trust over time. Comparable wellness brands include Erewhon, a boutique upscale grocery chain known for its thorough commitment to organic whole foods and supplements. Erewhon was founded by Boston hippies as a health food store in the 1960s; despite its growth and celebrity clientele, it maintains its cult following, having fostered the trust that Erewhon has carefully considered every ingredient it sells so the customer doesn’t have to.

Honeycomb will do the same. Residents will know they’re in a Honeycomb unit in large part because of our distinctive honeycomb-shaped floor plans that prioritize sunlight, cross-ventilation, and spacious views of nature. They’ll also know that every material, design, and siting decision was made with their optimal wellbeing in mind.

Why a Real Estate Platform?

In real estate, an individual asset has limited reach. Its value is tied to its location, its physical condition, and local market dynamics. By contrast, building a branded platform creates value that extends across all properties in the portfolio. A strong brand establishes consistent quality, builds trust with residents, and generates its own demand, so each new property benefits from the reputation and customer base developed by the entire system.

This accumulated brand equity produces more stable occupancy, greater pricing power, and a differentiated market position that cannot be replicated by single, unbranded assets. For investors, the platform becomes a scalable operating model rather than a collection of buildings, which can command a premium and trade at lower cap rates. The underlying logic is simple: while individual assets depreciate, a well-executed brand appreciates, creating compounding

as the portfolio grows.

Market Analysis

Selecting a location for a wellness-centered residential building begins with the conditions of the place itself. A building cannot meaningfully support wellbeing if its surrounding environment undermines it. Belmont best aligns with Honeycomb’s criteria: cleaner air, lower noise exposure, walkable access enabled by commuter-rail access rather than dense traffic, strong household fundamentals, and an absence of modern, wellness-forward rental housing. Because wellness is shaped as much by environmental context as by building systems, siting is critical to the Honeycomb mission.

Our environmental screen focused on three variables consistently linked to daily wellbeing: air quality, walkability, and noise. Air quality was evaluated using PM2.5 concentrations [12]; walkability using a regional scoring tool [13]; and noise via proximity to high-traffic corridors [14]. Across the Boston region, the most walkable neighborhoods tend to exhibit the highest levels of particulate pollution and ambient noise. This dynamic means that a wellness-driven building located in a traditional urban center inherits environmental externalities that are difficult to mitigate through design alone. A context that supports healthier air, lower noise, and meaningful mobility is essential to delivering a materially improved residential baseline.

Transit-oriented developments (TODs) offer an opportunity to solve this paradoxical dilemma. A survey of the Boston MSA’s TOD pipeline, shows Belmont best matching Honeycomb’s environmental and demographic criteria. It offers cleaner air, reduced noise exposure, stable growth trajectory, and adjacency to conservation areas. Belmont’s constrained multifamily stock and historically restrictive zoning have also suppressed new supply for decades. As a result, the town’s high-income, highly educated demographic base remains underserved by contemporary rental options.

To understand potential pricing capacity, we benchmarked Belmont against the Seaport, Boston’s highest-rent district. Despite large differences in rent levels, Belmont’s household incomes and median home values are broadly comparable to those of Seaport residents. Data from Census Reporter shows that Belmont’s median household income of $178,188 [15] significantly exceeds the Boston MSA median of $96,931 [16] and Seaport’s average annual income of $133,844 [17]; aligning with income levels in

the region’s highest-rent neighborhoods. The discrepancy reflects product, not purchasing power. The Seaport commands premium rents because it offers modern Class A housing; whereas Belmont’s rental stock is older and not aligned with contemporary expectations.

Prospective Honeycomb residents reflect national patterns among higher-income, highly educated households that increasingly prioritize environmental quality, natural light, material transparency, and walkable access. This includes professionals seeking urban connectivity without the environmental burdens of dense neighborhoods, young families trading up from older multifamily product, and empty nesters who value health-aligned housing. Belmont’s schools, safety, green space, and transit access position it to serve this demand well.

The current wellness landscape in residential real estate remains shallow. While the term is widely used in marketing, few buildings deliver wellness through systems, materials, or spatial logic. No comparable rental product exists at scale. The closest precedent is the Delosdeveloped pilot condominium in New York City, built in 2013 to inform the WELL Building Standard [18].

In Greater Boston, projects such as Life Time Living in Burlington and Gibson Point in Revere incorporate wellness branding, but their approach centers on amenities and lifestyle programming rather than building-level performance. Critically they do not deliver in-unit wellness features related to air quality control, acoustic mitigation, circadian-aligned daylighting strategies, water purification, or material health; elements central to Honeycomb’s design thesis.

Honeycomb’s approach embeds wellness into the architecture itself: its mechanical systems, acoustic treatment, biophilic expression, light access, water quality, and air movement. Belmont’s environmental profile aligns directly with Honeycomb’s five wellness pillars, making it an unusually strong testbed for our first project.

Maple Grove

When selecting a pilot site for the first Honeycomb project, targeting neighborhoods that already reflected the brand’s core wellness principles was a fundamental first step. Maximizing the desirable neighborhood qualities a resident would expect to find in a wellness-focused home was the highest priority,

followed closely by finding land at a low valuation to increase development feasibility and reduce up-front costs.

We saw the Brighton Street Corridor Redevelopment as a perfect opportunity to invest in a healthily urbanizing neighborhood. The Town of Belmont is currently producing a vision plan for the 30-acre site in collaboration with students from the Harvard Kennedy School and Graduate School of Design, upzoning and incentivizing these underutilized parcels in order to encourage a transit oriented mixed-use

Air

• Lower pollution context: Brighton Street predominantly residential area, which helps maintain cleaner baseline outdoor air quality compared to more urbanized TOD zones.

• Prevailing winds: Building setbacks along the commuter rail corridor can support better natural ventilation patterns for adjacent units.

• Separation from major highways: The site area is not bisected by major interstates, resulting in fewer ultrafine particulates and reduced noise and air quality exposure.

Water

development that infuses the Town with much needed commercial revenue. The Brighton Street Corridor in its current state is already a promising candidate for healthy living, surrounded by conservation land and closely neighboring the walkability-forward peer towns of Cambridge and Somerville. In the future, at various points along an 8-9 year project timeline, we can expect zoning reform enabling density, an influx of commercial and residential tenants, infrastructure improvements to support a walkable retail experience, and the addition of a commuter rail station.

By carefully negotiating the suburban promise of open space, safety, and fresh air with the walkable lifestyle offered by transit oriented developments, our site closely aligns with the five aspects of wellness we’ve selected to define a Honeycomb residence:

• High-quality municipal water: Belmont’s MWRA-supplied water has reliable quality, making it easier to exceed WELL standards with filtration enhancements.

• Stable groundwater table: The town’s hydrology allows for stormwater management features like bioswales, rain gardens, and permeable surfaces that support wellness and ecological performance.

Light

• East/west orientation: The site supports long North and South facades with optimal solar exposure.

• Favorable setbacks: Building setbacks and height restrictions along major roads guarantee generous light access along all facades.

Nature

• Conservation areas: Belmont sits near the Beaver Brook Reservation, Lone Tree Hill, and Fresh Pond, giving residents access to

A typology study of different forms a Honeycomb building could take depending on site, circumstance, and markets.

Upper and lower: A typology study of different forms a Honeycomb building could take depending on site, circumstance, and markets.

restorative green spaces within minutes.

• Park access: The new Brighton Street Corridor master plan will incorporate access to multiple parks within a walking distance of the site.

• Tree-lined streets: The town’s mature tree canopy creates opportunities for shaded pedestrian routes and biophilic connections right at the building edge.

People

• A walkable community: The focus of the Brighton Street Corridor Redevelopment revolves around a vibrant retail experience, prioritizing access to amenities and third spaces surrounding the project site.

• Transit-rich lifestyle: Proximity to a commuter rail, bus routes, and bike lanes encourages active mobility and reduces sedentary routines.

• Safe residential context: Belmont’s reputation as a safe, family-friendly community supports mental well-being and social stability.

As promising as this location is, its drawbacks lie in the reliability and execution of the Brighton Street Corridor Redevelopment. The Town would have to successfully implement the current vision plan without compromise, and even then it would take 8-9 years to unlock the full value of the site. This case study operates under a set of assumptions well within the realm of possibility, including infrastructure improvements, favorable zoning, commuter rail construction, and master plan project timeline, but confirmation of these factors from the Town would be necessary before undertaking the deal.

Architecture & Design Strategy

Typology Study

Due to the mixed parcelization offered by the Brighton Street Commercial Redevelopment, we were able to identify three potential sites to compare the viability of several typical multifamily residential typologies. These test-fits, under the same set of assumptions, modify each standard typology slightly to incorporate the Honeycomb floor plan and augment the circulation corridors to promote healthy living.

Double Loaded: Rather than closing off the corridor to expand the size of the corner units, this iteration leaves the hallway open at each end, providing residents with sunlight and views as they travel to their units.

Courtyard: This version of a courtyard building is single-loaded rather than double-loaded, which allows for unenclosed circulation adjacent to the courtyard, creating a more community-centered experience and saving on construction and operational costs.

Point Tower: Each floor of this point tower includes a core larger than that of a typical point tower to include a social space to be shared by the floor’s residents.

Double Loaded High Rise: Though the FAR requirements of the site would not allow for such a large gross floor area, we wanted to compare a maximal building envelope to our other more modest, medium-density solutions.

Following a comparison of these different typologies adjusted for healthy living, we ultimately selected the Courtyard option to further study. Though it does promise a slightly lower IRR (1.5% spread) than the double loaded option, the generously sized courtyard offers a solution more closely aligned to the Honeycomb brand values while maintaining comparable returns. We see this as a viable alternative to the market-dominating double loaded corridor when being evaluated under wellness design criteria.

Design, Materials, Products, & Systems

The design of Honeycomb is grounded in a holistic approach to wellness, integrating architecture, materials, and building systems that actively support healthier living. Every decision, from the massing to system selection, is tied back to our core wellness categories. By embedding these principles early in the design process, Honeycomb transforms everyday residential experiences into opportunities for restorative living, creating a home environment that promotes physical comfort, mental clarity, and meaningful connection within the Brighton Street community.

Air:

• Cross-ventilation: The Honeycomb floor plan is designed to provide cross-ventilation in every bedroom and living room.

• Low-VOC materials: Materials such as terracotta tiles for exterior cladding, clay plaster for interior wall finishes, stone, ceramic and glass surface finishes, wool insulation, VOC-free paint brands such as Ecos, and wood accents and finishes throughout the building reduce the amount of formalde-

Honeycomb’s distinctive floor plan prioritizes sunlight, fresh air, and spacious views for residents. A courtyard provides a natural gathering place among greenery and a site for casual encounters with neighbors. Through external circulation, the units are guaranteed light from both the exterior and interior.

hyde in the air.

• Probiotic HVAC: The EnviroBiotics E-Biotic Pro integrates with existing HVAC systems to disperse beneficial probiotics to maintain a healthy microbial balance.

Water

• Filtration: Aquasana water filter to improve water quality.

Light

• Sun exposure: Diagonal windows in the Honeycomb plan maximize sunlight exposure regardless of the building orientation, but are especially advantageous in North and South facades.

• Low-E Glass Windows: Products like the Andersen 400 Series enhance natural light penetration while reducing heat gain and loss, utilizing overhangs to prevent significant energy usage.

• Interior Lighting: Recessed, warm, artificial lighting is proven to help desk work.

Nature

• Views: Generous views in the unit plans provide a visual connection to nature at every area of each unit besides restrooms and closets, utilizing vertical louvers to maintain privacy between units. Each unit also contains at least one balcony.

• Plantings: Opportunities to cultivate vegetation across scales including bio-bricks similar to Rios’ Terracotta Facade lining the exterior hallways, individual planter boxes outside each unit, and larger plantings and trees in the shared courtyards. Plants known for air cleaning such as Pothos or Spider Plants can be selected.

People

• Social Spaces: Amenities on the ground floor including landscaped courtyards, fitness areas, common rooms, and retail programming serve as in-building third spaces.

• Controlled Acoustics: Controlling noise and reverberation through acoustic panel products like GIK reduces stress, sleep disturbances, and cognitive fatigue, while promoting privacy, comfort, and overall mental well-being for occupants.

By substituting conventional building practices with healthy materials and wellness-oriented systems, Honeycomb can meaningfully improve resident well-being. Using low-VOC materials such as clay plaster, terracotta, wool insulation, and VOC-free paints can reduce indoor formaldehyde levels

by 40-80% compared to typical multifamily construction, significantly lowering risks of headaches, respiratory irritation, and chronic exposure. Cross-ventilation in all major rooms can increase natural air exchange rates by up to 60%, helping dilute airborne pollutants and reducing reliance on mechanical ventilation. Probiotic HVAC systems have been shown to decrease harmful microbial loads by up to 30% while increasing beneficial organisms associated with stronger immune responses. Aquasana-level water filtration can remove 97%+ of chlorine and heavy metals, improving taste

and reducing respiratory sensitivities. Low-E glazing can boost usable daylight penetration by 15–25%, which is associated with strong improvements in mood and productivity while reducing lighting energy use. Generous views and biophilic cues, such as private balconies, planter boxes, and shared courtyards, are linked to 8-12% reductions in stress biomarkers and up to 15% faster post-stress recovery times. Finally, high-quality acoustic control can reduce reverberation and transmitted noise by 30-50%, improving sleep quality and reducing cognitive fatigue. Collectively, these measures position Honeycomb as a high-performance, wellness-centered residential model with tangible benefits for its residents.

Pro Forma

The pro forma evaluates whether a wellness-driven multifamily building can outperform conventional suburban apartments while using rent assumptions anchored in regional Class A comparables. In Belmont, where incomes are high but modern rental supply is virtually nonexistent, these comparables provide a more

accurate benchmark than the town’s legacy rental stock. The development program and unit mix that underpin this underwriting are summarized below.

According to RentHop (December 2025), the average asking rent for a one-bedroom apartment in the Seaport has reached $6,000 per month, whereas our pro forma assumes a one-bedroom rent of $3,600. This gap underscores both the depth of pricing power in Boston’s highest-end submarkets and the conservative nature of our underwriting.

Value in this model is created by three primary drivers. First, the project benefits from a cost basis that is materially lower than comparable infill Boston locations due to Belmont’s land

economics. Second, while the wellness features increase total development costs by roughly 10%, they produce a differentiated product in a market with no true Class A competition, supporting stronger absorption and long-term high occupancy. Third, and most importantly, the underwriting incorporates a 100 basis-point cap rate compression at exit to reflect the value of a branded, wellness-forward platform. This platform premium is the strongest financial lever in the model and aligns with increasing institutional appetite for category defining residential concepts.

Two development scenarios are modeled: a baseline construction approach and a wellness-enhanced version incorporating upgraded HVAC, advanced filtration, IAQ monitoring, acoustical improvements, and high-performance materials. Wellness-related uplifts reflect a

combination of vendor-informed estimates and benchmarking against comparable systems. Total development costs increase from approximately $59.7 million in the baseline case to $66.6 million in the wellness scenario; a 10.3% increase driven primarily by higher hard costs. Belmont’s labor environment, unlike Boston’s effectively union-exclusive market, supports cost efficiency and enhances feasibility.

Under these assumptions, the wellness scenario delivers a stabilized NOI of approximately $4.75 million and a development yield of approximately 7.1%. Using a 6.0% exit cap rate, the project generates an exit value of approximately $100 million; under the platform-adjusted 5.0% cap rate, exit value increases to more than $120 million. These outcomes translate into estimated unlevered IRRs of 10-12%, levered IRRs in the 18-20% range, and equity multiples

Sensitivity analysis confirms the resilience of the model. Returns remain attractive under more conservative rent or cost assumptions, and meaningfully improve if wellness premiums strengthen as the brand becomes established. Financially, the first building functions as both a compelling standalone investment and a prototype for the scalable platform.

Conclusion

Multifamily residential is ready for a new kind of luxury, based in an understanding of what actually makes for a healthy and fulfilling lifestyle: connection. Honeycomb residences promote connection to nature, to people, and to your senses by focusing on intentional materials, design, and siting. By emphasizing livability components such as walkability, outdoor air quality, and social connection between neighbors, Honeycomb goes above and beyond a mere certification checklist that stops at the property lines. We take into account all the elements that could inform the health of our residents the way we now know we should-- holistically.

Bibliography

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5 Condezo-Solano, M. J., Erazo-Rondinel, A., Barrozo-Bojorquez, L. M., Rivera-Nalvarte, C. C., Giménez, Z., Condezo-Solano, M. J., Erazo-Rondinel, A., Barrozo-Bojorquez, L. M., Rivera-Nalvarte, C. C., & Giménez, Z. (2025). Global Analysis of WELL Certification: Influence, Types of Spaces and Level Achieved. Buildings, 15(8). https://doi. org/10.3390/buildings15081321

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19 Town of Belmont Select Board Meeting on December 4th, 2025

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35-75 Morrisey Boulevard

Ugly Duck Studios Redevelopment

35-75 Morrissey Boulevard

Executive Summary

The 35–75 Morrissey Boulevard master plan in Dorchester addresses Boston’s housing shortage, constrained capital markets, and evolving community expectations. The site, covered by a Planned Development Area (PDA) and an approved Article 80 process, currently envisions a tower-first development: two 18-story residential buildings with 754 units as the initial phase at 75 Morrissey, supported by extensive below-grade parking and future phases across nearby parcels. This approach maximizes the entitled height early on but concentrates risk in the most complex building type during a challenging time for high-rise multifamily finance and construction.

This chapter suggests an alternative Phase 1 sequencing plan that starts smaller, focuses on the grocery store, and uses mid-rise buildings similar to the successful Hub 25 project nearby. In this plan, Phase 1 moves the existing Star Market into a new 48,804-square-foot standalone store on Parcel A and provides 265 units within two five-story residential buildings on Parcel C. These are supported by surface parking at a ratio of 0.5 spaces per unit and shared grocery parking nearby. This phasing sacrifices some early density for better feasibility: lower hard costs, no deep garages, attainable rents, and a design more aligned with community feedback and expert advice.

The core idea is that on Morrissey Boulevard, the question is not how much can be entitled, but what can actually be built, leased, and financed under a 20 percent affordability requirement. A grocery-first, mid-rise Phase 1 ensures continuous food access, addresses neighbors’ concerns about scale and phasing, and prepares the PDA for a gradual “towers last” build- out that aligns with the long-term vision while respecting today’s market and policy constraints.

This chapter draws on the PDA documents, Article 80 filings, public comment records, and

interviews with practitioners involved in the Morrissey corridor to evaluate feasible sequencing options for the site.

Site and Regulatory Context

Morrissey Boulevard and Columbia Point

The 35–75 Morrissey Boulevard site is located along the western edge of Columbia Point, between the Southeast Expressway (Interstate 93) and Morrissey Boulevard. It is immediately adjacent to the JFK/UMass Red Line and commuter rail station. This location provides direct transit connections to downtown Boston and Cambridge, as well as access to Logan Airport via the Red Line and Silver Line, making it an ideal example of a transit-oriented development opportunity. The corridor is bordered by major institutional anchors, including the University of Massachusetts Boston, the John F. Kennedy Presidential Library and Museum, Boston College High School, and the Southline campus housed in the former Boston Globe building.

Despite this concentration of jobs and institutions, the immediate area remains relatively underhoused, with Hub 25 (built in 2016 and offering about 278 units) as the main existing multifamily property on the west side of Morrissey. Much of the land between Southline and Hub 25 is made up of low-rise commercial buildings, surface parking lots, and former industrial sites, including the current Star Market and the underused buildings at 35, 55, and 75 Morrissey. The PDA thus provides one of the few spots in Dorchester where high-density, transit-accessible housing can be developed without displacing existing residences.

PDA Framework and Approved Master Plan

The Morrissey master plan is structured under a PDA that reimagines an 8.9-acre area as a mixed-use neighborhood featuring seven new buildings, new public streets, and civic open spaces. The PDA permits a maximum floor area ratio (FAR) of 4.0 for the entire site and establishes height limits for each building parcel; for the two buildings on the 75 Morrissey site, the PDA sets maximum heights of 204 and 206 feet. Within those parameters, the PDA outlines allowed uses and massing caps but leaves detailed building form, unit mix, and groundfloor programming to be finalized through future Article 80 reviews.

A key element of the master plan is its circulation and open-space framework. It calls for A Street, a new public roadway running east–west from Morrissey Boulevard into the interior of the site; West Street, a service road along the western edge of 75 Morrissey; and a new Community Park along with several open spaces totaling about 1.35 acres. Together, these initiatives aim to transform isolated parking lots and buildings into a connected neighborhood with pedestrian and bicycle paths, active frontages, and shared civic spaces.

Article 80 and Inclusionary Zoning

Within this PDA framework, Copper Mill has received Article 80 approval for Phase 1 at 75 Morrissey: two 18-story residential towers (Building A and Building B) totaling approximately 754 units. Building A is along I-93, while Building B faces Morrissey Boulevard. Both buildings stack residential and amenity space above ground-floor retail and community/civic uses, with three levels of below-grade parking beneath each. Together, the towers offer about 645,000 square feet of gross floor area, 414 underground parking spaces, and roughly 760 bicycle spaces, all elevated to a resilient groundfloor level that accounts for the city’s 2070 sea-level-rise design flood elevation.

The project adheres to the city’s updated Inclusionary Development Policy, which mandates that approximately 20 percent of units be affordable. Under the approved Phase 1, this means about 150 income-restricted apartments distributed across the two towers. This higher proportion of affordable units reduces net operating income and makes the project more sensitive to increases in hard- cost inflation, interest rates, and rent growth—especially for high-rise construction, where costs per square foot are much higher compared to mid-rise podium buildings.

Market and Tenant Demand

Boston Multifamily Overview

The Boston multifamily market remains structurally undersupplied despite some softening in select submarkets. Urban renter demand has been resilient, with multi-year rent growth and absorption in the core, even as office fundamentals weaken. New multifamily starts have slowed meaningfully in the wake of cost escalation and higher interest rates, and recent quarters show a sharp drop in groundbreaking activity relative to the late-2010s pipeline. The result is a widening gap between household formation and new unit delivery, especially in transit-served neighborhoods.

For investors and lenders, this creates a paradox: demand for well-located apartments is strong, but the capital stack is difficult to assemble for large, complex projects. High-rise multifamily, especially with union labor and robust sustainability requirements, often pencils only at very high rents, which are harder to underwrite in non- CBD locations. Mid-rise product, by contrast, can still be feasible if land costs and construction budgets are disciplined. For Morrissey, with strong transit access but an emerging residential identity, the signals favor mid-rise typologies that deliver new supply at rent levels accessible to a wider renter pool.

Neighborhood Fundamentals and Comps

Within this context, the Morrissey corridor and Columbia Point are appealing but still maturing as residential locations. The area benefits from students, faculty, and staff at UMass Boston and nearby institutions, as well as professionals seeking relatively more affordable rents than downtown or the Seaport. The corridor connects to parks such as Carson Beach and Moakley Park and sits between established neighborhoods in Savin Hill and South Boston. Yet the built form is still dominated by big-box retail, parking fields, and isolated office buildings.

Hub 25 at 25 Morrissey offers a clear precedent. The project delivers 278 units in a 5-story, wood-frame- over-podium configuration, with an average unit size of 660 square feet and average rents in the mid-$2,000s. It has operated with low vacancy and minimal concessions, suggesting that mid-rise product at this location can command healthy rents and maintain strong occupancy when tailored to

Source: Colliers Q3 2025 Multifamily Report for Greater Boston

transit- oriented renters. Hub 25 also shows that 5- over-1 construction can navigate the corridor’s geotechnical conditions without deep garages.

Target Tenants and Attainable Rents

The alternative Phase 1 targets the same broad segment: UMass students and staff, young professionals commuting by Red Line, and moderate-income households who want new construction without Seaport-level rents. These renters value safe, well- designed buildings, reliable transit access, and proximity to everyday services (especially a grocery store) more than luxury amenities.

To serve this market, the Phase 1 residential buildings adopt a “Hub-25-plus” rent strategy. Rents by unit type are modeled at approximately 15 percent above Hub 25 levels, reflecting newer delivery and improved common spaces but still well below downtown towers. Studios average roughly $2,771 per month, one-bedrooms about $3,129, two -bedrooms around $4,225, and three-bedrooms approximately $5,465. Transit access supports this level while still keeping units attainable for dual-income households and higher- earning renters in their 20s and 30s, particularly when car ownership is optional rather than mandatory.

Community Feedback and Design Objectives

Themes from Public Comments

Public comments on the master plan and Phase 1 show a community that supports new housing near transit but is cautious about how growth is phased and scaled. Residents favor higher density on underused land around JFK/ UMass as long as it doesn’t displace existing communities or burden local infrastructure. At the same time, many describe 18-story towers as out of step with Dorchester’s character and express concern about shadows, wind, and the perception of a “wall” along the highway.

Two main themes emerge. First, access to groceries is essential. Commenters highlight the current Star Market as a vital resource for seniors, low-income families, and residents without cars across Columbia Point, Savin Hill, and parts of South Boston, warning that even a temporary closure would create a food desert. Second, opinions on parking and traffic vary. Some call for one or more parking spaces per unit and doubt people will rely solely on the Red

Line; others advocate for minimal parking, arguing that high ratios increase traffic, raise costs, and diminish the site’s transit benefits.

Design and Phasing Principles

The alternative Phase 1 directly addresses these concerns. The first principle is “grocery first, towers last”: move Star Market into a new, modern store before demolishing anything on its current site. Making the grocery a standalone building in Phase 1 prevents service disruptions and immediately demonstrates that redevelopment will improve, not hurt, daily life. It also frees up the current grocery parcel for future housing.

The second principle is to begin with mid-rise housing that matches the established height context rather than starting with 18-story towers. Two 5-story buildings on Parcel C are consistent with the scale of Hub 25 and help keep the visual impact moderate. The third principle is to adopt a modest, transit-friendly parking ratio (0.5 spaces per unit), provided through surface stalls instead of deep garages, with the new Star Market relying on shared parking at an adjacent office property. Finally, the plan includes the 20 percent affordability requirement but concentrates income-restricted units in smaller formats to maintain feasibility while adding lower-rent options.

The Approved Tower‑First Phase 1

Program, Massing, and Parking

Under the approved Article 80 Phase 1, Copper Mill’s plan includes two 18-story residential towers at 75 Morrissey. Building A is along I-93, while Building B faces Morrissey Boulevard, together offering about 754 units. The ground floors feature retail, community space, lobbies, and services beneath the residential levels. The towers reach the PDA’s height limits of 204 and 206 feet.

Each tower is built on three levels of structured parking, accessible from A Street and West Street. Overall, the garages offer about 414 parking spaces, resulting in a parking ratio just over 0.3 spaces per unit, complemented by ample bicycle parking. The first phase also includes construction of A Street, West Street, and the Community Park, establishing the full circulation and open-space layout envisioned by the PDA.

Feasibility Challenges

On paper, this tower-first strategy maximizes early unit counts and captures PDA entitlement value. In reality, it faces the most challenging part of the current capital markets environment. High-rise construction in Boston’s unionized setting, with complex mechanical systems and strict energy codes, can cost about twice as much per square foot as typical mid-rise projects. Deep garages on filled land introduce geotechnical risks and ongoing dewatering costs. Combined with a 20 percent affordability requirement that lowers effective rents on a fifth of the units, these factors create a tight and fragile pro forma.

Developer feedback highlights this. Copper Mill’s head of development noted that delivering high-rise towers along the Morrissey corridor requires careful underwriting, since lenders focus on the absorption of several hundred units at rents slightly above existing neighborhood product. He also observed that the recent slowdown in life-science development has made contractors more competitive, with some bids now coming in below earlier budget projections. This is a helpful tailwind but still does not fully offset the structural cost premium of high-rise towers on this site.

An Alternative Phase 1: Grocery‑First Mid‑Rise Strategy

Phasing Concept and Overall Vision

The alternative phasing strategy keeps the PDA’s long-term ambition of a dense, mixed-use neighborhood with mid-rise and high-rise buildings but reorders the steps. Instead of leading with towers on 75 Morrissey, Phase 1 shifts to Parcels A and C. The first move is to build a new Star Market on Parcel A, occupying 48,804 square feet of retail within an 86,778 square-foot lot, with a 20-foot ground-floor height and a site-level FAR of 1.18. This frees the existing store’s parcel for later redevelopment without any gap in grocery service.

Simultaneously or shortly after, Phase 1 constructs two mid-rise residential buildings on Parcel C, each five stories tall with 10-foot floor-to -floor heights and an estimated gross floor area of 119,318 square feet. Between these buildings, they frame landscaped courtyards and a new internal road that begins to connect the site and create a recognizable neighborhood

identity. Later phases will move north to 55 Morrissey with a nine-story residential building and structured parking, and only in the final phase will two 18-story towers be built on the part of the former Star Market parking lot closest to Hub 25.

Phase 1 Program and Site Plan

On Parcel A, the new Star Market is a pure grocery anchor rather than a mixed-use building. The single-use configuration simplifies construction and operations, allows a high ceiling and efficient back- of-house layout, and ensures the store can open quickly to maintain uninterrupted service. Grocery customers park in surface spaces on Parcel A and in shared surface parking at the adjacent Beasley Media office building, which has surplus capacity.

On Parcel C, the two residential buildings adopt a “double courtyard” concept. Each occupies roughly half the parcel, with a landscaped shared space between them and smaller semi-private courtyards or terraces carved into their footprints. The internal road runs east–west between the buildings, creating a small “main street” for residents, visitors, and deliveries. Ground floors house residential lobbies, fitness rooms, and community spaces rather than retail, concentrating commercial activity at the new grocery in this phase.

Unit Mix, Affordability, and Parking

The Phase 1 residential program includes a total of 265 units: 101 studios, 130 one-bedrooms, 29 two -bedrooms, and 5 three-bedrooms. Average sizes are 610 square feet for studios, 763 for one-bedrooms, 1,175 for two -bedrooms, and 1,325 for three-bedrooms, reflecting a focus on efficient units that suit student and young professional households. At this scale, 20 percent affordability means 53 income-restricted units, mainly in studios and one-bedrooms to reduce revenue impact while providing meaningful access for lower-income renters.

Parking is intentionally limited. Phase 1 offers 133 surface stalls for residences, resulting in a 0.5 spaces-per-unit ratio. This amount acknowledges that many tenants will own cars, but a significant portion will depend on the Red Line and local buses for daily commuting. Avoiding structured or underground parking reduces both construction costs and geotechnical risks. For grocery shopping, customers primarily use shared surface lots at the nearby Beasley Media office site, where parking stalls are underused outside peak office hours.

Financial Framing and Deliverability

Key Assumptions and Capital Stack

The Phase 1 pro forma assigns $32.59 million of land costs to the new grocery store and two residential buildings. Hard costs are estimated at $86.04 million, or roughly $300 per square foot, in line with recent guidance for unionized mid-rise construction. Soft costs are calculated at 20 percent of hard costs, or $17.21 million. Including a 10 percent contingency on hard costs, the total Phase 1 development costs amount to approximately $103.25 million.

The capital structure assumes a 65 percent loan-to - cost construction loan at 8 percent interest, with the remaining 35 percent financed by equity targeting an internal rate of return around 20 percent. Achieving 20 percent affordability within this setup requires careful adjustment of rents, unit mix, and costs. Concentrating affordable units in smaller formats, keeping parking costs low, and avoiding high-rise premiums are key to making the numbers work.

Mid‑Rise vs. Tower Economics

Comparing this mid-rise Phase 1 to the tower-first approach highlights the trade- offs. The towers initially deliver nearly three times as many units but at significantly higher costs per square foot, with risks centered around deep garages and vertical construction. Rents would likely need to reach core downtown levels to ensure investment-grade returns, especially when 20 percent of units are affordable. Investors must believe the corridor can absorb 754 high-priced units all at once.

In contrast, the mid-rise Phase 1 assumes lower hard costs per square foot, no deep garage, and rents anchored near Hub 25 plus a modest premium. The 265 units represent a smaller, more manageable portion of the supply, allowing the sponsor to demonstrate absorption, rent levels, and operating margins before committing to towers. In effect, the mid-rise phase acts as both a revenue-generating investment and a largescale prototype for future phases.

Professional Insights

Interview

with Mark Callahan (Copper Mill)

In an interview with Mark Callahan, head of development at Copper Mill, he highlighted that the firm’s strategy is to take complex,

politically sensitive sites from entitlements into vertical development. On Morrissey, they inherited a flexible PDA and a land partner that has maintained a 1.6-million-square-foot vision for years, making a tower-first approach at 75 Morrissey a logical way to monetize a large entitlement package.

Callahan also recognized the challenges facing towers here. Construction costs in the city’s union environment, especially for highrise steel, have risen to levels that leave little room for error. Lenders are interested in Boston multifamily but remain cautious about leverage and underwriting assumptions. Inclusionary zoning at 20 percent further tightens the pro forma, making capital for towers more difficult to secure without strong rent expectations and a more lenient credit environment.

Interview with Jack Englert (Hub 25)

A discussion with Jack Englert, the original creator of Hub 25, offered a different, project-focused perspective. Englert expressed doubts about towers on Morrissey, claiming that the rents needed to support eighteen-story buildings don’t match local incomes and expectations. He favors 5-over-2 or lightweight steel construction up to about eleven stories, where costs are more controllable and unit layouts are effective.

Englert also emphasized the geotechnical and operational risks of deep excavation. During Hub 25’s construction, the team faced a high water table and flooding along Morrissey, leading to the installation of permanent pumping systems. Regarding parking, he noted that Hub 25’s 0.5 spaces-per-unit ratio has been sufficient, with the Red Line handling much of the mobility demand. These insights directly influenced the alternative Phase 1, reinforcing the decision to avoid below-grade parking, keep building height modest, and maintain the parking ratio at 0.5.

Design and Urbanism Outcomes

Public Realm and Neighborhood Integration

From an urban design perspective, the grocery-first, mid-rise Phase 1 seeks to humanize the corridor while preserving essential daily uses. Relocating Star Market to a purpose-built building on Parcel A ensures residents from Dorchester, Columbia Point, and nearby South Boston maintain walkable access to a full-service supermarket throughout redevelopment. The

new store’s frontage, combined with improved sidewalks and landscaping, begins to shift a stretch of Morrissey from parking fields toward a more legible, pedestrian-friendly edge.

Within the site, the two residential buildings on Parcel C frame an internal “main street” that introduces smaller-scale circulation and spaces for everyday interaction. Ground-floor lobbies, fitness rooms, and community spaces face onto courtyards and the new road rather than onto blank parking lots. This configuration anticipates later phases: as additional buildings rise to the north and east, the internal street can connect into a larger grid, while the early courtyards set expectations for landscape quality and public life. Deferring A Street and the formal Community Park allows Phase 1 to concentrate public-realm spending on spaces that directly support initial residents and grocery customers.

Long‑Term Build‑Out and Towers Last

The long-term vision under this plan does not dismiss towers; it repositions them as the culmination rather than the beginning of the PDA. After Phase 1 is built and stabilized, Phase 2 will move to 55 Morrissey with a nine-story residential building and structured parking, increasing massing toward Hub 25. Subsequent phases will add more mid-rise and then high-rise buildings on the former Star Market site (Parcel D), including two 18-story towers near Hub 25 where height is more appropriate.

By the time those towers are proposed, the neighborhood will have gone through years of successful mid-rise development, observed that grocery service has been maintained, and gained confidence that the district can manage traffic, noise, and services. Capital markets will be able to finance tower rents based on actual operating history from the mid-rise phases, reducing uncertainty. In that sense, the “towers last” approach is both a political and financial strategy.

Conclusion

The 35–75 Morrissey Boulevard PDA raises a broader question many urban districts face: how to balance ambitious entitlements with the realities of finance, construction, and community trust. The approved tower-first Phase 1 at 75 Morrissey reflects a reasonable desire to maximize density on a transit-served site, but it concentrates risk in the most complex and expensive building type when capital is scarce and policy demands are increasing.

The alternative Phase 1 described here offers a different approach: begin with a new grocery to ensure food access, combine it with mid-rise, attainable housing at the scale of Hub 25, utilize surface and shared parking to control costs, and reserve towers for a future phase once the district demonstrates its viability. This approach sacrifices some early unit count but enhances feasibility, flexibility, and alignment with both community feedback and practitioner experience. For Morrissey Boulevard and similar car-oriented sites, sequence might be as important as form; starting with what can be built and accepted now may be the most reliable way to achieve the heights envisioned on paper.

Bibliography

1 Apartments.com. Hub25 – 25 Morrissey Blvd, Boston, MA 02125. Apartments.com, updated 2025. Accessed December 2025. https://www.apartments.com/hub25-boston-ma/9m4xy07/

2 Boston Planning & Development Agency. Inclusionary Development Policy (IDP). Boston Planning & Development Agency, updated 2023. Accessed December 2025. https://www.bostonplans.org/projects/standards/inclusionary-development-policy

3 City of Boston & Commonwealth of Massachusetts. Boosting Boston’s Housing: City & State Partner to Overcome Market Challenges. JD Supra summary of joint housing strategy, March 19, 2025. Accessed December 2025. https://www.jdsupra.com/ legalnews/boosting-boston-s-housing-citystate-1134551

4 City of Boston, Mayor’s Office of Housing. Inclusionary Zoning. City of Boston, November 2025. Accessed December 2025. https://www.boston.gov/departments/housing/inclusionary-zoning

5 Cosign. Market Snapshot: Boston Q2 2025. Cosign, January 31, 2025. Accessed December 2025. https://www. rentwithcosign.com/reports/market-snapshot-boston-q2-2025

6 DotNews. “Is ‘Affordable Housing’ in Boston Unaffordable? A Closer Look at the Numbers.” Dorchester Reporter, February 27, 2025. Accessed December 2025. https:// www.dotnews.com/2025/affordable-housing-unaffordable

7 Hub25 Apartments. Property Overview and Rent Roll. RentCafe, updated 2025. Accessed December 2025. https://www.rentcafe.com/ apartments/ma/boston/hub25-0/default. aspx

8 Matthews Real Estate Investment Services. Boston, MA Multifamily Market Report, November 2025. Matthews, November 2025. Accessed December 2025. https:// www.matthews.com/market_insights/ boston-ma-multifamily-market-report-november-2025

9 MMG Real Estate Advisors. Boston Q2 2025 Market Report. MMG Real Estate Advisors, August 31, 2025. Accessed December 2025. https://mmgrea.com/boston-q2-2025-market-report

10 Northmarq. Multifamily Rent Growth in Boston Remains Positive Amid Elevated Supply. Northmarq, October 29, 2025.

Accessed December 2025. https://www. northmarq.com/insights/insights/ multifamily-rent-growth-boston-remains-positive-amid-elevated-supply

The Bgend

From Transit Hub to Community Hub

The Bgend

A case study of the Former Lechmere Station

The Lechmere terminal has disappeared, leaving behind an open parcel at a crucial edge of Cambridge. What possibilities arise when the end of a transit era becomes the beginning of something new?

The former Lechmere Station site occupies a highly visible three-way frontage, bounded by Cambridge Street, Monsignor O’Brien Highway (MA-28), and North First Street. For nearly a century, the land functioned as a major transit node. The parcel supported trolley operations and later accommodated a growing network of regional bus routes. The physical form of the site, shaped by service drives, curb cuts, and the operational geometry of the former station, reflects this long history of transportation use.

The original Lechmere terminal opened in 1922 as part of the Boston Elevated Railway’s

strategy to manage the heavy flow of trolley routes entering downtown Boston. Lines from Somerville, Medford, Harvard Square, and East Cambridge converged at Lechmere, where passengers transferred before continuing toward the central subway.[1] Over the following decades, the terminal evolved into a multimodal hub that combined trolley service with regional bus operations beneath and around the station approach.

After trolley and bus operations were relocated to the new Lechmere Station in 2022, the former site was cleared and has remained vacant. The parcel is governed by Cambridge’s underlying PUD-4A zoning district, which permits residential development within defined height and massing limits. Its proximity to transit, adjacency to Cambridge Street, and relationship to broader urban patterns create an opportunity to reposition the former transit parcel as a community-oriented residential anchor.

The name The Bgend draws from the idea that this former terminal site now stands at a moment

of transition, where an old pattern of movement has ended and a new form of urban life can begin. The parcel sits at a subtle seam where the familiar rhythm of East Cambridge meets the emerging scale of North Point and the academic energy that moves toward MIT. By combining student housing with family-oriented residences, the proposal reimagines this transitional edge as a small but active community hub.

Financial Considerations

From a financial standpoint, the project began with a simple question: can the former Lechmere site support a feasible residential development if it is built strictly under the existing PUD-4A zoning envelope?

An initial test fit followed the 65–85 foot height limit and assumed a mid-rise bar building with a conventional double-loaded corridor. When this scheme was underwritten with East Cambridge market rents and current construction costs, the results fell short of typical developer hurdle rates. The lower floor-area ratio could not generate enough net operating income to comfortably cover land value and hard and soft costs. In other words, a “by-right” PUD-4A project looked more like a policy exercise than a realistic private development.

Because the parcel sits directly on the edge of the PUD-6 district, the team then modeled a scenario that assumes discretionary approval for a taller form consistent with PUD-6 height ranges. Instead of a single mid-rise slab, the revised scheme introduces a more slender tower mass that steps up toward North Point while keeping a mid-rise base along Cambridge Street. This shift in form increases the amount of rentable area without dramatically enlarging the footprint, which is essential on a 52,026-square-foot site that must also provide meaningful open space.

Within this PUD-6-based envelope, the residential program is calibrated to the demand profile identified in the market analysis. The unit mix concentrates on compact studios and one-bedroom apartments for graduate students and young professionals, supplemented by a smaller number of two-bedroom units for couples or small families. A limited set of three-bedroom student apartments is included because the pro forma shows that these larger shared units generate stronger revenue on a per-square-foot basis while still offering each resident a rent level below what they would face in separate one-bedroom units. This balance allows the project to serve both student and non-student households while keeping overall density efficient.

Income assumptions are grounded in nearby market comparables rather than optimistic premiums. Market-rate units are underwritten against recent Class A multifamily properties in East Cambridge and Kendall Square, with

achievable rents set modestly below the very newest luxury buildings. Student-oriented units reference purpose-built housing near MIT, with three-bedroom apartments positioned to be competitive on a per-bed basis while recognizing the superior location next to Lechmere Station. This approach captures some of the pricing strength of East Cambridge while acknowledging that The Bgend is a first-generation residential building on a former transit parcel, not an ultra-luxury tower.

On the cost side, the financial model incorporates current construction pricing for high-rise concrete residential structures, structured parking limited to what is necessary for accessibility and operations, and a ground-floor build-out suitable for neighborhood-serving retail and amenity space. Soft costs, contingencies, and developer fees are included at conservative levels. Together, these inputs produce a total development budget that supports a viable but not excessive level of leverage.

Under these assumptions, the project generates an unlevered internal rate of return of 14.8 percent, reflecting the return on total project cost before financing. With a standard construction loan and permanent debt in place, the levered internal rate of return rises to 19.2 percent, which meets typical equity expectations for a transit-oriented multifamily asset in a high-cost market. Sensitivity tests on rents, exit cap rate, and construction costs indicate that the project retains acceptable returns under moderate downside scenarios, while any outperformance in student demand or retail activation would flow directly to higher cash flows and additional upside.

Taken together, the shift from a by-right PUD-4A massing to a PUD-6-scale form, the carefully tuned unit mix, and the conservative use of market comparables all support a financially credible proposal. The Bgend is neither a speculative tower chasing maximum height nor a minimal mid-rise that struggles to pay for itself. It is a calibrated investment that uses a modest increase in height to unlock a level of density and revenue that can carry the cost of high-quality design on this historically important but long-vacant corner.

Market Analysis

East Cambridge is shaped by a mix of long-established residential neighborhoods, transit access, and the strong research economy centered around MIT and Kendall Square. The district has experienced steady population and employment growth, which has reinforced demand for housing across a range of household types.

Within this broader context, the former Lechmere Station parcel occupies a strategic position at the meeting point of several urban conditions. It sits between the traditional fabric of East Cambridge, the emerging development activity near North Point, and the institutional influence that extends from MIT. These overlapping forces create a strong foundation for new development, particularly in the residential sector where demand continues to outpace supply. The following sections review the zoning framework that shapes what is feasible on the site and assess the housing, student demand, and neighborhood retail markets that define the most viable development direction for this parcel.

Zoning Context: PUD-4A and the Adjacent PUD-6

District

The former Lechmere Station parcel lies within the PUD-4A zoning district, a framework intended to maintain a mid-rise residential scale along the eastern edge of East Cambridge. The district allows multifamily housing supported by neighborhood-serving retail, with building heights generally limited to a range of 65 to 85 feet. This envelope reinforces a modest residential character and establishes a clear massing transition toward the historic fabric of East Cambridge.

Immediately to the north, however, the zoning shifts to PUD-6, the district that guides development in North Point. PUD-6 accommodates significantly taller buildings, with allowable heights ranging from approximately 85 to 250 feet. This zoning reflects the newer, larger-scale development patterns emerging in North Point, including residential towers and life-science

[2] Redfin. “East Cambridge Housing Market Trends,” November 30, 2025, www.redfin.com/neighborhood/797/MA/Cambridge/East-Cambridge/housing-market.

[3] CoStar Group. “Harvard MIT Multifamily Submarket Report, Q4 2025,” December 1, 2025.

[4] RentCafe. “Average Rent in Cambridge, MA,” December 1, 2025, www.rentcafe.com/average-rent-market-trends/us/ma/ cambridge/.

buildings organized around a different block structure and infrastructure network. The former station parcel sits directly at the boundary between these two zoning districts. This location places it at a point where the midrise intentions of PUD-4A meet the larger-scale ambitions of PUD-6. Together, these two frameworks define the regulatory context in which any future development must situate itself.

(A more detailed explanation of how this transition influences the design approach appears in the Design Concept section.)

The Housing Market

The East Cambridge housing market is closely tied to the region’s life science and technology economy and continues to operate under persistent supply constraints. The rapid growth of Kendall Square has intensified a longstanding imbalance between jobs and housing, which has placed steady upward pressure on both rental and for-sale units.

The for-sale market provides a clear baseline for understanding the area’s underlying value. Recent data from Redfin indicate that the median sale price for a home in East Cambridge is approximately $1,210,000, with a median price per square foot of about $845.[2] These values create a substantial barrier for early-career professionals who might otherwise enter the ownership market. Graduate students and visiting scholars rely heavily on rental housing, and their presence helps sustain consistent demand for rental units across the neighborhood. Rental market indicators reinforce this picture. The broader Harvard–MIT multifamily submarket has a vacancy rate of 5.8%, aligning closely with its five-year average of 5.5%, suggesting a stable environment capable of absorbing new supply even without recent deliveries.[3] East Cambridge is the most expensive neighborhood in the city, with an average rent of $4,227 per month, compared to the Cambridge citywide average of $3,755. [4]

Unit-level pricing highlights the challenges faced by individuals seeking smaller apartments. Studios average $2,927, and one-bedroom units average $3,432, while larger units command even higher rents.[5] These conditions signal a structural shortage of efficient, purpose-built units for one- and two-person households. The demand for modern housing continues to outpace supply, reinforcing the opportunity for new mid-rise development.

The Student Housing Market

The student housing market in Cambridge is fundamentally shaped by MIT and Harvard, whose graduate enrollments extend well beyond the capacity of their university-owned housing. Recent reporting for Cambridge indicates that the largest universities in the city can house only about half of their graduate students, with the remainder living in private off-campus rentals throughout the city. Graduate students therefore make up a significant share of Cambridge’s renter population and contribute directly to competition for available units and to upward pressure on rents.[5]

MIT’s own Graduate Student Housing Working Group has repeatedly concluded that existing on-campus capacity is not sufficient to meet graduate demand and has recommended the addition of new beds while acknowledging that many students will continue to live off campus. Annual updates describe very low vacancy rates in MIT graduate housing, in some years as low as 1 percent in October, which confirms that the university’s housing stock operates close to full utilization.[6]

At the metropolitan scale, city housing reports and student housing studies describe how large numbers of students living in private apartments reduce the supply available to long-term residents and contribute to higher rents in nearby neighborhoods. This dynamic is particularly

[5] Cambridge Day. “Biggest Universities in Cambridge Can House Around Half of Their Grad Students, Reports Say,” February 17, 2025, www.cambridgeday.com/2025/02/17/ biggest-universities-in-cambridge-can-house-around-half-oftheir-grad-students-reports-say/.

[6] MIT Graduate Student Housing Working Group. “Graduate Student Housing Working Group Report,” August 2018, https:// studentlife.mit.edu/app/uploads/2025/03/Graduate-Student-Working-Group-report.pdf.

[7] City of Boston. “Student Housing Trends and Impacts Report,” 2024.

[8] Walk Score. “143 Cambridge Street,” November 30, 2025, https://www.walkscore.com/score/143-cambridge-street-cambridge.

relevant in Cambridge, where university-driven demand overlays an already supply-constrained rental market.[7]

Within this context, locations that offer strong transit access and reasonable walking and biking connections to the MIT campus are natural candidates for additional student-oriented housing. The former Lechmere Station parcel fits this pattern. It lies within a twenty-minute walk and roughly eight-minute bicycle ride of the MIT Sloan School of Management and the Kendall Square research cluster, and it has a Walk Score of 91, a Transit Score of 88, and a Bike Score of 99 [8]. These conditions indicate that the site can support housing that aligns with the daily movement patterns of graduate students, visiting scholars, and research staff.

Retail Market

The retail market in East Cambridge and Kendall Square is exceptionally tight, which supports the feasibility of a small groundfloor commercial program on the site. The E Cambridge/Kendall Sq retail submarket contains roughly 970,000 square feet of inventory, yet almost none of this space is currently available. [8] As of the fourth quarter of 2025, vacancy stands at approximately 0.3 percent, a level that has remained near its five-year average of 0.4 percent.[8] In practical terms, the market is functionally full, and new, well-located space is absorbed quickly when it becomes available.

This chronic undersupply has supported steady rent growth. Average asking rents in the submarket have reached about $27 per square foot, with year-over-year growth of 2.3 percent.[9] Because this figure blends older stock with newer product, it implies that ground-floor retail in a new mixed-use building can reasonably command a premium above the submarket average, particularly for smaller spaces that benefit from strong visibility, transit access, and a built-in residential customer base.

The composition of the submarket further reinforces the opportunity for neighborhood-serving uses. A significant share of existing retail space in East Cambridge and Kendall serves daytime workers and nearby residents rather than destination shoppers. Within this context, a modest amount of new retail that focuses on everyday uses—such as a café, grab-and-go food, or fitness and service tenants—can succeed without needing to draw from a regional trade area. The site’s location beside the Lechmere station,

at the meeting point of North Point and East Cambridge housing, positions it to capture both commuter traffic and local foot traffic. Given these conditions, the ground-floor retail in The Bgend is not expected to be the primary driver of project value, but it is likely to lease quickly and at healthy rents. More importantly, it will function as an amenity that activates the adjacent open space and supports the building’s identity as a community hub, which in turn helps sustain premium residential rents on the upper floors.[9]

Design Concept

The Bgend: From Terminal to Threshold

The Bgend starts from a simple idea. The former Lechmere terminal once marked the end of the trolley line and the beginning of trips into Boston. Today the same parcel can become the beginning of daily life for a new residential community. The site sits between East Cambridge, North Point, and the MIT district, so the project treats it as a hinge where different routines and lifestyles meet. The name combines “begin” and “end” and reinterprets the history of the site as a place where movement always shifted from one condition to another.

The concept responds to the way the surrounding context is changing. North Point has grown

[9] CoStar, “E Cambridge/Kendall Sq Retail Submarket Report, Q4 2025”

into a district of larger residential and life science buildings, while the streets to the south still hold smaller houses and traditional blocks. At the same time, MIT and Kendall Square draw a steady flow of graduate students, researchers, and workers who move through Lechmere every day. The proposal uses this position to bring together student oriented units and family housing in one building, so that the resident mix reflects the mixed character of the neighborhood that surrounds it. The goal is to treat the former terminal not as an isolated object, but as a new threshold that connects these different pieces of the city.

The Ground-Floor Hub

The ground floor is where the idea of a community hub becomes visible. Rather than treating retail as leftover space, the project focuses on a small number of active tenants that support daily life. A café or coffee bar is located at the corner facing the station and the plaza, so that it can open directly to the sidewalk and pull people across from the platforms. Shared indoor lounges, mail and parcel areas, and bicycle rooms are arranged along this edge so that residents pass through an active zone as they enter and leave the building.

The adjacent Triangle park is treated as an extension of this ground floor. Large openings, transparent glazing, and generous seating are used to soften the boundary between the interior common spaces and the plaza. Outdoor tables

for the café and informal gathering spots for residents turn the park from a leftover traffic island into a small neighborhood living room. People arriving from the T, nearby families, and MIT students all have reasons to pause here, meet others, and stay for a while instead of simply crossing the site.

By combining a clear residential program with an intentional and carefully programmed base, The Bgend reframes a former transit parcel as a modest but meaningful center of local life. The project keeps the site’s historic role as a place of movement, but shifts the emphasis from transfers and waiting toward living, meeting, and staying.

Design Strategy

Massing and Site Organization

The design strategy begins with a clear massing approach. The building is organized around a central courtyard, with the main volume lifted above a porous ground plane. Much

of the first level is opened up on piloti so that people can move directly from the station edge toward the interior of the site. This east–west passage aligns with the new Lechmere Station plaza and helps the project feel like a continuation of the transit landscape rather than a barrier. The courtyard brings light, planting, and outdoor space into the middle of the block and offers a quieter shared environment for both student and family residents.

The height of the building is adjusted to respond to its surroundings. Along the southwest edge, where the project meets existing low rise residential fabric, the mass is kept lower and holds most of the student housing. Toward the northeast corner at the main intersection, the form steps up to match the emerging scale of North Point and the station district. Between these two conditions, an intermediate volume frames the courtyard and forms the main body of the project. This calibrated height strategy allows the building to add density at the corner that can absorb it, while keeping the smaller streets closer to their current character.

Program and Unit Mix

Program is layered vertically so that each level reflects a different pattern of use. The ground floor contains the two residential cores, the retail spaces, building services, and a limited amount of piloti parking pulled away from the primary street edge. Because the site sits next to a major transit hub, the project avoids large parking structures and uses its volume primarily for housing and active ground floor uses.

Above this base, the lower bar of the building is dedicated to student oriented units. These are organized as compact studios, one bedroom apartments, and small shared layouts that are competitive in the MIT rental market and suited to shorter or more flexible stays. Family housing occupies the middle and upper levels of the

podium, with a concentration of one bedroom units and a smaller number of two bedroom apartments intended for longer term residents. Where the two housing types meet, on the third floor, a shared community level links the separate corridors and cores. This floor includes lounges, study rooms, and flexible spaces that allow students and families to share the building without feeling fully separated into different blocks. Above this, the upper portion of the taller volume continues the family housing program. The mix gradually shifts so that more two bedroom units are placed where light and views are strongest, which reinforces the idea of the tower as a long term residential zone rather than an extension of student housing.

Taken together, these strategies connect massing, circulation, and unit planning back to the central idea of The Bgend. The building is shaped to support the movement patterns of people arriving from the station, to offer appropriate housing for different resident groups, and to anchor the site as a new residential and community focus at the edge of East Cambridge.

Conclusion

Redeveloping the former Lechmere Station site requires balancing market logic, zoning constraints, and the history of the parcel as a transit gateway. The analysis shows that East Cambridge operates under chronic housing pressure while remaining one of the most expensive rental markets in the region. At the same time, MIT continues to generate a persistent shortage of graduate student housing that spills into surrounding neighborhoods. Within this context, a housing-led program is not simply one option among many. It is the clearest response to both the structural shortage of efficient units and the specific demand generated by nearby institutions and employment centers.

Zoning frames this opportunity while also limiting it. Under existing PUD-4A controls, the site is restricted to a mid-rise envelope that supports multifamily housing and small-scale retail. This aligns with the surrounding fabric of East Cambridge but sits directly beside the taller buildings of North Point, which are permitted under PUD-6 standards. The proposal for The Bgend assumes that, given this adjacency, a carefully argued special permit could allow a slightly more generous height and massing profile without creating a full tower. In financial terms, this

additional flexibility is important for delivering sufficient residential density, while in urban terms it helps the building mediate between the smaller blocks to the south and the larger forms to the north.

Market conditions for ground-floor retail are also supportive, though the role of retail in this project is primarily qualitative. The East Cambridge and Kendall Square retail submarket is effectively full, with very low vacancy and stable rent growth. A modest amount of new space at the base of the building is likely to lease quickly to neighborhood-serving tenants. More importantly, it can animate the Triangle park and the station edge, turning the frontage into a small everyday destination instead of a leftover corner of infrastructure. In this sense the retail is less a stand-alone profit center and more a tool that strengthens residential value and reinforces the

project’s community ambitions.

The design concept of The Bgend builds directly from the site’s history as a point of transfer. For nearly a century, this parcel marked the end of the trolley line and the beginning of trips into Boston. The proposal keeps that idea of movement but redirects it toward social life. By combining student-oriented units with family housing in a transit-oriented, mid- to highrise form, the project seeks to turn a vacant transit remnant into a small but active residential anchor. The success of such a project will depend on disciplined execution: securing the necessary zoning flexibility, calibrating the unit mix to real demand, and treating the ground floor and adjacent open space as shared civic rooms rather than residual space.

Bibliography

1 Cambridge Day. “Biggest Universities in Cambridge Can House Around Half of Their Grad Students, Reports Say,” February 17, 2025, www.cambridgeday. com/2025/02/17/biggest-universities-incambridge-can-house-around-half-of-theirgrad-students-reports-say/.

2 City of Boston. “Student Housing Trends and Impacts Report,” 2024.

3 CoStar Group. “Harvard MIT Multifamily Submarket Report, Q4 2025,” December 1, 2025.

4 CoStar, “E Cambridge/Kendall Sq Retail Submarket Report, Q4 2025”

5 Redfin. “East Cambridge Housing Market Trends,” November 30, 2025, www.redfin. com/neighborhood/797/MA/Cambridge/ East-Cambridge/housing-market.

6 MIT Graduate Student Housing Working Group. “Graduate Student Housing Working Group Report,” August 2018, https:// studentlife.mit.edu/app/uploads/2025/03/ Graduate-Student-Working-Group-report. pdf.

7 RentCafe. “Average Rent in Cambridge, MA,” December 1, 2025, www.rentcafe. com/average-rent-market-trends/us/ma/ cambridge/.

8 Universal Hub, End of the Line for the Old Lechmere Station, 2020.

9 Walk Score. “143 Cambridge Street,” November 30, 2025, https://www.walkscore. com/score/143-cambridge-street-cambridge.

Hark, hark! The Wharf at 440 Atlantic

A Development Proposal for the James H Hook Lobster Site at 440 Atlantic Ave, Boston

Hark, hark! The Wharf at 440 Atlantic

Introduction

Imagine you’re a posh suit-type visiting Boston for work, throwing back oysters shucked at the table and appreciating their liquor. You probably went to Harvard or MIT in your youth and Boston has some nostalgic hold on your soul. Or perhaps the call came just as you turned thirty, or thirty-five, or some scary number which took you to Business School, Law School, Medical School, or perhaps even the School of Design, where at some point you came across real estate. Now as a fancy type with not much free time on your hands you’re taking expensed Ubers left and right. Your assistant will file for reimbursements later, or if you’re an entrepreneurial type, it goes straight into your business expenses ledger, making the taxman seethe come filing season.

Increasingly, your visits to Boston have

been taking you to Seaport, which seems to be a real hub of business activity. And because you have the money, you’ve been staying at the InterContinental just across the river, enough times that the receptionists know you by name and greet you like a long-lost relative every time you walk back in, and whenever you walk into your room, there’s cut fruit, or a cheese board, sometimes even a bottle of wine (low-tier red you’d never touch). You regularly get a high floor suite, and one of these times that you’re there you’re looking out the window, out towards the North. Almost below your nose is 470 Atlantic Avenue, an office building which was bought by Nan Fung Life Sciences Real Estate in 2021. To the north, right across the street on the other side of the Evelyn Moakes Bridge, is a small piece of land with some kind of ramshackle sheds on it. Just behind that is a street converted to a parking lot, going to the Old Northern Avenue Bridge,

which is now a partial metal structure jutting out into Fort Point Channel. The next morning before you book the Uber, you walk down to the sheds, and find out that it’s the James Hook & Co Lobster restaurant. And then you realize why it looks different – it burnt down in 2008, and you haven’t really paid attention or been there after your first few times in Boston – seems more like a tourist destinations. It’s surprising though: in the middle of all these modernist high-rises designed by high-flying architects, how is this plot of land still barely built up? It would be nice, you think, if you could buy a nice apartment here for when your son goes to college… maybe you could even flip it after he graduates and make back his tuition. Or it would even be nice to have a cheaper hotel for your less senior employees, on whom you’ve been spending somewhere between $300-400 per night to put them up in nearby hotels whenever they must travel. Reader, this is where we come in.

Design Proposal

The Site

440 Atlantic Avenue is an irregularly shaped plot of land, roughly 180 feet long and 110 feet wide, with the longer side perpendicular to the street. It abuts the access way to the Old Northern Avenue Bridge, which is scheduled for demolition in sometime in the near future. To the south is Independence Wharf, with the InterContinental Boston Hotel and the Boston Tea Party Museum on Fort Point Channel. To the north is Rowes Wharf, with boat and ferry docks along the Boston Harbor Hotel. Currently, the plot is very sparsely built on, with the James Hook restaurant building holding ~5 tables and a counter for ordering, and one storage building which is under disrepair. There are also some temporary structures which server as outdoor dining areas in good weather. The back of the

building, facing the access street to the Old Northern Avenue Bridge, has a few parking spots and a pair of portable toilets.

Proposed redesign and development program

In addition to the site characteristics described above, it is important to note that both sides of the Evelyn Moakes Bridge have a Harborwalk, which is broken by the bridge and has a further discontinuity caused due to 440 Atlantic not having any public space or access. To resolve this, the design strategy prioritizes public connectivity and plaza formation. Adhering to zoning guidelines that encourage public access, the proposal incorporates a strict 25-foot setback from the shoreline and dedicates 50% of the site to open space. After testing both point-loaded and double-loaded floorplate configurations, we selected a point-loaded strategy given that it yielded greater efficiency in terms of leasable area. By strategically positioning the building mass in the top / northwest corner of the lot, the design successfully reconnects the Harborwalk, maintaining vital public access adjacent to the bridge and maximizing water frontage through an L-shaped plaza skirting the proposed development. The building footprint is 120 feet long and 80 feet wide, living ample space for the plaza.

We believe that the site context and market

conditions support a mixed-use building, comprising a hotel component on the 2nd through 8th floors, and apartment condominiums from the 10th to 24th floor. The ground floor is activated by a restaurant (the renovated James Hook Lobster), a café, the hotel lobby, and public programming for the water-facing plaza, ensuring the street level remains porous and inviting. It also contains a loading dock and back-of-house space. The 9th floor also allows for further access to excellent harbor views, albeit not free, via a dedicated floor common to both hotel and condos, containing a gym and a water-facing bar.

Vertically, the tower is comprised of seven floors of hotel space surmounting the podium, followed by the amenity level, and capped by 15 floors of residential condominiums. The hotel levels feature symmetrical layouts with corner rooms being larger than inner ones, while the residential upper levels utilize the prime corner real estate for spacious two- and three-bedroom units.

Façade-wise, the building is defined by a unified grid façade that creates a harmonious rhythm across the building’s vertical rise. This grid responds directly to the program within: the hotel levels utilize a 10-foot structural base, which transitions into a wider 20-foot base for the residential floors above. This variation introduces visual interest while maintaining a cohesive structural logic.

Aesthetically, the tower is designed to stand out as a modern icon on the water. By exposing some of the structure and maximizing transparency, the building contrasts intentionally with the heavy brick / brick-like masonry and smaller windows prevalent in the surrounding neighborhood context.

Market Analysis

An earlier plan for the site had envisioned a 25-story, 357-room hotel tower on the site, planned as a “high-profile landmark hotel” straddling Downtown and the Seaport District (Gaffin, 2020). This plan was swept away by the vagaries of the Boston planning and approval process, stopped in its tracks by a Supreme Court judgment which voided a perceived bypassing of the environmental approval process. One can assume that the hotel idea was sound, having made it all the way to seeking approvals. However, our analysis finds that the neighborhood is already saturated with high-end and luxury hotels, with two of these within a minute’s walk of the site. Further, given the number of office buildings within a 0.5 mile radius, there is a profound gap in mid-scale hotel offerings under $250 a night. Market analysis for hotels (detail below) combined with financial feasibility suggested that a sub-200 room hotel priced around $200 a night would do well. The quirks of the site allow for generous room sizes at the given price, allowing further differentiation within a select-service hotel model.

Further, to capitalize on the excellent location and views offered at higher levels, we believe that a residential condominium component can be introduced successfully, at a market rate on par with prevailing neighborhood figures.

Hotel Market Analysis

Boston’s hotel industry shows strong demand recovery and growth, and it is in a position ripe for new supply. Total cumulative hotels in Greater Boston had approximately 74% occupancy, $233 ADR, and $172 RevPAR

for the 12-month period through early 2025, and RevPAR on a rolling basis was an impressive 6.2% YoY, far superior to the U.S. average of 1.8% (Tourism Economics, 2025). Part of the rebound was in part due to a drop in available rooms, with some hotels shutting down or repurposing, and a 0.7% surge in demand was observed as business and group travel improved (Tourism Economics, 2025). Increased international visits also drove this boost, with this positive trend likely to continue till 2030 (Tourism Economics, 2025). In fact RevPAR (nominal) for 2024 was 7% above 2019 level, an impressive recovery, even though some of the increase can be explained by inflation (Baum & Bisema, 2025). However, Boston’s overnight room occupancy figure for 2024 was

74.1%, the same as that from 2019, although the level is well below the range of 80 to 85% that is the average in peak months before COVID-19 (Baum & Bisema, 2025). This indicates a space for further growth as business travel returns to normal.

Demand in Boston is diversified across traveler segments. For the full year 2023, the Boston and Cambridge market mix was estimated at roughly 22% group (conference/convention), 6% contract (airline, etc.), 45% transient leisure, and 27% transient corporate (Roginsky, 2023). This indicates a well-balanced base, as both group and corporate segments are recovering, aided by increased office occupancy and in-person events, while leisure travel remains very strong (Tourism Economics, 2025; Roginsky, 2023). In fact, from May through October 2023, the peak tourist season, Boston hotels averaged 84% to 89% occupancy each month, driven by visitors drawn to the city’s historic sites, cultural attractions, and waterfront (Meet Boston & Pinnacle Advisory Group, 2025). Even during shoulder months (March, April, and November), occupancy averaged 75%, although it drops to 58% in winter (Meet Boston & Pinnacle Advisory Group, 2025). These figures underscore Boston’s strong seasonal peaks and a solid year-round occupancy base, albeit with pronounced winter slumps. 440 Atlantic Ave bridges the Financial District, the Seaport, and South Boston

Waterfront neighborhoods, putting it in proximity to major office employers, two convention centers, and top leisure attractions (New England Aquarium, Quincy Market, Freedom Trail, etc.). Convention activity is surging: the Boston Convention and Exhibition Centre recorded back-to-back record roomnight generation years in 2023 and 2024, and 2025 is expected to set another record (Baum & Bisema, 2025). With the September 2021 opening of a second large convention hotel (the 1,054-room Omni in the Seaport), Boston has improved its appeal for large events (Palma & Kuschner, 2020). However, a relative shortage of hotel rooms near the BCEC remains a constraint, meaning delegates often seek rooms in the Downtown Waterfront area (Tourism Economics, 2025). This submarket is also favored by high-spending leisure travelers and international visitors who seek harbor views and walkable nightlife along the Harborwalk (Baum & Bisema, 2025). Moreover, Boston’s education and healthcare institutions create a constant source of demand from visiting families, patients, and academics, many wanting to stay in safe, central locations with waterfront views (Tourism Economics, 2024). A well-located new hotel at 440 Atlantic Avenue is positioned to provide a balance of leisure and business, attracting mainly convention visitors and corporate employees, bolstered by tourists, to capitalize on the distinctive waterfront factor and proximity to a cross-section of demand generators. Demand growth potential is positive. In 2023, the Greater Boston visitor economy drew around 8 million overnight visits and in 2024, approximately 9 million overnight visitors, slightly above pre-COVID levels (Tourism Economics, 2024). In 2024, overnight tourism expenditures in the city were estimated at $9.3 billion and $12.6 billion in the Greater Boston region (Mass. Executive Office of Economic Development, 2025). At the same time, local employment and income are advancing (total employment rose 1.2 percent in 2024, with particularly robust gains in technology and life sciences), and this is supportive of corporate travel. Logan Airport in Boston experienced 43.5 million passengers in 2024, with an important 14.9% increase in international traffic – where hotels can profit (Baum & Bisema, 2025). Perhaps most crucially, new hotel construction has come almost to a halt while demand continues to grow. The supply-demand mismatch is evident: Boston’s RevPAR was outpacing inflation through late 2024, and STR reported that in 2024 RevPAR exceeded 2019 by 17% despite

fewer business travelers (Baum & Bisema, 2025). This set of circumstances suggests that a new hotel at 440 Atlantic could tap into a high-occupancy, high-ADR environment.

Boston is a high-barriers market with minimal new hotel supply, and Downtown Waterfront exemplifies this. Even before the pandemic, new hotel construction in the city was modest – Boston added roughly 1,400 rooms per year on average in the 2010s, a pace far below peer cities (Tourism Economics, 2025). In recent years, hotel supply growth has essentially stalled. From 2020 through 2024, only a handful of significant hotels opened in the urban core: for example, the Omni Boston Seaport (1,054 rooms, opened 2021), a Canopy by Hilton (212 rooms, 2022), a Moxy Boston Downtown (340 rooms, late 2019) and a Hyatt Centric Faneuil Hall (163 rooms, 2019)(Baum & Bisema, 2025). In 2023, no major traditional hotel opened; notably, CitizenM Boston (380 rooms) debuted in 2024 as part of a mixed-use Back Bay project (Palma & Kuschner, 2020). Overall, the city’s room count shrank in 2023 (net -1%) due to permanent closures and only rose about 1% in 2024 (Roginsky, 2023b). As of late 2025, there are few if any hotels under construction in Boston’s core – a remarkable situation for a top US travel market (Baum & Bisema, 2025). High construction costs, scarce land, expensive financing, and Boston’s protracted entitlement process have kept developers at bay (Tourism Economics, 2025). This supply constraint is especially acute in the downtown waterfront and Airport submarket, which hosts the city’s largest convention facilities and many upscale hotels, but has very limited new development site (Tourism Economics, 2025). In short, this demand-supply imbalance means a new hotel at 440 Atlantic could capture pent-up demand without immediate competitive pressure.

market around 440 Atlantic Avenue is currently dominated by upscale and luxury hotels, with very few true midscale options. Within a 1 km radius of the site, most competitors are 4 star to 5 star properties such as the InterContinental Boston, Boston Harbor Hotel, and The Langham, with typical nightly rates often in the $300 to $700 range. This submarket contains a “dense cluster of upper-upscale and luxury hotels” near major demand drivers like convention centers. By contrast, only a handful of mid-priced hotels operate nearby, like YOTEL Boston (opened 2017 as a tech-focused micro hotel) and Club Quarters Faneuil Hall (a 3 Star business hotel), both positioned as affordable alternatives with rates roughly in the $150 to $300 range. The limited presence of these midscale options underscores a gap in the market: price-sensitive travelers have few choices in the downtown core aside from these smaller offerings.

Recent performance metrics suggest an oversupply at the top end and unmet demand at lower price points. In 2024, Boston’s luxury tier achieved only around 60% occupancy (citywide), which is a soft performance attributed in part to new high-end supply entering the market (Roginsky, 2025). The Boston market analysts note temporarily exacerbated the pace of the post-COVID recovery and put shortterm pressure on occupancy and RevPAR in the luxury segment (Wronka Ltd, 2023; The Plasencia Group, 2024). Meanwhile, the midscale and upper-midscale segments rebounded strongly: many downtown hotels in the 4 star range reached 85–90% occupancy in 2023, far outpacing the luxury tier (Roginsky, 2024; Meet Boston, 2025) Overall market data confirm that Boston remains “structurally under-supplied” in rooms, with occupancy commonly exceeding 80% in peak months (Wronka,nd). In other words, demand is high relative to available rooms – but most of those rooms cater to the high end. The prevalence of luxury products (and their premium rates) indicates an opportunity for a midscale hotel to fill an underserved niche. A new mid-range hotel at 440 Atlantic can differentiate itself from the upscale competition by targeting guests who are currently priced out of downtown lodging.

Competitive Advantage of a Modern, BudgetFriendly Midscale Hotel

The introduction of a midscale “affordable chic” hotel in this waterfront site has a number of competitive advantages. To start off, it would make use of strong demand from younger travelers, tour groups, and budget-conscious visitors

who seek the downtown location but cannot afford the prevailing luxury rates. The likes of citizenM and Moxy have proven that appealing, “affordable but luxurious” experiences provide an attractive price for modern travellers today, offering an appealing combination of sleek design and technology, along with smaller room formats, thus contributing to keeping rates relatively low (Signature Boston, 2024). For its part, Boston’s new citizenM hotel (399 pods in Back Bay) was recently opened in 2024 as an example of this trend, and it represented an “affordable luxury” product entering the market for the first time in a long time dominated by high-end offerings (Signature Boston, 2024). A comparable approach at 440 Atlantic with efficient room layouts, smart tech, and vibrant social spaces would allow for healthy occupancy by bringing on budget-conscious visitors who are otherwise absent at the Waterfront. The Club Quarters downtown among cost-conscious corporate travelers is an area with great success rates, likewise, the nearby YOTEL has been successful at “micro” rooms and lower rates for a similarly chic experience (Roginsky, 2023). Such examples give a glimpse of the potential for value-driven lodging. The newly identified midscale hotel could utilize their lower operating costs (lower room sizes, fewer amenities) to charge considerably lower nightly rates to the luxury competitors and position themselves as an affordable substitute, offering room choices at a lower-value for money price point within a highADR neighborhood. What’s more, given the very constrained pipeline, a midscale hotel located in this area would be a rare entrant: it would be filling a market gap but without facing imminent new supply. On balance, such a modern, efficient hotel aimed at the 3-star and 4-star segment could quickly offset any spillover demand that the current upscale hotels are not managing, and it would also circumvent any cost-push wars against luxury incumbents.

Residential Market Demand

Parallel to the strong hotel metrics, housing demand in Boston has soared, particularly in transit-accessible, amenity-rich neighborhoods such as downtown. Boston’s population has been constantly growing over decades, reaching 675,000 inhabitants in 2020 (up 9 to 10% from 2010) (BPDA Research Division, 2024). For this, consider the metro region, which is still growing, with the Boston MSA standing at an estimated 5 million people (0.3% to 0.5% yearly growth) (Macrotrends LLC, 2025). This population growth, in addition to the explosion in regional

jobs (148,000 new jobs from 2010 to 2018) in the area, has significantly outstripped housing stock (EBP & Massachusetts Taxpayers Foundation, 2025). A regional task force determined that Greater Boston’s cities allowed about 32,500 new housing units between 2010 and 2018, despite drawing 110,000 additional residents in that time period (EBP & Massachusetts Taxpayers Foundation, 2025). The result is a critical housing deficit. And one estimate puts Boston’s shortfall at over 40,000 homes (roughly 13% of supply) required to fulfill current demand (Kadlus & O’Toole, 2023). At state level, Massachusetts is expected to require 220,000 additional housing units by 2035 to match growth and stay competitive (Shachnow, 2025).

Note: 1900-2010 Decennial Censuses, 2020-2025 City of Boston Planning Department Research Division Estimates and 2030-2035 Population Projections, Research Division Analysis

The housing shortage is reflected in the skyrocketing rents, soaring home prices, and the low vacancy rates that surround the property. The availability rate of apartment buildings in Boston was around 5% to 6% in mid-2025, almost at historic lows (Salpoglou, 2025). In desirable downtown areas, effective rental vacancy is even more constrained, with many buildings nearing nearly full occupancy and new units absorbed rapidly. Affordability fell in Boston’s for-sale housing market, which showed a growing gap in supply with demand for starter homes (Schuster et al., 2025). In particular, there exist few residential stock in the downtown waterfront, with few larger luxury condo buildings (such as Rowes Wharf or Harbor Towers) (Compass, n.d.; Boston Luxury Flats, 2025; Coastal Neighborhoods, 2025). Adding new housing is rare in those places, and in the neighboring Seaport District it has quickly expanded despite top-of-market rents, confirming that pent-up demand for well-located units is very much alive (Kayata, 2023; LuxuryBoston, n.d.; William Raveis Real Estate, n.d.; Palmer, 2022). Additionally, demographics favor downtown living: both young professionals and downsizing empty-nesters have increasingly begun looking for walkable, mixed-use neighborhoods with work, entertainment, and transit (Jay Nuss

Realty Group, 2024). These groups are ready to pay a premium for urban convenience, and the success of mixed-use development in metro areas like Assembly Row and Boston Landing reflects this (Jay Nuss Realty Group, 2024).

City officials are busily advocating the push to boost housing production and mixeduse vibrancy to Boston’s inner city. The Boston Planning & Development Agency (BPDA) rolled out an entirely new downtown zoning policy that incentivizes development of underutilized commercial buildings for residential use, increases permitted densities for mixed-use projects (BPDA, 2025; BPDA, 2023). There is also an Office-to-Residential Conversion Initiative that provides tax support and expedited permitting for conversion of rundown office buildings to homes (Kuechler, 2025). At least 15 buildings (totaling 800 units) have also entered the conversion pipeline downtown, since its launch (Kuechler, 2025). This is part of a larger plan to counter high office vacancies and to add housing by “reimagining Downtown” for more activity 24/7 (Kuechler, 2025). The city’s aspiration, as articulated in its Downtown Waterfront planning, is to “foster a core where more people live, work, and gather,” with dense, walkable development and improved public realm (City of Boston, 2017).

A mixed-use hotel and residential tower at 440 Atlantic directly aligns with these objectives by bringing new residents to the waterfront. It would bring permanent residents into the downtown waterfront (supporting local businesses year-round) and provide a hotel to accommodate visitors, all while activating a currently underutilized wharf site. The public feedback in recent years has often been in favor of adding housing in new projects to help address the shortage; in a 2025 city poll, Boston residents overwhelmingly supported policies to build more homes

(Abundant Housing MA, 2025). In short, market demand for the residential component is assured by the city’s housing crunch and the enduring appeal of waterfront living. Any new condos or apartments delivered at this site should expect strong absorption and high pricing, given the scarcity of such opportunities.

Downtown Boston’s residential stock has grown meaningfully in the last 15 to 20 years, but remains small relative to its job base and overall housing demand. Historically, the Financial District and Downtown waterfront were dominated by office, hotel, and institutional uses, with only a limited number of housing units (City of Boston Parks and Recreation Department, 2008). Recent research on downtown commercial real estate describes the Financial District land use as “almost entirely commercial office space interspersed with a small amount of restaurant and retail space,” underscoring how little residential there has been until very recently (EBP & Massachusetts Taxpayers Foundation, 2025).

Since the 2000s, Boston has deliberately tried to rebalance this pattern. BPDA neighborhood profiles show that the Downtown population increased by roughly 48% between 2000 and 2015, yet still accounted for only about 3% of the city’s residents in 2015, confirming that the central business district remains lightly populated compared with outlying neighborhoods (Boston Planning & Development Agency [BPDA], 2019). More recent demographic estimates put the Downtown–Financial District population at about 5,100 to 12,000 residents, depending on boundary definitions, which is modest for a district that contains a very high proportion of Boston’s office employment (Morgan Franklin, n.d.; Point2Homes, 2025; BPDA, 2024).

The residential market in downtown Boston and the Seaport has a similar imbalance: a surplus of luxury units and a dearth of affordable, workforce-oriented housing. Over the past decade, “high-end housing has sprouted across the Seaport”, with numerous upscale condominium towers and expensive rental developments transforming the waterfront skyline (Chesto, 2025). The Downtown Waterfront area today is largely characterized by premium apartment buildings and condo projects aimed at affluent buyers (Boston City Properties, 2025). Average rents and sale prices in these neighborhoods rank among the highest in the city (Hawkes, 2025; Creamer, 2025; Garcia, 2024). New residential projects have tended to be luxury-oriented; for example, the nearby Harbor Towers and other high-rise residences

cater to wealthy tenants. By contrast, affordable or mid-market housing is exceedingly scarce in this submarket. A recent Boston Globe report noted that a planned 200-unit income-restricted apartment building in the Seaport was a “rare project to bring affordable housing” to the area – and even that project had to be scaled back due to financing challenges (Chesto, 2025). Indeed, the Massport-led development will now offer only 100 units, and is the “first all-affordable project in the Seaport” district (Chesto, 2025). This only underlines how unusual it is to find non-luxury housing in the current Downtown Seaport real estate climate. The net result is an underserved market for moderately priced, even if not “affordable”, homes close to Boston’s employment core. Young professionals, service workers, and middle-income residents want to live downtown but are unable to pay exorbitant rents or live further away. This dynamic is mirrored at scale; Greater Boston faces a shortage of tens of thousands of housing units affordable to those earning moderate incomes, and much of the new supply in central areas remains out of reach for this cohort (Urban Land Institute, 2010; Callahan, 2022). Shortage of affordable housing close to job centers is one factor contributing to a lack of talent retention, a 2024 survey found that 25% of young adults want to leave in the next five years, with high housing costs a key reason (Kuznitz, 2024).

amenities at a reasonable price point. This strategy would also align with city policy goals to increase housing affordability and diversify downtown’s residential mix, enhancing the project’s public support. If positioned as rental apartments instead, those units would also fill a niche: midscale rentals in downtown that could attract executives, relocatees, or residents who value flexibility. As the overall rental vacancy rate in Metro Boston was estimated around 6.2% in 2023 (HUD), up slightly from the ultra-tight sub, 5% pre-pandemic rate, but still indicative of an undersupplied market (U.S. Department of Housing and Urban Development, 2024). Thus, we note that the Seaport apartments (such as those at 100 Pier 4, The Benjamin, etc.) have achieved some of the highest rents in Boston, and vacancy in those properties is consistently low (LuxuryBoston,n.d; Innis, 2025). This suggests that a mixed-use hotel with residential rentals could succeed financially, as the residential income stream would be strong. Furthermore, a mixed project can share certain costs (parking, amenities, etc.) across uses, improving overall feasibility.

Market indicators show that any increase in supply is quickly absorbed. The overall rental vacancy rate in Metro Boston was estimated at around 6.2% in 2023 (HUD) – up slightly from the ultra-tight sub-5% pre-pandemic rate, but still indicative of an undersupplied market (U.S. Department of Housing and Urban Development, 2024). In downtown luxury buildings, with the rare exception of lease-up periods for new buildings, vacancies have typically been close to zero. On the for-sale side, Boston condo inventory in 2025 is still very low, particularly with respect to new build units. High construction costs and lengthy approvals have stunted condo development, leaving buyers few choices beyond resales of existing towers.

Financial Analysis

Adding a component of value-driven residential units at 440 Atlantic Avenue could fill a crucial gap. Such units (whether priced as “workforce” housing or offered below luxury condo levels) would target local professionals and younger residents who are currently underserved by downtown’s luxury-centric housing stock. By providing modern but relatively budget-friendly apartments, the development can capitalize on pent-up demand from renters seeking proximity to workplaces and urban

We conducted a first-level financial analysis for the proposed mixed-use redevelopment of the 440 Atlantic Avenue site, working as far as possible with conservative assumptions vis-à-vis market conditions and achievable revenues.

Cost

The total development cost of the project comes to roughly $128 million, with the land cost set at a nominal $3 million (based on assessed value); this is likely to be lower or even zero, given that the Hook family, who own the site,

have expressed a strong interest in continued ownership / partnership in any new development on the site.

Hotel development costs were assumed to be as follows: $500 per square foot hard construction costs, with $100 per square foot soft costs. FF&E was expected to come in at $40,000 per key, based on the HVS Hotel Development Survey 2025. Similarly, construction costs for condominiums were initially estimated at $450 per square foot, then revised to $500 based on expert input from David Hamilton, Principal at Geobarns, LLC and Lecturer at Harvard Graduate School of Design. Soft costs are in line with hotel at $100 per square foot. For the retail portions of the building, hard and soft costs combined are expected to be $400 per square foot.

In total, this leads to a hotel development cost of ~$39 million for 168 keys, or ~$230,000 per unit. Condos come in at ~$75 million for 100 units – on average, $750,000 per unit. Retail costs come to ~$2 million. On top of this $115 million are stacked the developer fee and contingency budget, bringing the total to ~$126 million. The remaining $2 million is dedicated to open space improvements, including grading and finishing for the public plaza, and a pedestrian walkway connecting Hook Wharf to Rowes Wharf in order to ensure continuity in the northern side of the Harborwalk above Moakes Bridge.

Revenue

Hotel ADR is estimated at $160 per night, higher than boutique hotels such as CitizenM but well below luxury hotels which dot the neighborhood of 440 Atlantic. This translates to a ~$7.5 million revenue annually from room bookings, accounting for 25% vacancy (conservative given the stable market lies between 80-85% occupancy). In addition to this, there is revenue from food and beverages, and other sources. Operating expenses are detailed in the full financial model.

The condominiums are priced according to the market at a lower-than-luxury rate, ranging from $700,000 to almost $1.6 million for the largest 3-beds, equating to $950-$1000 per square foot, which is almost half of luxury apartment prices.

Retail rents are assumed to be zero for James Hook Lobster, with the café and bar estimated to earn between $50 and $60 per square foot in rent annually. These are expected to bring in a relatively small portion of the revenue, at $200,000 per year.

Financing and Returns

The project construction loan is treated separately for all three asset classes, albeit with similar terms. A 70% LTC ratio is assumed, with interest rate being 7.5% paid quarterly. The construction period for the whole development was assumed to be around 3 years from design and approvals to receiving the Certificate of Occupancy. Hotel and retail loans are expected to be fully refinanced to a fixed-mortgage payment upon construction completion, at an interest rate of 6.5% (once again a conservative estimate). The construction loan for condos is expected to be paid down by unit sales over years 4-6, assuming a release price which is 70% of construction cost, with a 10% overhead, in effect 77% of the development cost of each unit sold.

Under these conditions, the development as a whole generates a levered pre-tax 19% IRR over a 10 year period (including 3 years of construction). The breakdown is as follows: the hotel achieves 15%; condos generate 23%, with sales completed by year 6 (3 years after construction completion); and finally, retail generates 8.5% – with the important caveat that a large section of retail (James Hook Lobster) is not income-generating, and triple-net lease assumptions for the other two retail spaces (café and common-floor bar) are highly conservative. An alternative scenario to consider is that the bar could potentially be owned by the developer as a part of the hotel, which will improve hotel topline and moderately pad the bottomline. We would also like to note that compared to our initial proposal presented in class, revising our hotel ADR assumptions to move to a slightly higher service bracket, and increasing condo prices to match market while remaining well below luxury, increased the IRR from ~12% to the current 19%, with a minor part of this effect coming from modifications to the financing and retail revenue assumptions.

In conclusion, the financial feasibility and the market case for a mixed-use hotel and residential development at 440 Atlantic Avenue look strongly positive. The hospitality and housing market analyses suggest that there is ample demand, and supply is constrained in the Downtown Waterfront. Boston’s hotel market has recovered sharply after the pandemic, registering high occupancy and record ADRs while virtually no new competitors have started in the region. Simultaneously, Boston’s chronic housing undersupply and push for downtown living open a space for the project’s residential program. Lastly, Hook Wharf is already iconic due to its family-run nature, with the James Hook Lobster

restaurant commemorating its 100th anniversary in 2025; this project emphasizes the importance of retaining and celebrating this legacy, while also renovating the site to open it to the public at a relatively inexpensive cost. It also stitches the Harborwalk together for a seamless pedestrian

experience of the waterfront, while also adding an iconic, fresh new structure to the skyline in an area dominated by older buildings.

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A Future Proof Typology

Development Test Fit at 56 Fulton Street

A Future Proof Typology

Introduction

Across contemporary real estate markets, developers confront a paradox: buildings must perform under the economic realities of the present while retaining the flexibility to adapt to radically different conditions in the future. Market cycles have become more volatile, development costs have grown less predictable, and the durability of any single land use—office, residential, retail—can no longer be assumed. Nowhere is this more visible than in Boston, where post-pandemic office distress and persistent housing demand coexist.

56 Fulton Street, a City-owned parcel at the edge of the North End, demonstrates this tension. As a site with long-term commercial potential but short-term residential feasibility, it challenges the binary thinking that traditionally guides highest-and-best-use analysis. This project proposes a “future-proof” building typology that rejects that binary. Instead, it imagines a structure intentionally designed to operate as a high-performing residential asset today, when multifamily fundamentals are strong, while being designed to convert into boutique office in a future cycle without demolition, structural intervention, or capital-intensive rework.

This future-proof positioning is not only an architectural stance but also a response to a broader policy and economic context. Cities like New York, Chicago, and Boston are actively experimenting with tools to recycle obsolete office stock into housing, while at the same time trying to preserve strategically located employment centers. The pace and unevenness of these changes suggest that no single program can be assumed to remain dominant over a building’s 50–75 year lifespan. A building that can behave as both housing and office across time, without requiring massive reconstruction, offers a way to reconcile these competing imperatives.

Drawing on lessons from inflexible office towers, precedents in hybrid industrial design, and the economic logics emerging from a bifurcated post-pandemic market, this chapter outlines the spatial, financial, and architectural strategies behind the proposed typology. It demonstrates a development methodology rooted not in predicting the future, but in preparing for multiple futures across an asset’s lifespan. In doing so, it emphasizes design of long-term optionality and nimbleness as markets change.

Defining “Future Proof” Development

Future-proof development is fundamentally about resilience across economic cycles. Instead of optimizing a building for the market that exists the moment construction begins, a future-proof approach accepts that markets will shift and that value is maximized when assets can evolve alongside those shifts. Rather than asking, “What is the single highest and best use today?” the question becomes, “What set of uses might plausibly be highest and best over the next several decades and what kind of building can move between them with minimal friction?”

Core Principles

The core principles of this future-proof building include:

Adaptable Structure

Regular structural bays that support both residential unit plans and future open office layouts, allowing the building to toggle between use patterns without structural surgery. A regular grid minimizes “structural leftovers” in future reconfigurations, reducing the need for transfer beams or partial demolitions when changing demising patterns.

Centralized service and circulation cores positioned for efficiency in residential layouts but dimensioned and located for future office demising patterns. In practice, this means elevators, stairs, and risers are clustered where they can serve both double-loaded corridors and open office plates, and where the cores do not block potential future internal connectivity across the floor plate.

Elevated Floor-to-Floor Heights

Sufficient height to enable office mechanical distribution, natural lighting requirements, and contemporary workplace ceiling clearances, while still residentially efficient. Floor-to-floor heights that are too low constrain office layouts and ceiling systems; heights that are excessively tall reduce residential efficiency. The future-proof strategy targets an intermediate band—typically in the 11–13 foot range—that keeps both options viable.

Convertible MEP Systems

Mechanical, electrical, and plumbing infrastructure that anticipates the higher loads, more distributed ventilation, and deeper spans required in office conversions. This includes planning for future increases in cooling capacity, flexible distribution routes, and riser locations that can accept additional branches without major disruption.

Reprogrammability Without Demolition

The building should not require gut renovations, new shafts, structural cuts, or façade replacement to transition uses. The façade module, window rhythm, and sill heights must work for both residential and office occupancies; the building envelope must already provide adequate thermal performance and daylight penetration for either use.

Collectively, these principles treat flexibility as a first-order design driver, not an afterthought. They internalize lessons from past building stocks that have proven difficult to convert, particularly postwar office towers with deep floor plates and rigid cores.

Why This Matters: Lessons from 180 Water Street

The constraints of non–future-proof design are clear in examples like 180 Water Street. Built in 1971 in Lower Manhattan’s Financial District, 180 Water was a 23-story office building with open floor plates organized around a mechanical core on the windowless fourth side. Before its

conversion, distances from the perimeter windows to the core reached up to 72 feet, far deeper than ideal for residential layouts that require access to light and air in every habitable room.

When the building was converted in 2017 into more than 500 apartments, the architects were forced to carve a 1,200-square-foot courtyard through 23 floors of the structure, effectively hollowing out the center of the tower to allow double-loaded residential corridors with units on both the perimeter and courtyard sides.

This strategy, while elegant, required substantial structural intervention, extensive re-cladding, and a reorganization of the building’s internal circulation and service systems. Communal bathrooms, conference rooms, and excess elevators were demolished, and significant façade work was required to meet contemporary energy and daylight standards.

The conversion ultimately demonstrates both the possibilities and the costs of retrofitting a building that was optimized for a single use. It reveals how deeply early design decisions, core placement, floor-plate depth, façade rhythm, can either hinder or enable future adaptation. Even after investment, buildings like 180 Water carry residual inefficiencies and, as recent reporting on refinancing challenges suggests, remain financially exposed.

This example highlights the ways in which buildings optimized narrowly for one moment become obsolete when conditions shift.

Lessons from a Hybrid Industrial Model

By contrast, a future-proof strategy embeds flexibility at the architectural “molecular level,” echoing Tim Love’s argument from his “A New Model of Hybrid Building as a Catalyst for the Redevelopment of Urban Industrial Districts”.

In the essay, he argues that the survival of urban industrial districts depends on the creation of new building types that can host both production and non-production uses over time.

Rather than preserving industrial zones as static museums of manufacturing, Love proposes hybrid buildings, structures that integrate a mix of uses including light industrial and office, through carefully calibrated structural systems and floor-plate configurations.

Key aspects of Love’s model resonate directly with the 56 Fulton proposal. First, he emphasizes structural generosity: clear spans, higher floor-to-floor heights, and robust floor loading that can accommodate everything from light fabrication to office fit-outs. Second, he stresses programmatic layering, in which “back-ofhouse” production spaces, office suites, and public-facing uses like retail or showrooms inhabit different vertical strata of the same building, enabling cross-subsidies and operational synergies. Finally, he insists that this flexibility must be designed from the beginning; it cannot be reverse engineered on the back end.

While Love focuses on industrial districts, the underlying logic is transferable to central-city parcels like 56 Fulton. In both contexts, the long-term survival of the district depends on buildings that can accommodate evolving mixes of employment and/or residential uses without requiring wholesale obliteration of the existing built fabric. A future-proof North End building, like Love’s hybrid industrial prototypes, becomes a catalyst for gradual, reversible change rather than a one-time, irreversible bet.

Why Future-Proofing Matters in the North End

Spatial, economic, and temporal logics make 56 Fulton Street an ideal test case for a future-proof typology.

Spatial Logic

The site benefits from a rare confluence of high-amenity and high-access conditions:

- A 5–7 minute walk from Downtown employment centers

- Immediate adjacency to the Waterfront, Quincy Market, and North Station

- Direct alignment with the Rose Kennedy Greenway

These characteristics are not merely descriptive; they translate into the ingredients of high-performing boutique office markets. Research on so-called “lifestyle office markets” shows that buildings located in walkable, mixed-use districts with strong transit access command significantly higher rents, up to 30 percent premiums, relative to more isolated office clusters.

The North End/Waterfront submarket fits this profile: it is bounded by the waterfront and major downtown thoroughfares, and it sits between the Financial District and North Station/Government Center, producing a natural bridge between residential neighborhoods and employment cores.

Historically, the North End has been characterized by fine-grained blocks, narrow streets, and active ground-floor retail, conditions that favor small tenants and experiential uses rather than large corporate floor plates. Commercial listings in the area tend to emphasize historic character, street visibility, and proximity to both tourist and office foot traffic, confirming the neighborhood’s appeal for restaurants, boutique offices, and neighborhood-serving services housed in older building stock.

As a result, even modest amounts of additional office space, especially in buildings that provide contemporary systems and flexible layouts, are likely to find a receptive tenant base of professional services, design firms, and small-scale tech or life-science support companies seeking a “neighborhood” address rather than a tower.

In Boston’s Seaport District, for example, 250 Northern Avenue, a four-story, approximately 50,000-square-foot boutique office and retail building, demonstrates how mid-rise mixed-use assets can thrive when anchored in amenity-rich waterfront settings. The building features

high-image ground- and first-floor retail, floorto-ceiling windows, and exposed ceilings, and has tenants including Del Frisco’s Double Eagle Steakhouse and Temazcal Tequila Cantina that draw both office workers and visitors.

Additionally, one of its larger tenants, digital security firm Aura, along with other professional services firms, reflects a demand profile that values proximity to transit and urban attractions over sheer square footage.

56 Fulton’s adjacency to the Greenway and to similar waterfront amenities suggests that a comparable boutique office product could succeed here once market conditions normalize.

The site’s ability to plug into an existing network of pedestrian flows—between Faneuil Hall, the Aquarium, the Greenway parks, and the residential blocks of the North End—gives it an inherent locational advantage that will be difficult to replicate elsewhere as vacant parcels disappear.

In addition to its transit connectivity and amenity base, the neighborhood is defined by small blocks and tight parcel geometry limiting redevelopment opportunities.

Zoning for the North End Neighborhood District explicitly aims to manage growth to preserve the area’s fine-grained urban fabric and historic character, which, in practice, constrains the scale and intensity of future construction.

The combination of tight parcels, height limits, and preservation goals means that few large floor-plate buildings are likely to be introduced in the future. In such a context, each new building must do more than one thing over its lifetime; the opportunity cost of locking a parcel into a single, inflexible use is simply too high.

These characteristics point to a district where land value will remain durable and where future office demand is highly plausible, even if today’s market cycle renders new office construction infeasible. As future redevelopment sites dwindle, new buildings should carry greater responsibility to be long-lived and multi-functional.

Market Data: Residential

Market Data: Office

Market Logic

The North End’s spatial advantages intersect with a market environment characterized by divergence between residential and office performance.Boston’s markets are currently out of sync. On the residential side, multifamily fundamentals remain strong. Market reports show metro-wide vacancy in the mid-single digits, with the central city performing even better, and long-term vacancy averages hovering around 5–6 percent. Rent levels rank among the nation’s highest and continue to outpace national growth over the medium term, reflecting both constrained supply and durable demand from students, knowledge-economy workers, and downsizing households. Within this context, the project’s residential assumptions, vacancy of approximately 5 percent and rents hovering around $4,500 per month for well-located, new construction units are realistic and supported by recent transactions.

Residential Market: Strong and Stable

Stable, High-Performing Fundamentals

- Boston vacancy is 6.7%, well below the national average of ~8.4%.

- Five-year average vacancy is ~5.5%, showing long-term structural stability.

- 12-month absorption: 5,994 units, even with 9,835 units delivered.

Rents Remain Among the Highest in the Nation

- Average rents near $2,890/month, ranking among the top U.S. metros.

- While YoY rent growth is currently muted (~0.1%), CoStar forecasts re-acceleration to ~3% annually by late 2026.

- Rent growth has outperformed the national average consistently, even during slowdowns.

Capital

Markets & Investor Confidence

- $4.1B in multifamily sales volume over the past year, indicating ustained investor liquidity.

- Average multifamily cap rates near ~5.1%, reflecting continued pricing strength and low perceived risk relative to other asset classes (notably office).

- Capital flows remain decisively concentrated in residential, reinforcing its role as the primary safe-harbor asset class in Boston today.

Office Market: Cyclically Weak, Structurally Persistent

By contrast, the office is far more fragile.

Structurally Weakened Fundamentals

- Boston vacancy is 15.2%, more than double pre-pandemic low of 6.7% and historical long-term average of ~9.3%.

- Availability now exceeds 19% when sublease is included.

- 12-month net absorption: –1.6 million SF, the worst annual absorption since 2001.

- An additional 7.6 million SF is still under construction, extending the supply overhang even as demand remains muted.

Rents Are Under Sustained

Pressure

- Average asking rents are ~$43.08/SF, but would be ~$50/SF if they had tracked inflation, signaling real rent erosion. (North End/Waterfront average asking rent: ~$41.63/SF)

- CoStar forecasts rents will decline through 2025–26 to ~$41/SF, with 4–5 Star buildings facing the steepest pressure.

Capital Markets Are Distressed and Selective

- Average office sale prices have fallen to ~$222/ SF, down roughly 28% from peak pricing.

- Average office cap rates are now ~

Yet the North End’s walkability, amenity base, and transit access position it as a first-recovery submarket when the cycle resets. Studies of post-pandemic office demand suggest that tenants show a marked preference for mixeduse, amenity-rich locations, often consolidating from peripheral or monofunctional submarkets into districts that offer 24/7 activity, transit, and neighborhood character. The North End/ Waterfront, like the Seaport, fits this model: it is compact, walkable, and well served by transit and regional connectivity. When companies do recommit to office space, they increasingly seek environments where smaller footprints in higher-quality, lifestyle-oriented locations can support hybrid work and employee retention. In other words, while Boston’s office market is cyclically weak, its long-term viability in prime, amenitized submarkets is unlikely to disappear. For a city-owned parcel in such a location, the risk is less that office will never return, and more that building the wrong kind of office, or building office at the wrong time, will strand public land in a suboptimal use.

Design Proposal:

Massing, Program, and Spatial Configuration

Massing Logic

The project’s massing strategy aligns directly with both neighborhood geometry and future adaptability requirements. Two linear bars maintain contextual continuity with the surrounding blocks and reduce floor depths, improving daylight access for both housing and future office plans. A central courtyard enhances residential livability while doubling as a potential future office amenity zone, capable of hosting outdoor workspaces, shared terraces, or small-scale events. A top-floor carve-out increases solar access and introduces a rooftop garden, framing views to the Greenway and the Harbor. A connecting elevated walkway allows shared egress and mechanical routing, reducing redundancy and simplifying future reconfiguration.

This massing supports today’s residential efficiency while enabling tomorrow’s commercial flexibility. Unlike a typical double-loaded residential slab, which is optimized exclusively for unit depth and corridor efficiency, the bars at 56 Fulton are proportioned to function as shallow office plates once internal partitions are removed. The courtyard ensures that no portion of the plate is excessively deep, avoiding the lighting and ventilation challenges seen in buildings like 180 Water.

Ground-Floor Program: Convertible Townhouse Typology

The ground floor introduces a double-height townhouse unit, a typology that activates the street edge and enhances privacy through a 4-foot greenbelt setback. Townhouse entries create a finer-grained rhythm along Fulton and North streets, echoing the existing residential stoops of the North End while providing eyes on the street and a robust threshold between public and private space. At the same time, the double-height volume and modular structural grid are consciously designed to support an eventual retail or commercial fit-out.

Importantly, this format is deliberately convertible, townhomes today and retail bays, neighborhood services, or food-and-beverage tenants

The relationship of front door, stoop, and ceiling height makes it easy to imagine ground-floor conversions that preserve the basic shell while introducing storefront systems and internal mezzanines. In a future office configuration, some townhouse bays might be combined to create larger, corner retail spaces, while others could host small professional offices, showrooms, or coworking suites directly connected to the public realm. This modular, street-linked configuration is one of the most powerful levers of future-proofing in the project.

Upper-Floor Residential Configuration

The residential program includes:

-Floors 2–3: 10 two-bedroom + 16 one-bedroom units

-Floor 4: 7 two-bedroom + 11 one-bedroom units + rooftop garden

These floors are supported by:

-Standardized structural grids optimized for future office conversion

-Utility spines that transform into mechanical chases

-Floor-to-floor heights calibrated for both user types

-Demising patterns compatible with both residential suites and office modules

In practice, the unit layouts have been tuned to avoid spaces that would be difficult to reuse in an office scenario. Bedrooms, living spaces, and kitchens are organized so that once nonload-bearing walls are removed, the underlying grid yields logical office bays of varying sizes. The corridor alignment anticipates future transformation into an office spine, with cores positioned to allow continuous circulation along both bars and around the courtyard.

The rooftop garden and solar carve on Level 4 not only improve the residential amenity package but also benefit a future office use. In a commercial configuration, this level could host shared conference facilities, indoor-outdoor meeting rooms, or wellness spaces overlooking the Greenway, aligning the building with contemporary expectations for amenitized workplace environments.

Residential Floor G

-Townhouse typology

-Individual access to streetside

-4 feet greenbelt set back for privacy

- 22 parking spots (8 ADA accessible)

Residential Floors 2 + 3

- 10 * 2B2B + 16* 1B1B

- Walkway to maximize egress usage

- Utilities at core of the bars

Residential Floor 4

- 7 * 2B2B + 11* 1B1B

- Solar Carve

- Roof Top Garden

Future Commercial and Office Adaptation

Once market conditions favor office demand, the building transitions seamlessly.

Ground-Floor Commercial Flexibility

The ground floor can evolve into:

- Activated retail frontage

- Food-and-beverage concepts

- Neighborhood-serving commercial uses

A detachable mezzanine enables tenant-specific balancing of open space and private rooms. By preserving generous slab-to-slab heights and column-free zones near the façade, the design allows a future tenant mix ranging from small cafés to destination restaurants and specialty retail. The patios and setbacks along the Greenway edge offer opportunities for outdoor seating and spill-out space, strengthening the reciprocal relationship between building and park.

Upper-Floor Office Transformation

The building’s future office configuration includes:

- Flexible demising, from boutique suites to fullfloor tenants

- A Level 4 civic garden operating as an amenity terrace

This setup offers programmatic appeal to:

- Creative firms

- Design studios

- Tech and life-science support companies

- Professional services

In this scenario, residential units are replaced with a mix of open-plan and enclosed office areas, while the existing core-and-shell infrastructure remains largely intact. The double-loaded residential corridors become office circulation spines; unit party walls are replaced with demising partitions; and bathrooms and pantries are clustered in locations compatible with existing plumbing stacks.

The building’s relatively modest scale, four to five stories above grade, aligns with the prefer-

ences of smaller firms that may not want to be in high-rise towers but still seek Class A systems and finishes.

Precedent: 250 Northern Avenue

The project draws inspiration from the oreviosuly mentioned 250 Northern Avenue, a mid-rise boutique office building that thrives due to:

- Human-scale mixed-use design

- Active ground-floor retail

- Strong urban and waterfront amenities

- A tenant mix combining dining, boutique office, and tech-oriented firms

250 Northern Avenue sits on Liberty Wharf in Boston’s Seaport District. Completed around 2010, it contains roughly 50,000 square feet across four stories, with high-image retail and restaurant uses on the lower levels and office space above.

The building’s marketing materials emphasize features like exposed ceilings, floor-to-ceiling windows, private decks, and harbor views, attributes that mirror the amenity and lifestyle advantages 56 Fulton can offer on the Greenway.

From a programming perspective, 250 Northern Avenue demonstrates that relatively small footprints and modest height can nonetheless attract institutional-quality tenants when paired with the right mix of environmental qualities: water views, walkability, transit, and a dense cluster of restaurants and cultural venues.

This precedent confirms that mid-rise office, in the right urban context, is both viable and in demand, reinforcing the long-term logic of preparing Fulton Street for commercial use.

Commercial Floor G

- Maximized streetside access to retail spaces on ground floor - Individual units can be connected for larger area - Detachable mezzanine level

Commercial Floors 2 + 3

- A variety of rentable unit sizes, accessed through the double loaded corridor

- Flexibility to create a free plan upon removal of partition walls

Commercial Floor 4

- Civic garden accessible from street level

Financial Analysis

The financial strategy for 56 Fulton is based on the hypothesis that multifamily development is feasible and financeable in Boston today, whereas ground-up office development is not. Current market rents, capital conditions, and construction costs all support a rental housing program, whereas speculative office development struggles to clear investor or lender hurdles. At the same time, Boston’s office market has historically rebounded faster than national averages, driven by its institutional employment base and above-average return-to-office rates. For this reason, the building is designed as multifamily today but intentionally structured to allow a future conversion to office should market conditions shift.

The development consists of 110,950 square feet, including the townhouse upper floor with 95 residential units and 22 parking spaces. All-in development costs range from $647.32 to $709.57 per square foot, depending on land acquisition assumptions. Residential revenues are modeled using gross rents, with two scenarios. If the City provides the land at no cost—as is plausible for this municipally owned parcel—the project complies with Boston’s Inclusionary Development Policy and sets aside 18% of units at 60% AMI, resulting in an average rent of $4,500 per month. Under this structure, the project achieves a 7.36% development yield, 11.80% unlevered IRR, and 19.50% levered IRR, with an equity multiple of 4.31×. If instead the land is purchased for $5,610,000, the project is not subject to IDP, resulting in higher average rents of $4,900 per month. This second scenario produces even stronger performance: an 8.30% development yield, 12.38% unlevered IRR, and 21.81% levered IRR, with an equity multiple of 4.475×. In both cases, multifamily clearly pencils and delivers returns in line with, or above, typical expectations for Boston residential development.

In contrast, the office program struggles under today’s market assumptions. Using prevailing rents in the North End Neighborhood and a comparable boutique office located at 250 Northern Avenue in the Seaport District, current achievable rents are modeled at $38 per square foot NNN, with 10% vacancy, $37 per square foot for tenant improvements, and leasing commissions of $10.28 per square foot. At these levels, even assuming free land, the project generates an unlevered IRR of just 6.86% and a levered

IRR of 9.12%, with an equity multiple of 1.36×— far below investor requirements. When land is purchased, returns decline further. The combination of soft market rents, high leasing-related capital expenditures, and lower lender leverage (approximately 62–65% LTC, compared to 73–75% for multifamily) makes new office development financially unworkable in the current environment.

However, if office rents return to their preCOVID levels—modeled here at $54 per square foot NNN, adjusted for inflation—the economics change dramatically. In a recovered market, the free-land scenario produces a 24.30% unlevered IRR, 41.10% levered IRR, and a 3.16× equity multiple, while the market-land scenario generates 19.82% unlevered IRR and 32.49% levered IRR. Under these conditions, office outperforms multifamily by a wide margin. This divergence highlights why the project’s ability to convert uses is so important: while building office space now is not financially prudent, it is also risky to rule out the option of office in the future.

Taken together, these findings support a dual-horizon financial strategy. Multifamily serves as the highest and best use in the current market, generating reliable cash flow and strong investment returns. At the same time, the building’s structural grid, floor-to-floor heights, and core placement are designed to support a future office conversion, allowing the project to capture significant upside in a recovered office cycle. This approach minimizes downside risk while preserving long-term optionality, positioning the development to remain economically resilient across multiple market futures.

Multifamily Returns

Conclusion

56 Fulton Street illustrates how future-proof design allows real estate to operate as a longterm civic and economic asset rather than a single-cycle investment. By embedding adaptability into its massing, structure, mechanical systems, and ground-floor program, the building can:

- Perform exceptionally well as housing today

- Transition into office or mixed commercial use tomorrow

- Maximize land value over decades

- Avoid the obsolescence that defines so many postwar buildings

In a moment when many cities are grappling with what to do with underused office stock and persistent housing shortages, the project offers a different approach: design new buildings so that they never become as inflexible as the ones we are now struggling to convert. Rather than seeing conversion as a heroic act of retrofitting, it treats adaptability as a baseline requirement of responsible urban development.

The project channels the central insight from Tim Love’s work: flexibility must be designed from the beginning, at the molecular level. In doing so, the building becomes not just a response to today’s market conditions but a durable, evolving component of Boston’s urban fabric, capable of moving between residential and commercial futures as the city’s needs change, without sacrificing performance, identity, or public value.

Bibliography

1 Badger, Emily, and Larry Buchanan. “Here’s How to Solve a 25-Story Rubik’s Cube.” New York Times, March 11, 2023.

2 Boston Planning & Development Agency. “North End at a Glance.” Accessed November 30, 2025. https://www.bostonplans.org/neighborhoods/north-end/ at-a-glance

3 Colliers. Greater Boston Office Market Report | 2025 Q3. Accessed December 14, 2025. https://www.colliers.com/en/ research/boston/2025-q3-greater-boston-office-report

4 CoStar Group. Boston Office Market Report. CoStar Group, 2025.

5 CoStar Group. Boston Multifamily Market Report. CoStar Group, 2025.

6 CoStar Group. “Boston Multifamily Buyers Becoming More Aggressive on Pricing.” Accessed December 1, 2025. https:// www.costar.com/article/128813480/ boston-multifamily-buyers-becoming-more-aggressive-on-pricing

7 Fannon, David, Moshe Laboy, and Peter Wiederspahn. The Architecture of Persistence: Designing for Future Use. London: Routledge, 2022.

8 JLL. Boston Office Market Dynamics: Q3 2025. Accessed December 1, 2025.

9 LoopNet. “250 Northern Avenue, Boston, MA.” Accessed December 1, 2025. https:// www.loopnet.com/Listing/250-NorthernAve-Boston-MA/35876813

10 Love, Tim. “New Models for MixedUse Industrial Development.” Built Environment: Manufacturing the Future of Cities, special issue, edited by Tali Hatuka, vol. 43, no. 1 (2017).

The Strategic Art of Anchoring

The Strategic Art of Anchoring: High-End Art Institutions as Urban Catalysts

Introduction

In the contemporary urban landscape, the “high-end” art institution has evolved beyond its traditional role as a cultural repository and is now deployed as a specific tool to catalyze and anchor emerging urban districts. For nearly thirty years, the “Bilbao Effect”—named after Frank Gehry’s Guggenheim Museum in Bilbao, Spain—has been the poster child of this phenomenon. The prevailing narrative suggests that creating an architecturally iconic art institution in a struggling region will revitalize the economy. Research has mostly proven this out. Following its opening, Bilbao experienced a surge in tourism, new fiscal returns, and a strengthened local art scene. However, recent analysis suggests a nuance to these findings. While the Guggenheim profoundly redefined Bilbao’s image, transforming it from a declining industrial port to a symbol of creative ambition, it did not unilaterally transform the economic trajectory of the broader Basque region. Its success was in branding and catalyzing a feedback loop that would further that identity, rather than generate direct economic multipliers.

In the United States, there has been a similar phenomenon at playm with art institutions popping up as part of broader urban redevelopment projects for severely underutilized areas of major cities. This essay examines three different examples, the Institute of Contemporary Art (ICA) in Boston, the Pérez Art Museum (PAMM) in Miami, and The Shed in New York City. The questions this essay addresses are:

1. Stakeholder Motivations: Are the stakeholders involved in these projects supporting art institutions primarily for the theoretical economic and placemaking effects (i.e., Bilbao Effect), or are they driven by divergent, self-interested reasons that happen to align?

2. Conditions of Success: Under what conditions does an art institution meaningfully anchor a district, creating genuine urban value and civic life, rather than remaining an isolated amenity?

Art as an Amenity: The Shift from Labor to Lifestyle

Labor availability is no longer the primary driver it once was in motivating where people move in the United States. In the post-COVID era and the subsequent normalization of remote work, urban amenities have become increasingly central to residential decision-making. The urban wage premium of one’s vocation has become a lesser factor. While amenities like restaurants and retail attract residents, surveys show that only arts and culture attract and anchor them. Access to cultural activities, such as art institutions, correlates with greater investment of time and resources in the community. Despite their power as an anchor and driver for location choice, cultural amenities are scarce. Nationally, they rank as the 4th hardest amenity to find, following affordable housing, public transit, and job opportunities— categories that are only nominally an amenity. In this context, an art institution could function strategically as a “loss leader” for a district. While the institute itself may operate at a deficit to both developers and Cities (no rent or standard property taxes) its presence encourages new development and even high price-persquare-foot rents for adjacent residential and commercial towers. It effectively “de-risks” the neighborhood for future investors. However, that has not been the way these projects have materialized. The onset and success of this catalytic strategy is determined by the alignment between three distinct actors, forming a Triangle of Stakeholders:

1. The Developer: Primarily motivated by ROI and branding, developers perceive the art institution as an amenity that enhances placemaking and adds value to their projects. However, parcels allocated to these are institutions were to facilitate approvals from city governments for the developers’ broader urban plans. Only after the fact did developers embrace the presence of the art institution as the civic use on the site and leveraged it for the branding and placemaking benefits described above.

2. The City: Driven by goals of expanding the tax base and reactivating underutilized land, the City often works with private developers in their investment efforts for big urban redevelopment projects. At the same time, the City wants or is compelled by the public to install civic uses within these projects to ensure that they deliver broader value to residents—not just to developers or future tenants. Through zoning variances, density bonuses, and general approvals, governments will get land allocated from the developer for a civic purpose. In our examples, cities have decided to install art institutions in these parcels as a way to “activate” these areas.

3. The Art Institution: Motivated by survival, visibility, and long-term relevance, the institution views free land and the prospect of capital support for a state-of-the-art facility as a transformative opportunity. For many, it represents a rare chance to significantly strengthen the organization or even to establish it for the first time.

Case Study: Pérez Art Museum Miami (Downtown Miami)

Context

For much of the 20th century, Downtown Miami was home to the city’s port, which functioned as a heavily industrial operation center. When the port moved to Dodge Island in 1976, the City converted the area into Bicentennial Park. The design of Bicentennial Park effectively walled off the city from its own waterfront by surrounding the site with berms, parking lots, and dense vegetation that blocked sightlines and limited access from Biscayne Boulevard. With few inviting entrances and a layout focused on large, occasional events rather than everyday urban life, the park functioned more like an isolated events ground than an extension of the city, creating a physical and psychological barrier between downtown and the bay. Over the following decades, the park fell into decline and was repurposed for a series of temporary uses, including a racetrack and even a homeless shelter. By the early 2000s, growing recognition of the site’s waterfront potential renewed interest in its redevelopment, prompting a range of revitalization proposals including plans for a Marlins baseball stadium.

Development Story

The proposal for a Marlins stadium was met with strong opposition from community activists. These included groups like the Urban Environment League, neighborhood advocates from communities such as Overtown and Little Haiti, and a broader parks-preservation coalition who argued that Miami’s last major piece of public waterfront should not be handed over for a for-profit stadium. They pushed instead for a civic, open, and cultural waterfront, emphasizing equitable access, the preservation of scarce green space, and a transparent planning process. Their sustained pressure ultimately shifted political momentum away from the stadium and toward what became Museum Park, effectively blocking the city from moving forward with the Marlins plan. Their advocacy prompted the city to organize a design charrette in 2005, whereby the community was involved in a public selection process for the project.

Through the design charrette, the community and the City agreed to a master plan that envisioned two major museums, a continuous bay walk, and a reimagined

E11VEN Club Hotel and Residences (2026)

E11VEN Residences Beyond (2027)

22-acre park. City leaders embraced this culturally driven strategy, believing that the museums were essential to attract visitors to a park long isolated by highways, infrastructure, and decades of neglect. The hope was to create Museum Park in the image of Chicago’s Millennium Park, a transformative public destination animated by architecture, art, and uninterrupted public access to the waterfront.

Financial Forces

The project was realized through a combination of public funding and major philanthropic support. To develop PAMM, the City of Miami provided the land along Biscayne Bay. The total construction cost of the museum was $220 million. To finance the project, MiamiDade County voters approved $100 million in bond funding, reflecting a broader history of community excitement in which city and county residents twice approved referendums that together allocated nearly $300 million in public dollars for Museum Park. The remainder of the capital came from private donors, many of whom continue to serve on the museum’s board of trustees.

Building Design

Today, the site is home to two landmark institutions, the Pérez Art Museum Miami (PAMM) and the Frost Science Museum. Designed by Herzog & de Meuron and completed in 2013, PAMM occupies a 200,000-square-foot, three-story structure organized around deep overhangs, porous circulation paths, and a lifted, columnar ground floor that maintains visual and physical continuity with the waterfront landscape. Its system of shaded verandas, openair ramps, and suspended vegetated screens creates a gradient between outdoor public realm and indoor gallery space, softening the threshold that typically separates museums from their surroundings. The architects, working closely with landscape architects and botanists, undertook a broad search for resilient tropical plant species. Together they ultimately curated a palette that includes hanging gardens, native hardwoods, and coastal vegetation to create a transition zone in which the park effectively flows into the museum. These design strategies, widely praised by critics from the Wall Street Journal to the New York Times, position PAMM

not as an elevated cultural enclave but as a civic anchor that welcomes the public and strengthens the site’s connection to the urban fabric and the bay.

While not an art institution nor as impactful as PAMM, the Frost Science Museum was completed in 2017 by British firm Grimshaw Architects, covers 250,000 square feet across four buildings and attracts roughly 700,000 visitors annually. Trish and Dan Bell, co-chairs of the museum’s Board of Trustees, said of the design:

“Our new building should serve as a delightful gathering place for residents and visitors... It will also be an outstanding economic and architectural asset for the city.”

Both museums prioritize community engagement, positioning their buildings not only as cultural and scientific destinations but also as vibrant public gathering spaces that integrate with the waterfront park and encourage yearround public use.

Motivations and Developer Leverage

The TriangleofStakeholders was central to the development of Museum Park and the wave of adjacent infill that followed. From the City’s perspective, the site’s status as public land made it possible to prioritize a civic-oriented vision rather than pursue private proposals such as the baseball stadium. This choice was shaped both by significant constituent pressure and by the belief that the museums would appeal to diverse audiences and generate consistent, year-round foot traffic. At the same time, both museums needed more space and saw Biscayne Bay as an opportunity to expand their reach through a highly visible waterfront location. While developers largely fought to acquire the land themselves, the real estate industry ultimately capitalized on the cultural anchoring and brand identity the museums, especially PAMM, created for that area of Downtown Miami.

With the museum plan set, developers quickly looked to leverage the opportunity PAMM provided. A closer look at the private capital contributions for PAMMs construction reveals a pattern of engagement by Miami’s leading real estate figures. Notably, Jorge Pérez, CEO of the Related Group and a prominent art curator, has leveraged art and culture to enhance his development projects, often working with curators to integrate artwork into his properties. Pérez contributed $20 million in cash and $15 million in Latin American art to the museum,

prompting the institution to rename itself in his honor. He continued his support with an additional $25 million donation at PAMM’s Art of the Party gala in 2023, the museum’s largest annual fundraiser. Craig Robins, developer of the nearby Miami Design District, is another key donor whose support highlights the close ties between real estate, philanthropy, and cultural development in Miami.

As one of the neighborhood’s earliest developments, PAMM acted as a cultural anchor, drawing new investment as subsequent developers increasingly leveraged proximity to Museum Park for branding and prestige. A prime example is the ultra-luxury condominium tower 1000 Museum, completed in 2019 as one of Zaha Hadid’s final projects. The project was named directly after Museum Park, explicitly tying its identity to its proximity to the cultural institutions located just across the street. Another example is the nearby 27-acre mixeduse Paramount Miami World Center. Completed in 2019, it prominently positions Museum Park as a central feature in its marketing materials.

Future planned developments continue this trend, as a wave of luxury condo and mixed-use projects is now reshaping the neighborhood. The Jem Residences, a luxury condominium project by Naftali Group scheduled for completion in 2027, describes its location as “minutes from PAMM and the Frost Museum”, labelling surrounding blocks as a “new neighborhood defined by a confluence of arts, culture, entertainment, and transportation.” Okan Tower, a high-end mixed-use development by Turkish Okan Group is poised to become Florida’s tallest building upon its completion in 2026. The project exemplifies substantial foreign investment and deliberately positions itself as an extension of the Museum Park cultural district. Beyond residential projects, the worldfamous club E11even, which opened in 2014 a few blocks from Museum Park, reinforces this pattern through its ongoing twin-tower hotel and residential expansion, which leverages the area’s rising profile. Collectively, these projects demonstrate how Museum Park’s creation helped catalyze a new wave of real estate investment in a previously declining area. Developers now repeatedly highlight their proximity to Museum Park and draw on its cultural cachet to elevate their projects’ identity and brand.

Impact

For years, Miami was often perceived primarily as a sun-and-fun destination, known for Art Basel Miami Beach but lacking a

permanent, world-class art institution that could attract visitors year-round. The openings of PAMM and the Frost Science Museum transformed that perception, establishing the city as a serious cultural and scientific hub on the global stage.

Since relocating from its former Miami Art Museum site to its current waterfront home, PAMM has dramatically expanded its reach and influence. Attendance grew from roughly 60,000 visitors annually at the old location to around 300,000 in the first full year at the new site, while its operating budget increased from $6 million to $16 million. The museum’s move also spurred broader urban transformation: Downtown Miami, including Museum Park, saw its population rise from 66,769 in 2010 to approximately 92,235 by 2018, while tourism increased from 3.1 million visitors in 2010 to over 5.4 million in 2017. Through its design, programming, and location, PAMM has helped create a thriving district that revitalized Miami’s downtown into a vibrant, year-round cultural destination.

Case Study: ICA Boston (The Seaport)

Context

For the first half of the 20th century, the South Boston waterfront was a bustling nexus of rail yards and harbor wharves. However, as these industries evaporated in the 1950s, the district collapsed into obsolescence. By the 1980s, the Seaport was a massive “sea of parking lots.” The area saw significant public investment in the 1990s and 2000s, including the Boston Harbor Cleanup and the Big Dig, which dismantled the elevated Central Artery that had physically severed the waterfront from downtown. As Charles Leatherbee, Executive VP for Skanska, noted:

“With the completion of the Big Dig, it became clear that there was ‘an opportunity to develop a new city’ in the Seaport... the Seaport has access to the single greatest resource the city has—the harbor.”

Simultaneously, the ICA was facing an existential crisis. In the 1990s, the institute was in a cramped former police station on Boylston Street. It had no permanent collection, an annual budget under $1 million, and attendance hovering at a mere 25,000 visitors annually. When Jill Medvedow became director in March

1998, she was charged with reinventing the institution. Medvedow convened a “business planning group” of trustees and advisors. They concluded that to survive, the ICA needed to broaden its audience, become a collecting institution, and most importantly, secure a new, larger space.

Development Story

The creation of the new ICA was a clear example of alignment among the Triangle of Stakeholders. Seeing opportunity by the waterfront, the Pritzker family planned the Fan Pier development—a massive $3 billion, 21-acre mixed-use project. To secure City approvals for increased density and height for their planned luxury hotel, they agreed to designate Parcel J, a prime 0.75-acre site right on the water’s edge, for civic use. From there, The City of Boston undertook a bid process to determine which institution could best fill that civic role. Before this process began, Medvedow had been scouting for a location for a new ICA building and building relationships with developers and civic leaders in Boston. Through these contacts, she came to hear about Boston’s search for an institute to fill Parcel J. Mevdevow saw what the museum could become at that location, a place with high visibility, foot traffic, and public appeal in a city historically indifferent to contemporary art. With a bold vision, a slew of cultivated allies, and a lot of work, she convinced the City of Boston to unanimously select the ICA to redevelop the site.

Financial Forces

Medvedow understood that it would be difficult to secure the capital needed for the ICA’s construction and endowment. The

museum launched a “Campaign for the New ICA” with a goal of $50 million. It eventually raised over $75 million. This success was in part due to aggressive restructuring of the ICA Board. Medvedow brought in 13 new board members, primarily from private equity, venture capital, and financial services, the very sectors that were beginning to view the waterfront as their future home. Their participation significantly expanded the ICA’s fundraising network beyond what the institution had previously been able to access. A notable example of this new alignment was a $3 million contribution from State Street Corporation, a financial services giant located just a short walk from the museum, reinforcing the emerging link between the ICA and the district’s corporate future.

Building Design

The museum was designed by Diller Scofidio + Renfro (DS+R) in 2001. This was their first major building in the United States. Their design ethos was focused on creating a place for “gathering, community, and sharing,” a place to directly serve the anchoring mandate. The design for the new ICA was met with critical acclaim. It was included in NEXT: The Future of Architecture, at the 8th Annual International Architecture Exhibition at the Venice Biennale, and a retrospective of the architects’ work was displayed at the Whitney Museum of American Art in 2003. The design actively resists the standard “luxury condo” aesthetic of floor-toceiling glass. As the architect Charles Renfro noted, the building dispenses harbor views in “small, controlled doses.” This forces the visitor to engage with the art, rather than passively consuming a panoramic “view.”

The design also contended with a major site

Federal Courthouse (1998)

constraint, the Harborwalk. A 43-mile public easement, the Harborwalk required a 25-foot setback from the water. In a negotiation with the City, the museum was granted permission to physically elevate the gallery level to the top floor and cantilever it over the public space. In exchange, the overhang created a sheltered, outdoor public plaza that is occasionally closed for use by the ICA for events like FirstFridays. A traditional building would have been pushed back, disconnecting it from the harbor. Instead, the building literally “hugs” the public realm. The grandstand seating facing the water became a civic porch, blurring the line between “museum goer” and “passerby.”

All in all, the 62,000 square foot building encompasses galleries of contemporary art, DJ nights and outdoor concerts, a theater, a restaurant, a bookstore, education and workshop facilities, and administrative offices.

Motivations and Developer Leverage

What were the motivations for the stakeholders that created the ICA? For the museum they were on the margins in the art world and sought a new site to reinvent themselves. They determined the Fan Pier parcel was the perfect place. The City was convinced that the ICA would act as the cultural anchor of Fan Pier, attracting visitors and strengthening civic life by the waterfront as the first new art museum built in Boston in nearly a century. They also felt the ICA could act as a “civic signal” to the market that the Seaport was open for business. For the developers, it was worth forgoing a small part of the site for civic use as part of negotiations with the City. However, the high-end art institution became a compelling and considerable asset for them, propping up future development in Seaport.

The final approved plan the Pritzker’s drafted for Fan Pier conceived the museum as the cultural touchstone of the development project. This did not change when the project was sold to the Fallon Company in 2005 for $115 million. Joseph Fallon, president and chief executive of the Fallon Company, explicitly cited the “new neighborhood” created by the ICA’s impending arrival as a driver of value. He proved to be correct. The new ICA was completed in 2006 as the first major building in the area. A slew of notable developments following in the subsequent years, financed by both private and public interests. The Fallon Company even

designed for the extensive use of glass in their buildings to maximize views of the harbor and to better harmonize with the ICA.

The most direct evidence of the ICA’s anchoring power is visible in Tishman Speyer’s adjacent Pier 4 development, an assortment of luxury condos, a premier office tower, and retail spaces. Their marketing materials explicitly refer to the ICA to brand Pier 4 as a district “defined by art, architecture, and design.” The Pier 4 luxury condos (selling for $2,100–$4,000 PSF, among the most expensive in Boston) feature glass facades and cantilevers that visually echo the ICA. The architects cited “contextual dialogue” with the museum as a design driver. The ICA did not just anchor the neighborhood economically; it dictated the aestheticlanguage of the luxury real estate market around it. Furthermore, the attraction and identity the ICA provides warrants continued investment. Both nearby office tenants and developers in the area continue to donate annually to support the ICA’s continued operation.

1-column wide graphic / image

Impact

The new museum building was a monumental change for the ICA. They grew their attendance from 25,000 to 300,000 annually, built net assets of $125M+, achieved a sizable permanent collection, and even opened a satellite site (ICA Watershed) in East Boston. Beyond the art, the ICA also greatly expanded their programming, earning the National Arts and Humanities Youth Program Award In 2012. The ICA’s success also catapulted them from an art museum in Boston to a global art player. In 2022, the ICA was selected to commission

the U.S. Pavilion at the Venice Biennale with a historic presentation of Simone Leigh, the first Black woman to represent the United States.

The Seaport neighborhood has completely changed from abandoned rail yards and parking lots to a mixed-use district of glass and steel class

A office towers, high-end experiential retail and luxury high-rise housing. Since the ICA opened, there has been seven million square feet of new development in the area, more than 2 billion dollars’ worth of direct project investment, and more than four thousand residents have moved to the neighborhood. In Seaport, the Triangleof Stakeholders held firm. The City got its public access and urban redevelopment; the Developer got its branding and land value; and the Institution got a world-class home that propelled it onto the global stage.

Case Study: The Shed (Hudson Yards, NY)

Context

The land that became Hudson Yards has a long industrial history. It transitioned from lumber yards and warehouses in the 1800s to a series of major railway installations, including the Hudson River Railroad and the modernized West Side Railroad. This railroad served as the only freight transportation to and from New York City for decades. For nearly 20 years, the site functioned as an open-air train storage yard before eventually becoming an active rail yard and industrial district.

Development Story

The site’s modern redevelopment concept—publicly named “Hudson Yards” in 2001—was initially galvanized by New York City’s unsuccessful 2012 Olympic bid, which was lost in 2005. This early plan, led by Dan Doctoroff, centered on a controversial 86,000seat stadium built over the active rail yards. Although the Olympic bid failed, the underlying vision for large-scale redevelopment persisted, leading to the rezoning in 2005 of nearly 60 blocks. What followed was a massive proposal by Related Companies and Oxford Properties to develop an entirely new neighborhood, consisting of 16 skyscrapers split between two phases. The developers promised the city tens of billions in future tax revenue and a comprehensive mix of office space, housing, retail, and public open space. This combination won neighborhood and public approval and was viewed as a superior alternative to the earlier

stadium proposal, as well as a crucial step in strengthening the city’s long-term economic competitiveness. Under the deal, Related and Oxford would lease the land from the city for a period of 99 years and make payments in lieu of taxes which closely mirror property taxes. The first phase of development was comprised of four commercial skyscrapers, two luxury residential buildings, a mall, a major public plaza, The Vessel, and The Shed. Notably, The Shed was the single parcel of land in Phase 1 that the city deliberately reserved for arts and culture. This specific parcel was mandated for cultural use by the Bloomberg administration as a condition of the site’s rezoning, a requirement the developers accepted in the memorandum of understanding. At the time, Dan Doctoroff, then Deputy Mayor for Economic Development and Rebuilding, along with former Department of Cultural Affairs Commissioner Kate Levin, launched a search for a new cultural venue that would be highly flexible and capable of adapting to multiple art forms and future needs. Support for The Shed came both politically and financially from Mayor Bloomberg who said “I’ve always believed the arts have a unique ability to benefit cities by attracting creative individuals of every kind, strengthening communities, and driving economic growth”.

As construction was preparing to begin Phase 1, the unexpected 2008 financial crisis struck, triggering major delays across the Hudson Yards project. The city took out a massive $3-billion loan, for an extension of the 7 train and to purchase land for a park. In 2008, there was no business or property tax revenue to draw from, leaving it responsible for servicing massive interest payments. As a result, taxpayers covered approximately $359 million in interest payments that Hudson Yards would have otherwise generated had construction proceeded according to plan.

By 2011, as the effects of the financial crisis began to ease, construction finally resumed. That same year, Coach signed on as the anchor tenant for 10 Hudson Yards, the development’s first skyscraper. This catalyzed leasing momentum for the retail mall and brought much-needed legitimacy to the project. While Related Companies and Oxford Properties Group advanced vertical construction, the city simultaneously completed nearly eight years of work extending the 7 subway line to deliver critical transit access to the district—ensuring

that Hudson Yards, and TheShedinparticular, would be fully integrated into the city’s transportation network.

Building Design

The design of The Shed was led by Diller Scofidio + Renfro (lead architect), the same firm that designed the ICA, and Rockwell Group. The team secured the commission by convincing city officials that their “kinetic” concept would allow multiple artistic disciplines—from visual arts to large-scale performances—to function independently or simultaneously under one roof. Reflecting on the final iteration, Elizabeth Diller noted:

“[The team] massaged the design to be clearer and more efficient, [and] at the same time very elegant and expressive.”

Importantly, the design was conceived to complement the surrounding supertall glass office towers, rather than compete with or critique them.

The building’s defining feature is its telescoping outer shell. Clad in lightweight, translucent ETFE (ethylene tetrafluoroethylene) panels, this 16,000-square-foot mobile structure sits on rails and can deploy over the adjoining plaza. When extended, it doubles the building’s footprint and creates the McCourt, a 17,000-square-foot light-, sound-, and temperature-controlled performance hall. Diller Scofidio + Renfro has stated that the design draws directly from “the industrial past of the High Line and the West Side Rail Yard”, rooting the building’s futuristic mechanics in the site’s infrastructural history.

In total, the building rises eight stories and spans 170,000 square feet. When fully expanded, the main performing arts space can accommodate 2,220 people. Additional interior programming includes 40,000 square feet of exhibition space, 25,000 square feet of dedicated museum space, a specialized 500seat theater, and a restaurant and bar. When the shell is not deployed—which is most of the time—the architects intentionally envisioned the plaza in front of the building as the primary public gathering space. In fact, the very first commission activated this plaza, when a local artist installed the phrase “IN FRONT OF ITSELF” in 12-foot-tall letters directly on the ground plane.

This plaza is dark and visually enclosed on nearly all sides by supertall, dark-blue skyscrapers and the world’s most expensive

public art project, The Vessel. While the proximity between the two was intentional, the Vessel’s permanent closure due to safety concerns has made it more difficult for the Shed to command attention within the larger Hudson Yards spectacle.

As part of the development process, the project sponsors also pursued LEED certification to access a $75 million dollar grant the city provided, contingent on the building reaching a silver certification or higher. LEED projects are required to achieve a minimum number of points across multiple environmental categories addressing different dimensions of sustainable design and construction. The category in which the project performed most strongly was Sustainable Sites, which evaluates factors such as proximity to public transit, access to densely populated areas, and infrastructure supporting alternative modes of transportation. Without the city’s substantial investment in the extension of the 7 train, The Shed would not have met the criteria necessary for a LEED Silver Certification. This is a bit ironic considering how Hudson Yards marketing materials position the developers as the main and only contributors to the certification of the area.

Financial Forces

The financing for The Shed was assembled through a complex blend of public capital funding, private philanthropy, and large corporate real-estate transactions that were

strategically used to unlock project-wide financing. New York City provided the single largest capital grant to the project, initially committing $50 million in 2013 and later increasing that figure to $75 million. Michael Bloomberg also played a decisive role, leveraging both political influence and personal capital to advance the project. Bloomberg first contributed $15 million in 2012, followed by an additional $60 million five years later—effectively pushing the project across the financial finish line. As he later stated, he was “honored to help see it through to completion”.

In tandem with the City and its former mayor, the luxury brand Coach—now Tapestry, Inc.—played a pivotal catalytic role in advancing not only Hudson Yards writ large but also The Shed by stabilizing the project’s early financial risk. In November 2011, Coach committed to becoming the anchor tenant at 10 Hudson Yard. Rather than signing a conventional lease, Coach injected upfront capital into the project by purchasing approximately 738,000 square feet as a condominium stake for roughly $750 million. This move served three critical functions simultaneously: it delivered immediate construction capital, provided lenders with the market signal needed to justify large-scale debt financing, and validated the site to other office and retail tenants. City officials characterized this commitment as the “kick-start” necessary to unlock the full Hudson Yards development and justify the public investment in the No. 7 subway extension. Coach’s decision was also crucial for the adjacent cultural facility as well. By the time Coach finalized its headquarters location, the city’s master plan had already preselected the

neighboring parcel—now 15 Hudson Yards—as the future home of The Shed. Following Coach’s stabilizing purchase, the developers were able to secure over two hundred million dollars to move forward with the construction of the broader complex, including the physical structure of The Shed. Prior to Coach signing, there was large hesitation to loan Related and Oxford the billions they needed to finance.

Coach’s decision was based on a deliberately symbiotic relationship with the emerging mixeduse district and its planned cultural centerpiece, The Shed. By locating its headquarters alongside high-end retail, public space, and a future experimental arts institution, the company sought to leverage Hudson Yards as a projected “dynamic hub of creativity and innovation” to attract both employees and luxury consumer foot traffic. This is perhaps best proven by The Coach Foundation being 1 of 7 corporate leaders for The Shed, indicating large recurrent financial commitments. In 2016, Tapestry monetized its initial capital position through a sale-leaseback transaction—selling its ownership stake while simultaneously signing a 20-year lease to remain the building’s largest tenant. This maneuver allowed the firm to redeploy capital while maintaining long-term occupancy and signaling continued confidence in Hudson Yards’ branding and trajectory, even as public controversy later emerged regarding the accessibility and financial viability of its cultural and retail components.

Impact

The first phase of Hudson Yards has been completed for over six years now, providing ample time for the public to digest and reflect

on how they feel about the most expensive private development in American history. The consensus, developed across dinner tables, discussion forums and articles is almost unanimous—dissatisfaction. Despite the ambition associated with the mega-project, the novelty of a kinetic structure, a huge plaza, and numerous galleries could not shield The Shed from the same dissatisfaction applied to the rest of the site.

As it stands today, The Shed—which represents a mere 1.1% of the total square footage in Hudson Yards—has struggled to gain traction. It has little individual identity outside of the broader Hudson Yards development and is unable to function as a true cultural anchor. It receives unprecedented public funding from city departments, yet it does not publish visitation figures, likely due to a failure to attract crowds. From the most recent tax filings, revenue generated by ticket sales fell by nearly 28% year over year. Private donors have had to step in greatly to cover the nearly $45M in operating expenditure per year. This struggle is tacitly admitted by the administration; the new CEO, Meredith Hodges, was specifically chosen for her ability to “build audiences,” and the institution’s own website reflects a pivot toward this urgent need.

Furthermore, the institution’s programming is criticized for being financially exclusionary. While The Shed reserves 10% of tickets for low-income New Yorkers, the general pricing structure reflects a clientele that can easily digest premium costs, reinforcing the perception that the entire complex is inaccessible. If you visit The Shed’s website, you will find that a single ticket for even the worst seat in the house often costs over $69, a price point totally

unaffordable to working-class New Yorkers. Ultimately, the pervasive critique of Hudson Yards as a “playground for the rich” does not include an exception for The Shed. With The Vessel permanently closed and Hudson Yards feeling inaccessible to a majority of the public, the question must be asked whether The Shed was worth the half-billion dollars it cost to construct. Elizabeth Diller, the lead architect, called the project “an experiment” and by all accounts, it seems to be one that went wrong.

Looking Ahead

The analysis of academic literature and our three case studies—the ICA, PAMM, and The Shed—reveals that the deployment of art institutions as urban anchors is typically a calculated negotiation where the City requires or encourages the inclusion of a civic use parcel to unlock necessary zoning approvals for a developer. In every case observed, developers and municipal leaders perceived the art institution through the lens of established research: as a vehicle for branding, a signal of long-term investment, and a marker of a cohesive city vision. This belief is backed by capital; tenants and developers actively finance and donate to these venues to “keep the institution hot,” understanding that the cultural vitality of the anchor directly correlates to the value of the surrounding real estate.

However, the mere presence of a museum does not guarantee a thriving district. Our research indicates that successful anchor institutions depend entirely on the alignment of the TriangleofStakeholders—the Developer, the City/Community, and the Institution. When this alignment is achieved, as seen in Boston

and Miami, the art institution becomes the core identity maker for the district. In these instances, developers market and design their projects around the museum’s proximity, engaging in a “contextual dialogue” that elevates both the civic asset and the private real estate. When institutions are well-integrated and possess a robust identity separate from the towers around them, they succeed on their own terms and successfully bolster nearby development.

The Shed serves as a cautionary counterexample to this success. In New York, the overwhelming identity of Hudson Yards’ own luxury branding dominated The Shed’s impact. Rather than functioning as a civic anchor that democratizes the space, The Shed was subsumed by the exclusive nature of the development, becoming an accessory to a “playground for the rich” rather than a counterweight to it. Unlike the ICA or PAMM, institutions that are situated amid wealth but have cultivated neighborhoods and identities that feel welcoming to a broad public, The Shed never achieved meaningful integration with its surroundings. Built concurrently with the broader Hudson Yards project, it had little opportunity to shape the district’s identity and instead inherited it. The result is an institution struggling both financially and conceptually, unsure of its place or audience. Ultimately, while strategic cultural anchoring can catalyze urban transformation, it requires a genuine civic foundation at the start; without that, an arts institution risks becoming little more than an isolated amenity within a gated enclave.

Looking forward, it appears that developers are no longer treating these institutions as amenities after the fact. Instead, they are turning to them as essential development partners, at least for infill projects. Firms like LMXD have built an entire practice around this shift. LMXD has carved out a niche partnering with civic institutions, especially art institutions that already own land. Their deal with the National Black Theatre in Harlem exemplifies this approach: the civic partner contributes its land and cultural identity, while the developer assembles capital, assumes financial risk, and delivers both a newly constructed cultural facility and the revenue-generating uses (such as residential units). The result is a mutually reinforcing structure in which the institution gains new facilities at cost, and the developer gains access to valuable sites, branding power due to the connection with the art institution, and a cultural anchor that materially improves leasing and long-term performance. Speaking

with developers at the firm, all three of these motivations have been critical in their projects. In some cases, the value is primarily the branding and cultural anchoring that the institution provides. For example, Museum Parc is an LMXD project that includes two multi-family rental buildings with ground floor retail space and a massive gallery that will be leased and operated by the Newark Museum of Art (NMOA). This project is directly tying their revenue making spaces to the art museum, which is relocating and did not have the land previously. Whether other firms will adopt this approach for large-scale urban redevelopment remains to be seen, but it is likely a winning strategy.

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29 Slater-Ryan, S. (2012, July 5). Rising high: Boston’s Seaport District. BostonMagazine https://www.bostonmagazine.com/ news/2012/07/05/rise-seaport-district-boston/

30 Tucker, N. (2014, February 21). Pérez Art Museum Miami’s Setting on the Banks of Biscayne Bay Is Part of the Show. The Washington Post. https://www.washingtonpost.com/ entertainment/museums/perez-art-museum-miamis-setting-on-the-banks-of-biscayne-bay-is-part-of-the-show/2014/02/20/ dda7d39e-929a-11e3-b46a-5a3d0d2130da_ story.html

31 Vianna, C. (2019, March 15). Billionaire Developer Insists Hudson Yards Is Not Just for the Rich, Because Shake Shack. Eater NY. ny.eater.com/2019/3/15/18266050/ stephen-ross-hudson-yards-playground-forrich-criticism-shake-shack

32 Wainwright, O. (2019, April 9). Horror on the Hudson: New York’s $25bn Architectural Fiasco. The Guardian. www. theguardian.com/artanddesign/2019/ apr/09/hudson-yards-new-york-25bn-architectural-fiasco.

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https://dspace.mit.edu/bitstream/handle/1721.1/118229/1052621499-MIT.pdf

A New Vision for LaSalle

Comparing Adaptive Reuse Across Different Office Building Typologies

A New Vision for LaSalle

Introduction

The COVID-19 pandemic accelerated structural shifts already underway in American downtowns, fundamentally destabilizing demand for traditional office space. Hybrid work patterns reduced daily foot traffic and weakened the economics of large, older office buildings whose deep floorplates, aging mechanical systems, and hierarchical layouts no longer aligned with contemporary workplace expectations. When residential demand in many urban centers ultimately rebounded, renters and homeowners increasingly prioritized transit access, local amenities, and proximity to cultural assets. These dual pressures - falling office demand and rising demand for well-located housing - drove the national appeal for adaptive reuse.

Chicago experienced these dynamics acutely. While overall office vacancy in the Loop surged to near 30%, newer districts like the West Loop and Fulton Market drew major corporate relocations. According to Avison Young, the average CBD tenant shifted 5 blocks northwest from 2024, moving closer to the Chicago River. This shift was not just driven by river views, but also to appease workers who moved out of the city during COVID, and could more easily access these locations via Union Station and METRA.

Against this backdrop, office-toresidential conversions in the Loop were imagined as a silver bullet to revitalize struggling office spaces, create attractive residential spaces to bring people back into the city, and preserve architectural heritage. These conversions of older buildings offered several key advantages: avoiding the embodied carbon of demolition, leveraging the high-quality materials and craftsmanship of pre-war architecture, and introducing 24-hour activity to monocultural office districts. The feasibility of these conversions is influenced by building typology, regulations, and financing, factors that vary widely between pre-war and postwar towers.

LaSalle St. Reimagined

Mayor Lori Lightfoot introduced the LaSalle Street Reimagined program in September 2022 as an effort to diversify activity on LaSalle Street by converting vacant office buildings into apartments and enhancing the public realm. LaSalle Street is the “historic heart” of Chicago’s central business district. Centrally located with access to commuter rail lines and the “L” system, the corridor features major financial and governmental institutions, as well as Classical and Art Deco architectural icons. The initiative has five main themes: affordable housing, global innovation, public realm enhancements, neighborhood-oriented amenities, and historic building sustainability. Converting underutilized commercial spaces with “mixed-income residential uses and related public amenities” would “revitalize its monoculture of offices […] beyond the typical 9-to-5 workday.”

The initiative leverages the LaSalle Central TIF, designated in 2006 by the City of Chicago to support the rehabilitation of central business district office properties – particularly those of historic significance. LaSalle Street Reimagined intersects with the West LoopLaSalle Street National Register Historic District and features Chicago Historic Resources Survey (CHRS) Red- and Orange- Rated buildings (red properties having architectural or historical significance in the context of the city, state, or country; orange properties having significance in the context of the surrounding community).

The city issued an Invitation for Proposals (IFP) in September 2022, offering assistance for office conversions through the TIF. As noted on the map, six projects are currently underway, having been approved by the Community Development Commission and City Council. As of October 2025: “$260 million in Tax Increment Financing has been approved by City Council for five of the projects, ensuring 30 percent of the units will be affordable to

residents earning an average 60% of the area median income.” 11 additional conversion projects are advancing without the City’s financial support.

In addition to the conversions, the city is advancing public realm, cultural, and entertainment enhancements that strengthen the corridor’s revitalization and contribute to its livability. The Chicago Departments of Planning (DPD) and Transportation (CDOT) published “A Vision for LaSalle Street” in January 2025. This community-led framework for neighborhoodoriented public realm improvements outlines eleven principles such as “Beyond 9-5, it’s lit” and “Outdoor spaces and people places.”

Furthermore, DPD is providing up to $5M in grants through its Small Business Improvement Fund to expand and upgrade restaurants and businesses along the corridor.

This report examines the LaSalle Street Reimagined initiative within this context through two buildings, 111 W. Monroe and 30 N. LaSalle, as contrasting case studies that reveal how architecture, policy, and financing shape adaptive reuse. Their comparison illustrates both the opportunities and challenges of repurposing legacy office buildings into vibrant, mixedincome urban housing.

Building Profiles

Context and Visions For Redevelopment

111 W. Monroe consists of three

interconnected pre-and post-war office towers: the original Harris Trust and Savings Bank building on Monroe, its 1960 Monroe-side addition, and the 1974 LaSalle-fronting tower at 115 S. LaSalle. Developers Capri Investment Group and The Prime Group and architect Stantec will rehabilitate the 24-story 1911 Classical Revival-Style building designed by Shepley, Rutan, & Coolidge and the 1960 International Style addition by SOM into a combination of residential, hotel, and amenity uses. The 1911 skyscraper, featuring pink granite columns and terra cotta ornament, received landmark designation in July 2025. The third structure, which sits along S. LaSalle St, will house Chicago state workers moved from the Thompson Center, currently under redevelopment into Google’s Chicago headquarters.

BMO Harris Bank consolidated its offices in 2022 to a new tower, leaving the building largely vacant. Capri purchased the building in 2022 from BMO. The project converts 604,000 square feet of existing office and retail space. It will feature a 226-room hotel on the lower levels of both buildings, including an event center and 16,000 square foot ballroom. Floors 11 and 12 will feature amenities including a pool, fitness center, and lounge. Floors 1322 will have 345 residential units, including studio, 1-bedroom, and 2-bedrooms. 30% of units will be designated as affordable. The top two floors will host the Monroe Club, which

includes a restaurant and rooftop pool deck and bar. The building will also include a 130-space underground garage and side courtyard.

30 N. La Salle is a 44-story, 980,000-square-foot post-war tower built in 1974 at the SW corner of N. LaSalle and W. Washington. Originally designed by Thomas E. Stanley, the International Style skyscraper building has had two cosmetic renovations in 1986 and 1990 and is LEED Gold-certified. Notable tenants include WSP, Telephone and Data Systems, and Amalgamated Bank of Chicago. The City of Chicago also had leased 246,000 square feet at 30 N. LaSalle for Departments of Fleet and Facility Management,

residential lobby accessible from Washington Street; an existing office lobby accessible from LaSalle Street; and a landscaped plaza.

Structural and Design Characteristics

The structural logic of each building, including its floorplate depth, daylight access, core configuration, and relationship to the street, shaped its conversion. Though 111 W. Monroe and 30 N. LaSalle stand only a few blocks apart, their architectural eras produced distinct geometries that demanded distinct design solutions.

111 W. Monroe, built in 1911 and expanded in 1960, reflects the proportions

restaurant, swimming pool)

CDOT, Law, Aviation, Housing and Economic Development, and the Police Review Board. City departments includingCDOT relocated to 2 N. LaSalle in 2020. In summer 2024, 30 N. La Salle was 52% vacant and had 12 floors of contiguous vacancy.

Architecture firm SCB is leading the design for Golub & Company, a local developer. Project plans approved by the city’s Permitting Committee in spring 2025 call for converting floors 2-18 into 349 apartments: 222 studios, 98 one-bedrooms, and 29 two-bedrooms. 105 of these units will be designated as affordable housing. Residential amenities including an outdoor terrace, storage, and fitness, game, and lounge rooms, replacing a mechanical level. Upper floors 19-42 will remain office space. Floors 43 and 44 will include storage, mechanical uses, and office amenities. A rooftop will include a solarium and outdoor deck. The redesign will also upgrade building systems and the façade, including adding operable windows for the residential floors. The ground floor will feature four ground retail spaces; a new

Proposed 111 W. Monroe program square footage approximations.

Project size: 603,800 SF (including 62,500 SF of parking)

Estimates based on “LaSalle Corridor Revitalization”, Chicago. gov and “The Monroe Residences & Hotel”, Chicago.gov

of early Chicago high rises. It has a narrow footprint, a regular rhythm of perimeter windows, and bay depths that align well with typical residential unit layouts. These pre-war characteristics make the tower well-suited for housing on its upper levels. The 1960 addition created a deeper and more modern floorplate that limited daylight penetration and left large portions of the interior too far from the exterior wall for residential use. To resolve this, the development team created a central atrium approximately 60 by 70 feet. This effectively removed nearly one quarter of the midcentury floorplate, opening the interior to natural light. Although the atrium reduces the gross floor area, it increases net rentable residential space. The interior zones that were removed were more than 60 feet from the exterior wall and could not support code compliant units. With the atrium in place, the design accommodates eight shallow units per floor wrapped around the lightwell. Bedrooms remain within 15 feet of the window wall, with kitchens and bathrooms pushed inward. Without the

Proposed 30 N. LaSalle program square footage approximations. Project size: 980,000 SF

Estimates based on “LaSalle Corridor Revitalization”, Chicago. gov and “Updates Design Approved for 30 N LaSalle Street in the Loop”, ChicagoYIMBY.com

Hospitality

Residential

Retail

Other (Lobby/ Amenity)

Building diagram and residential floorplan adapted from “The Monroe Residences & Hotel”, Chicago.gov

Roof Terrace / Landscaped Plaza Residential Office Retail / Lobby Other (Amenity)

atrium, these floors could only support a few deep one-bedroom units with minimal daylight. The atrium therefore improves both unit quality and the total number of units per floor.

The building’s geometry also guides its programmatic organization. The lower and deeper floors, which are unsuitable for apartments, contain the hotel, event spaces, and back of house areas. Residential levels begin where the historic structure narrows and window spacing increases. The combination of hotel and residential uses reduces financial risk and assigns each use to the portion of the structure best suited for it.

30 N. LaSalle offers a contrasting case.

It represents late modern office design from the 1970s, with a large rectangular floorplate, a very large central core, and long structural spans that create interior zones with no access to natural light. These conditions make a full residential conversion technically and financially infeasible. Instead, the conversion focuses on the lower eighteen floors. On these levels, three elevator banks distribute the core horizontally, reducing the depth of interior spaces and allowing the perimeter to support residential units. Above these floors, the tower consolidates circulation into a single elevator bank, creating large windowless interior zones that must remain office.

The building’s corner site adds another layer of feasibility. Because the structure clears its neighboring building by the 2nd floor and rises above a parking garage by about the 10th floor, its south and west exposures receive more daylight than typical Loop mid block towers. Even lower floor units receive usable light, which supports reasonable unit depths and rentable corner layouts. The development team places more affordable units along the south exposure where rents are lower but daylight

is still adequate, which helps meet the 30% affordability requirement while maintaining financial feasibility.

At 30 N. LaSalle, the overall result is a stacked program with residential uses below and office uses above, in contrast with 111 W. Monroe where residential took the top stack, the difference driven by geometry and sightlines, rather than market preference. Taken together, 111 W. Monroe and 30 N. LaSalle reflect the range of adaptive reuse conditions in Chicago. The former shows how pre-war buildings can be transformed through targeted interior interventions, while the latter demonstrates how post-war towers can accommodate partial

conversions when their lower floorplates and exposures allow it.

Regulatory Considerations

111 W. Monroe has landmark designation, meaning the preservation of features including materials, ornament, and even certain interior elements is required, and all alterations are subject to landmark review. Landmark status also creates additional obligations, in order to make the project eligible for historic tax credits and Class L property tax incentives, which encourage the preservation of character-defining features. To qualify, rehabilitation work must follow federal preservation standards, adding further complexity, cost, and review requirements. The code interface for residential conversion triggers Group R occupancy requirements for egress, fire safety, and accessibility, and deep floorplates already complicate natural-light and ventilation compliance; in this case, any

new lightwell or window modification must also satisfy preservation constraints. While the lightwell concept is well-established on large Chicago lots, 111 is not a narrow building, and unlike comparable sites in New York, its floorplate depth makes meaningful daylight access far harder to achieve. Taken together, these considerations guarantee longer permit and approval timelines, higher restoration costs, and constrained parameters on facade and window interventions.

windows, and installing hundreds of new windows can be costly. Preservation work, window upgrades, and mechanical retrofits add time and expense, often requiring additional funding or scaled-back scopes.

Financing and Development Models

30 N. LaSalle carries no landmark constraint, giving developers more latitude for alterations both on the interior and exterior. With approvals obtained, city permitting bodies approved the partial conversion (lower floors residential, upper floors retained as office), but the project must still demonstrate compliance with residential life-safety, fireseparation, and egress requirements. The use of TIF funds introduces affordability and TIF conditions, creating affordability and public-benefit obligations that are written into the project approvals. This results in faster façade and systems work, as well as simpler preservation risk, but extensive life-safety engineering and residential mechanical systems updates are still required.

Shared considerations include meeting ventilation and safety codes, providing separate access for different uses, and complying with affordability and accessibility rules. These conversions are more complex than single-use projects: many older buildings lack operable

The financing strategies behind 30 N. LaSalle and 111 W. Monroe reflect two fundamentally different adaptive-reuse conditions. One project benefited from a low acquisition basis and a relatively uncomplicated residential program, enabling a clean capital stack anchored by TIF. The other required major structural interventions, parking, and a hotel component, which pushed costs high enough to necessitate multiple subsidy layers.

At 30 N. LaSalle, the decisive factor was the building’s entry into receivership, which allowed the developer to acquire it at a very low basis. Land costs were only $8M, roughly $23k per unit. Because the lower 18 floors were already structured in a way that could accommodate residential units without major demolition, and because no parking was required, the overall cost profile remains relatively efficient for a downtown high-rise conversion. Hard costs total $92M, or about $267k per unit, and soft costs add $35M, or $101k per unit. Altogether, the development cost is $135M, translating to $391k per unit.

The capital structure matches this streamlined profile. Of the $135M in total

sources, $57M comes from TIF, $26M from equity, and $51M from traditional senior debt. There are no tax-exempt bonds, no low-income housing tax credit equity, no historic tax credits, and no deferred developer fee. For a downtown project delivering 349 units, including a 30 percent affordable set-aside, this is unusually simple. The project’s feasibility hinges on its low acquisition cost, efficient lower-level floorplates, and the absence of atypical cost drivers.

The conditions at 111 W. Monroe differ sharply. Land costs alone reach $52M, which is about $149k per unit. Hard costs rise to $116M, or $332k per unit, driven by several nonstandard components. One is the requirement to construct 130 structured parking spaces, an expense of roughly $10M. Another is the need to carve a large central atrium into the mid-century east tower to bring daylight into deep floorplates. This intervention removed unusable interior space and made housing possible, also adding significant cost. Soft costs total $35M, or roughly $100k per unit. In total, the residential component of Monroe reaches $203M, or about $582k per unit.

To support these higher costs, the capital stack becomes far more complex. Monroe uses $40M in TIF and $32M in equity, but that covers only part of the gap. The project also relies on $87M in tax-exempt bonds, $35M in combined low-income housing tax credit equity and historic tax credit equity, and a $9M deferred developer fee. Structurally, it is a standard stacked financing model for a historically designated, mixed-use adaptivereuse project in the urban core.

Taken together, these two buildings show how physical characteristics directly shape financial structure. At 30 N. LaSalle, a low basis, favorable floorplate, and minimal structural reworking meant a simple TIF-plusconventional-financing model could deliver a large mixed-income program at reasonable per-unit cost. At 111 W. Monroe, the combination of historic requirements, atrium construction, and structured parking drove costs high enough that feasibility required every available subsidy mechanism. The contrast underscores the broader reality that adaptive reuse is never a standardized product: the building itself determines not only its design but the capital architecture required to make housing possible in the Loop. Discussion

30 N. LaSalle takes a more straightforward approach, converting portions to residential while maintaining existing office tenants, which simplifies financing, operations, and execution. The project’s feasibility hinges on its low acquisition cost, efficient floorplates on the lower levels, and the absence of atypical cost drivers. This relatively direct conversion strategy works precisely because the building’s conditions allow it; in a competitive market, the project can focus on delivering housing efficiently. 111 W. Monroe’s mixed-use model with hotel, dining, and event spaces reflects the building’s more challenging constraints - its conditions necessitate a complex approach. This model generates multiple revenue streams, creates cross-subsidization and activation potential, attracts tourism dollars, and diversifies risk, but requires significantly more complex operations, multiple specialized operators, and systems for different uses. The residentialfocused conversion at 30 N. LaSalle maximizes unit count within its converted portion and simplifies affordability compliance, while 111’s mixed-use conversion creates broader economic activation out of necessity. This contrast reveals how adaptive reuse resists standardization. The building itself determines not only its design, but also the capital structure required to make a new program possible.

City Involvement and TIF Financing

Developer Lee Golub of Golub & Company notes that the cost of adaptive reuse is nearly the same as new construction and “[w] ithout having the TIF and the public-private partnership and that subsidy, the numbers don’t work.” The TIF plays two distinct roles across the projects. For 30 N. LaSalle, the TIF serves as the primary funding source. For 111 W. Monroe, where costs are higher due to structural challenges and historic preservation requirements, the TIF provides crucial but more limited support, necessitating additional layers of subsidy. TIF is clearly essential for urban adaptive reuse, but its role varies: straightforward conversions can rely heavily on TIF, while complex projects require multiple funding sources. Adaptive reuse financing is largely about matching the capital structure to the physical reality of each building.

Form Comes First: Lessons from LaSalle

In adaptive reuse, form comes first, and everything else must be assembled around it. The comparison of 111 W. Monroe and 30 N. LaSalle reveals how this inverts Carol Willis’s

“form follows finance” principle. While new development shapes buildings to match available capital, adaptive reuse forces developers to shape capital to match what’s already there. A 1911 narrow tower demands entirely different solutions than a 1974 deep-floorplate box. The pre-war building enables residential conversion but requires historic tax credits and preservation work; the post-war tower’s efficient lower floors allow straightforward conversion, but its massive upper plates force a hybrid program.

Each building’s bones present unique constraints requiring tailored financing. The LaSalle Street projects succeeded through careful calibration: 30 N. LaSalle’s favorable conditions allowed TIF to carry most costs, while 111 W. Monroe’s complexity demanded every available tool, including tax-exempt bonds, LIHTC equity, historic credits, and deferred fees. The building determined the capital structure, not the other way around.

Public Benefits Extend To Community Transformation

The public benefits delivered through these conversions reveal how adaptive reuse can transform single-use districts into mixedincome neighborhoods. Both projects create hundreds of income-restricted, affordable units, representing what the city calls a “1000% surge in affordable housing” in the Loop. As SCB CEO Chris Pemberton notes of 30 N. LaSalle, “nearby hospitality workers or first-time renters…now have a chance to live downtown.” The projects also generate over 400 construction jobs and 200 permanent positions across hotel, retail, and residential operations, with specific minorityowned commitments at 111 W. Monroe. Beyond housing and employment, the ground-floor retail activation and 24/7 programming challenge the Loop’s traditional 9-to-5 rhythm. These

outcomes demonstrate that public investment in adaptive reuse delivers more than preserved buildings: it creates the population density and economic diversity necessary to sustain a neighborhood. The success of LaSalle Street Reimagined hinges not just on converting offices to apartments, but on ensuring those conversions serve the broader community through affordability, opportunity, and engagement.

Adaptive Reuse as Urban Strategy

These conversions represent just one component of LaSalle Street Reimagined, which envisions pedestrianized streets, public plazas, cultural programming, and a nighttime economy beyond the workday. The projects contribute essential density and affordable housing but gain full impact within this larger ecosystem. The partial conversion at 30 N. LaSalle, which leaves 24 floors as offices, reflects the practical limits of adaptive reuse. Many post-war towers have floorplates too deep, cores too large, or structures too inflexible to support residential conversion at reasonable cost. While these two projects succeeded through significant public investment and creative design, they benefited from specific physical and economic conditions that aren’t always present. Chicago’s approach shows that revitalization requires multiple strategies: converting where feasible, demolishing where necessary, and reimagining public space throughout. Not every office should be turned into apartments, but when cities align policy, subsidy, and design with a building’s inherent constraints, even challenging structures can anchor neighborhood transformation.

Bibliography

1 Capri. “The Monroe Residences & Hotel.” https://www.chicago.gov/content/dam/ city/sites/lasalle-street/pdfs/monroe_residences_hotel_presentation.pdf.

2 City of Chicago. “Chicago Community Meeting Q&A.” March 2, 2023. https://www. chicago.gov/content/dam/city/sites/lasalle-street/030223_CommunityMeetingQA. pdf.

3 City of Chicago. “Chicago Historic Resources Survey.” Chicago Landmarks. Accessed December 6, 2025. https:// webapps1.chicago.gov/landmarksweb/web/ historicsurvey.htm.

4 City of Chicago. “IFP Map.” 2019. https:// www.chicago.gov/city/en/sites/lasalle-street/home/ifp-map.html.

5 City of Chicago, Department of Housing and Department of Planning and Development. “30 N LaSalle Presentation.” 2024. https:// www.chicago.gov/content/dam/city/sites/ lasalle-street/pdfs/30_n_lasalle_presentation.pdf.

6 City of Chicago, Department of Planning and Development. “LaSalle/Central TIF.” Accessed December 6, 2025. https://www. chicago.gov/city/en/depts/dcd/supp_info/ tif/lasalle_central_tif.html.

7 City of Chicago, Departments of Planning and Development and Transportation. “LaSalle Street Visioning Document.” January 2025. https://www.chicago.gov/ content/dam/city/sites/lasalle-street/pdfs/ LaSalle_VisioningDoc.pdf.

8 Ficke, Robin, and Andrew Hayes. “LaSalle Street’s Evolution into a Mixed-Use Neighborhood.” World Business Chicago, July 22, 2025. https://worldbusinesschicago. com/allnews/lasalle-streets-evolution-intoa-mixed-use-neighborhood/.

9 Kugler, Lukas. “PRC Approves Residential Conversion of 30 N. LaSalle.” Urbanize Chicago, March 31, 2025. https://chicago. urbanize.city/post/prc-approves-residential-conversion-30-n-lasalle.

10 Kugler, Lukas. “Preliminary landmark approved for 111 W. Monroe” Urbanize Chicago, September 23, 2024. https:// chicago.urbanize.city/post/preliminary-landmark-approved-111-w-monroe

11 Mullins, Jon. “Updated Design Approved For 30 N LaSalle Street In The Loop.” Chicago YIMBY, April 16, 2025. https://chicagoyimby.com/2025/04/ updated-design-approved-for-30-n-lasalle-

street-in-the-loop.html.

12 Pratt, Gregory. “Developers Behind Thompson Center Revamp Buy Former Cboe Headquarters in the Loop.” Chicago Sun-Times, August 6, 2024. https://chicago. suntimes.com/real-estate/2024/08/05/ prime-capri-investment-group-thompsoncenter-revamp-former-cboe-headquartersloop-data-center.

13 Pratt, Gregory. “La Salle Street Is Getting 1,000 New Apartments, but First Comes Navigating Conversions and Code.” Chicago Sun-Times, June 22, 2024. https://chicago. suntimes.com/real-estate/2024/06/22/ lasalle-street-apartments-office-adaptivereuse-tif-johnson.

14 Preservation Chicago. “WIN: Final Landmark Designation and Class L Approved for Harris Trust & Savings Bank Hotel.” July 18, 2025. https://www. preservationchicago.org/win-final-landmark-designation-and-class-l-approved-forharris-trust-savings-bank-hotel-2/.

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16 Walk the Room. “The Rebirth of 111 West Monroe: A New Chapter for Chicago’s Historic LaSalle Street Corridor” Walk the Room, July 6, 2024. https://walktheroom. com/the-rebirth-of-111-west-monroe/

Conversion of Real Estate Assets to Hospitality

The Liberty Hotel Case Study

Conversion of Real Estate Assets to Hospitality

Acknowledgment

We would like to extend our sincere thanks to Yanni Tsipis, Senior Vice President at WS Development and former Senior Vice President at Colliers International, for generously sharing his insights and experience leading the conversion of The Godfrey Hotel in Boston. His reflections on the technical, financial, and regulatory dimensions of adaptive reuse provided valuable depth and real-world context to our understanding of hotel conversions. We are also grateful to Professor Tim Love for his continued guidance throughout this research.

Introduction

This research paper began with a thought and curiosity. As we explored the evolving role of adaptive reuse in real estate development, we were struck by the frequency with which hotels emerged as the final product. From grain silos and banks to post offices, embassies, and even jails, hospitality seems to accommodate a remarkable range of building types. Why is this the case? What makes hotels so adaptable, and so frequently selected, in reuse strategies?

Globally, the pattern is hard to ignore. The Silo Hotel in Cape Town reimagined a 1920s grain silo into a 28-key luxury destination by preserving its concrete shell while inserting multi-paned, 5.5-meter-high convex windows into the elevator tower (Castle, 2017; The Royal Portfolio, 2023). In London, The Ned Hotel converted a neoclassical bank into a 252-room Art Deco hotel and private members’ club (Sydell Group & Soho House, 2017). While The Lanesborough Hotel transformed the 19th-century St. George’s Hospital into one of London’s most prestigious five-star properties, with the façade preserved and interiors fully modernized (Oetker Hotels, n.d.). Closer to home, Boston’s The Godfrey Hotel preserved and reactivated two Beaux-Arts commercial buildings, combining them into a 242-key hotel through envelope restoration

and seismic upgrades. In an interview with Yanni Tsipis, he explained the site’s irregular floorplates, terracotta slabs, and historic façades posed intense structural challenges—yet proved well-suited to boutique hospitality, which values distinctiveness over standardization (Tsipis, 2025).

Each project presented different constraints. Yet they all ended with the same typology: hospitality. One reason may lie in the spatial and operational elasticity of hotels. They tolerate a wide range of room sizes, layouts, and publicprivate mixes. A hotel can consist entirely of suites, micro-units, or classic rooms. Unlike residential or office programs, there is no fixed unit mix, corridor width, or MEP standard. Brand affiliation also plays a role. Operators like Marriott, Hilton, and Rosewood now offer soft-brand “collections” that can absorb unconventional properties while providing global infrastructure and reservation platforms (Gensler, 2023). Another reason, as Yanni shared in our interview, is that “a successful hospitality project creates an image, a soul, and a character that resonates with guests who seek something adventurous and unique. You can stay in a jail, a palace, a silo—it’s about the story” (Tsipis, 2025).

This line of questioning shaped our research paper, but it was The Liberty Hotel in Boston, a former jail, that stood out as a bold and layered case. In this chapter, we explore The

Liberty’s transformation from an institutional building—that people are forced to stay in—into a market-performing hospitality asset—that people pay for a stay at.

Historic Origins and Architectural Typology

Completed in 1851, the Charles Street Jail was designed by architect Gridley J.F. Bryant and penal reformer Rev. Louis Dwight as a “model penitentiary” reflecting 19th-century reform ideals. Its cruciform radial plan, centered on an octagonal rotunda, drew from panopticon logic—maximizing light, order, and visibility. Constructed in granite from Quincy,

Massachusetts, the structure exemplifies the so-called Boston Granite Style (Library of Congress, n.d.).

Original Historic American Buildings Survey (HABS) drawings reveal massive loadbearing masonry walls, iron-barred windows, and a symmetrical cruciform geometry (Library of Congress, n.d.). Notably, the building’s castiron cupola—visible in early photographs—was removed in 1949 but later reconstructed during the hotel conversion (CambridgeSeven, n.d.).

Urban Context and Development Constraints

The site lies at the edge of Beacon Hill, bounded by Charles Street, Cambridge Street, and the Charles River. Its triangular lot—1.12 acres—sits adjacent to Massachusetts General Hospital and the Charles/MGH Red Line station. According to CoStar (2024), the building totals 268,000 gross square feet with a FAR of 5.47. Despite its location and visibility, the jail’s original design lacked parking, loading docks, and modern mechanical systems. These constraints would require innovative responses in the conversion.

Ownership and Team Formations

Following its decommissioning in 1990, Massachusetts General Hospital (MGH) retained the property and led a competitive development process. In 2001, they selected Carpenter & Company, which assembled a team including CambridgeSeven (architect of record), Ann Beha Architects (preservation), and Champalimaud Design (interiors). According to the Urban Land Institute, the team leveraged both federal and state historic tax credits to offset premium rehabilitation costs (Urban Land Institute, n.d.). NBC News (2007) reported the final development cost at approximately $150 million.

Preservation and Architectural Strategy

The conversion’s signature move was the rotunda restoration. What was once a surveillance hub for prison guards became a soaring lobby atrium. The granite walls were cleaned, catwalks widened and rebuilt, and the historic cupola was craned into place in 2007 (CambridgeSeven, n.d.). The new construction included a 16-story guestroom tower, positioned along the rear edge of the site to minimize visibility from the street. This enabled the hotel to reach 298 rooms, ensuring performance viability while preserving the historic block for public uses like dining, ballrooms, and event space.

Materials and Guest Experience

Design details reinterpreted carceral motifs: iron grilles, stone textures, and the radial plan were retained but repurposed. The rotunda’s circular balconies became dining perches; original stone walls now frame a contemporary cocktail bar. As Tsipis noted in our interview, this ability to turn “constraint into story” is what makes hospitality so suited to adaptive reuse (Tsipis, 2025). Unlike housing or office tenants who require uniformity, hotel guests seek uniqueness. That experiential elasticity, combined with strong brand infrastructure, helps explain why hotels often lead reuse strategies.

Financial Analysis

1. Development Economics and Feasibility

The Liberty Hotel project originated from the adaptive reuse of the former Charles Street Jail, which is considered to be a 19th-century historical landmark, located directly adjacent to Beacon Hill, one of Boston’s most historically significant districts. Following the decommissioning of the jail in 1990 (Clipson & Clipson, 2025), the overall ownership of the property was transferred to the Massachusetts General Hospital (MGH) in 1991 (Liberty Hotel, 2025). Given the site’s immediate adjacency to the hospital’s campus and scarcity of developable parcels within the Beacon Hill area, this conversion provided a substantial adaptive reuse opportunity for a valuable urban asset that was underutilized. Consequently, in 2000, MGH issued a Request for Proposal (RFP) giving the opportunity to developers to redevelop the property into a viable hospitality project, while

simultaneously preserving the overall identity of the historic asset (Boston Preservation Alliance, 2018).

The timing of this RFP, in combination with Boston’s favorable luxury hotel market conditions in the late 1990s through the early 2000s, created a strong opportunity for this capital-intensive adaptive reuse project. A market analysis was conducted utilizing CoStar covering the period between 1997 to 2007, which showed that the luxury hotel segment in Boston portrayed significant strength across multiple key performance indicators. More specifically, as seen from Exhibits 1 and 2, it is evident that the average luxury hotel occupancy had reached approximately 76.9%, among the highest levels of the decade, illustrating consistent demand absorption within the city’s upper-tier hospitality market. This sturdy performance was further amplified by a relatively restricted room supply, totaling around 1.49 million room-nights. Such limited supply and high demand created clear opportunities for new hotel development in order to meet rising market needs. Nevertheless, Boston’s strict zoning regulations and historic preservation ordinances in prime districts such as Beacon Hill and Back Bay made development challenging. Furthermore, the market displayed an upward-trending Average Daily Rate (ADR), reaching an amount $236.1 in 2000, a 20.4% increase from 1997. This indicated that Boston’s luxury hotel market possessed strong pricing power and could sustain high room rates without compromising occupancy, which remained at high levels. In parallel to these beneficial key performance indicators, capitalization rates have been decreasing steadily since 1997. These reductions in yield expectations emphasize the

increase in investor confidence and a lower perceived risk associated with high-quality hospitality assets in Boston’s core.

These favorable market conditions, including high occupancy, limited existing supply in the luxury hotel market, rising ADRs, and cap rate compression, created a market environment in which a new, unique luxury hotel, especially one with a historic character, was viewed as both operationally and financially feasible. Regarding the location, the Charles Street Jail site was positioned between the MGH campus, the Charles River Esplanade, and adjacent to Beacon Hill, hence offering an unparalleled location. In addition, the site’s positioning could cater efficiently to multiple types of visitors, including business travelers linked to the hospital and nearby medical institutions, leisure visitors drawn to the historic district and waterfront, and domestic guests seeking luxury experiences. Therefore, overall, it is evident that the site’s location in conjunction with favorable market conditions shows that the RFP was issued at a moment of optimal market alignment.

2. Capital Stack Composition

Based on available documentation and reasonable assumptions derived from comparable adaptive-reuse projects of similar scale, as well as the interview conducted with Yanni Tsipis, the estimated total development cost for The Liberty Hotel is approximately $150 million (NBC News, 2007). This figure reflects the hard and soft costs which were associated with the rehabilitation of this 19th-century structure into a 298-key luxury 5-star hotel, including structural stabilization, interior reconfiguration, design adjustments, and FF&E. At an estimated construction cost of

$559.70 per square foot and a total gross floor area of 268,000 square feet, the project illustrates the premium cost intensity of historic adaptive reuse projects in Boston. Moreover, as seen in Exhibit 3, on a per-key basis, the total cost equates to approximately $503,355, positioning the Liberty Hotel within the upper range of luxury redevelopment costs during the early 2000s. In addition, the exact breakdown of the capital structure was not publicly disclosed; therefore, an educated reconstruction informed by market norms and corroborated through the Interview with Mr. Tsipis was completed, as evident below.

The resulting capital structure follows the conventional framework, which was typically embedded in certified historic rehabilitations and adaptive reuse projects. According to Mr. Tsipis, such projects “typically rely on equity from both a principal developer and an institutional partner, combined with a construction loan and historic tax credits as major financing incentives.” Consequently, the assumptions above include a mix of traditional debt financing via a construction loan, public incentive investments, as seen by the tax credit, and, finally, equity from the developer and institutional partners. More specifically, as evident in Exhibit 4, the construction loan was estimated at $90 million, representing approximately 60% loan-tocost, reflecting a standard leverage ratio for a large-scale adaptive reuse project. Moreover, the institutional equity tranche, estimated at $42 million, likely originated from Carpenter & Company’s investment partner, a common structure in hospitality redevelopment that combines the developer’s local expertise with institutional capital. Similarly, the developer,

Carpenter & Company, would have also invested around 5% of the total equity, or 1,5% of the loan-to-cost, through a modest $2.25 million investment, serving as alignment capital, ensuring managerial commitment while leveraging thirdparty participation to scale the project. Finally, a crucial component of the financing model was the $15 million in combined Federal and State Historic Tax Credits (HTC), which effectively reduced the project’s equity requirement by 10%. These types of credits are available for certified rehabilitation of historically significant structures and allow investors to claim tax offsets equivalent to a portion of qualified rehabilitation expenditures, which could even reach 20% loanto-cost (Hotel Management Network, 2008). When analyzed in the context of prevailing market conditions, specifically the 2001 Boston luxury hotel cap rate of 8.54%, the project’s cost structure and financing composition appear aligned with investor return expectations, suggesting that even at elevated construction costs, the Liberty Hotel could achieve marketconsistent yields once stabilized.

Overall, it is evident that this financing logic is consistent with Tsipis’s observation that “heritage projects require both patient equity and incentive-based funding to balance high construction complexity with long-term value creation.”

3. Investment Outcome and Sale to LaSalle Hotel Properties (2013)

The Liberty Hotel’s operational and investment performance from its 2007 opening through 2013, when the hotel was sold to LaSalle Hotel Properties, illustrates the economic success of adaptive reuse when executed in a high-barrier and highly regulated market such as Boston. Despite the unfortunate launch during the late-2000s economic crisis, the hotel, under Marriott’s Luxury Collection, and the overall luxury hotel market quickly stabilized. As seen in Exhibits 5 and 6, Boston’s luxury hotel occupancy rose from 69.7% to 77.2% between 2008 and 2013, while ADR increased by approximately 5% from $257.2 to $268.8, emphasizing both demand recovery and strengthened pricing power following the recession. These improvements were underpinned by constrained supply and efficient corporate and leisure demand, particularly in the city’s core districts, such as Beacon Hill. Furthermore, from a capital markets perspective, The Liberty Hotel’s value trajectory aligns with general trends in Boston’s luxury market segment. More specifically, between 2008 and 2013, market cap rates declined from 7.84% to

6.91%, portraying steady yield compression and strengthening investor confidence in high-quality assets located in high-demand locations.

Shifting the focus towards the actual transaction, in 2013, LaSalle Hotel Properties, a real estate investment trust (REIT) specializing in upscale urban and resort assets, acquired the hotel for approximately $170 million (Hospitality Net, 2013), equating to a value of $570,470 per key and $634.3 per square foot (Exhibit 7) at a 6.8% capitalization rate, as stated by CoStar. When benchmarking the transaction-specific capitalization rate of 6.8% to the market-wide cap rate of 6.91%, specific to Boston’s luxury hotel segment that year, it is evident that the Liberty’s slightly lower sale yield indicates a premium

valuation which also aligns with its superior location adjacent to Beacon Hill and the Charles River, Marriott’s Luxury Collection brand affiliation, and the site significant historical value. Moreover, the transaction illustrated investor recognition of the property as a stabilized asset, demonstrating that an adaptive reuse project, when well executed, can, in fact, achieve institutional pricing comparable to or exceeding that of purpose-built or ground-up development of luxury hotels. Finally, when compared with its initial $150 million development cost (approximately $503,000 per key), seen in Exhibit 8, the sale represents a 13.3% nominal appreciation over a six-year period, despite the capital intensity of the hotel’s conversion and the intervening financial crisis in 2008.

4. Current Market Assessment and Valuation of The Liberty Hotel

I. Analysis of the Boston Luxury Hospitality Market (2025)

It is clear that Boston’s luxury hotel market in 2025 reflects a mature post-pandemic recovery cycle, illustrated by strong ADR driven performance, moderate occupancy stabilization, and recovering investor confidence. After a period of disruption and market instability caused by the COVID-19 pandemic, which, as illustrated in Exhibits 9 and 10, caused occupancy rates to fall to a staggering 26.3%, the market has since rebounded to a stabilized occupancy of 75.3% as of 2025. This shows the sector’s strong resilience to times of economic downturn and rapid recovery. Likewise, the ADR for Boston’s luxury segment rose from $314.9 to $396.6 between 2018 and 2025, displaying a 25.9% increase. The substantial growth illustrates both inflation-adjusted pricing

power and growing consumers’ willingness to pay premiums for experiential hotel stays. Regarding market capitalization rates, between 2018 and 2023, they expanded notably, rising from 6.63% to a peak of 7.76% in 2023. This upward movement reflected broad market uncertainty likely caused by global events such as the COVID19 pandemic, inflation pressures, and monetary policy, all of which significantly contributed to augmented investor caution and a temporary reduction in transaction activity. Nevertheless, starting in 2024, the trend began to reverse with cap rates gradually compressing to 7.45% in 2025, emphasizing a slow but steady recovery of investor confidence. The mild compression suggests that the Boston luxury hotel market is re-establishing its reputation as a stable investment environment.

Overall, it is evident that Boston’s luxury hospitality market in 2025 demonstrates a transition from post-pandemic volatility to a more stable environment, supported by growing occupancy rates, record-high ADRs, and gradually compressing cap rates. The combination of these dynamics positions Boston as a substantially attractive luxury hotel market, with growing upside potential.

II. Benchmarking ADR Performance

In order to accurately evaluate The Liberty Hotel’s current positioning within Boston’s upperluxury market and underwrite an accurate hotel valuation, a direct ADR benchmarking analysis was completed against a carefully selected set of comparable five-star properties (Exhibits 11-15): The Newbury Boston, Four Seasons Boston, Raffles Boston, and The Ritz-Carlton Boston. These properties were chosen for their similar service standards, five-star classification, and prime location within Boston’s most prestigious neighborhoods. The methodology included a direct-source approach. Gross room rates for each property were

collected manually from each hotel’s direct booking website across all room categories and months. From these published gross rates, a $25 destination fee and 16.5% in government taxes and fees were deducted so as to determine a net ADR. Each room type was then assigned a room-weighting factor based on its estimated distribution within the hotel’s inventory to calculate a weighted average ADR representative of the property’s overall pricing structure. The approach provided an accurate property-specific result that truly reflected real market conditions rather than broad averages.

Based on the analysis, the following adjusted ADRs were determined:

• The Four Seasons Boston: $1,055.10

• The Raffles Boston: $951.25

• The Ritz-Carlton Boston: $866.52

• The Newbury Boston: $764.07

• The Liberty Hotel: $726.38

• Average ADR: $872.66

It is evident that among the group, the Liberty Hotel demonstrates the lower ADR. This relative pricing difference reflects several key dynamics. Firstly, brand position and operator prestige play a key role: while the Liberty operates under Marriott’s Luxury Collection, a globally recognized but midupper luxury flag, hotels such as the Four Seasons and Ritz-Carlton tend to command higher rates due to their bespoke service offerings and brand exclusivity. Secondly, product configuration and amenity depth substantially influence pricing potential. Properties like the Four Seasons offer a larger suite room type inventory and more extensive facilities, thus justifying premium rates. Nevertheless, despite the Liberty’s slightly lower ADR, it remains competitively positioned within Boston’s top-tier segment, heavily supported by its architectural distinction, historical character, F&B outlets, and amenities, enhancing guest perception and allowing the hotel to achieve rates significantly

above the broader luxury market average.

According to CoStar data, the average ADR for Boston’s luxury hotel market in 2025 is $396.60, indicating that The Liberty and its

competitive set operate at ADR levels that are nearly double the market benchmark (Exhibits 16 & 17). This divergence confirms that the selected comp set represents the uppermost tier

of Boston’s hospitality landscape.

III. Valuation Analysis and Current Market Position of The Liberty Hotel

A “high-level” valuation of The Liberty Hotel was conducted utilizing a discounted cash flow (DCF) consistent with standard hotel investment analysis in order to estimate the hotel’s current value, as evident in Exhibit 18. The model integrates operational assumptions derived from market evidence, including occupancy, ADR, and department revenue composition, and expense ratios typical of luxury hospitality assets.

The valuation model assumes an ADR of $726.38, as extracted from the hotel’s direct rate analysis, with a 2% annual growth rate, consistent with long-term inflation-adjusted hotel revenue escalation in stabilized markets. Occupancy was modelled at approximately 70%, representing a relatively conservative adjustment below the CoStar-reported 2025 luxury market average of 75%. This discount considers the rate of sensitivity inherent to upper-luxury assets, where higher room prices typically lower occupancy rates due to the higher price premium. Total room revenues, calculated utilizing the hotel’s ADR, were supplemented by Food & Beverage (30% of room revenue), Other Operated Departments (4% of room revenue), and Miscellaneous Income (3% of room revenue), aligning with operational norms for full-service, five-star US hotels. Furthermore, Undistributed Expenses, Management Fees, Non-Operating Income and Expenses, and Replacement Reserve were proportionally modeled based on industry benchmarks, typically as a proportion of Total Operating Revenue. On

the investment side, the valuation incorporates a going-in cap rate of 7.0%, displaying a 45 basispoint reduction from the 2025 Boston Luxury hotel average of 7.45% (CoStar). This adjustment was made due to the fact that it captures the Liberty’s superior positioning as a historical site with numerous amenities, a unique design, and positioned in a prime location adjacent to Beacon Hill and the Charles River. Collectively, these factors substantially lower perceived investment risk and justify higher yields. The exit cap rate was conservatively increased by 50 basis points to 7.5%, consistent with industry convention to reflect potential yield expansion at sale. Finally, the discount rate was derived as the sum of the going-in cap rate (7.0%) and the growth rate (2.0%), summing to 9.0%.

Following the above parameters, the current market value of The Liberty Hotel is estimated at $217.5 million (Exhibit 18 & 19), compared to its 2013 acquisition price of $170 million. This represents an appreciation of approximately 27.9% in nominal terms, despite numerous cyclical disruptions and macroeconomic challenges over the past decade. The model yields an unlevered IRR of 12.79% and a cash-on-cash return of 9.56%, indicating strong risk-adjusted performance for a stabilized luxury hospitality asset. These results underscore the property’s ability to maintain and grow intrinsic value over time, and with a market value exceeding $217 million, the hotel exemplifies how historical sites that have undergone adaptive reuse can deliver both cultural distinction and durable financial performance within competitive hospitality markets. Finally, as seen in Exhibit 20, a sensitivity analysis was completed, including varying ADR and Occupancy levels in order to assess their impact on key investment parameters such as market value and IRR. The results illustrate that only under extreme downward adjustments in either key performance indicator would the investment returns fall below the target threshold, once again confirming the hotel’s strong resilience and stable performance across constantly changing market conditions.

Bibliography

1 CambridgeSeven. (n.d.). The Liberty Hotel https://www.cambridgeseven.com/project/ liberty-hotel/

2 Castle, E. (2017, October 13). The Silo by Heatherwick Studio. IndesignLive. https:// www.indesignlive.com/projects/silo-heatherwick-studio

3 Clipson, G., & Clipson, G. (2025, March 20). The Charles Street Jail – The West End Museum. The West End Museum. https:// thewestendmuseum.org/history/era/ west-boston/the-charles-street-jail/

4 CoStar. (2024). 215 Charles Street – The Liberty, A Luxury Collection Hotel Boston [Property Report PDF].

5 Daily Mail. (2018, July 17). Fascinating vintage photos reveal what London’s Midland Bank HQ looked like before its £200m transformation into one of the city’s hottest hotels. https://www.dailymail. co.uk/travel/travel_news/article-5961625/ What-Londons-Midland-Bank-HQ-lookedlike-hotel-makeover.html

6 Gensler. (2023, May 8). Old to Bold: How hotel adaptive reuse transforms communities. https://www.gensler.com/blog/ old-to-bold-how-hotel-adaptive-reusetransforms-communities

7 Historic Hotel in Boston, MA | Liberty Hotel. (2025, March 25). The Liberty Hotel. https://libertyhotel.com/hotel/history/

8 Infamous Boston jail now a luxury hotel. (2007, November 7). NBC News. https:// www.nbcnews.com/id/wbna21676139

9 LaSalle. (2013, January 4). LaSalle Hotel Properties acquires majority interest in the Liberty Hotel in Boston. Hospitality Net. https://www.hospitalitynet.org/ news/4058975.html

10 Liberty Hotel. (2008, April 14). Hotel Management Network. https://www. hotelmanagement-network.com/projects/ libertyboston/

11 Liberty Hotel – Charles Street Jail. (2018, February 21). Boston Preservation Alliance. https://www.bostonpreservation.org/advocacy-project/liberty-hotel-charles-street-jail

12 Library of Congress. (n.d.). Charles Street Jail Complex, 215 Charles Street, Boston, MA (HABS MA-1259). https://www.loc.gov/ pictures/item/ma1440/

13 NBC News. (2007, November 13). From jail to hotel: Luxury in former Boston prison. https://www.nbcnews.com/id/ wbna21676139

14 Oetker Hotels. (n.d.). The History of The Lanesborough. https://www.oetkerhotels. com/about/oetker-hotels-history/the-history-of-the-lanesborough/

15 Sydell Group & Soho House. (2017). The Ned London. https://www.thened.com/ about

16 The Royal Portfolio. (2023, August 7). Reimagining a Cape Town icon: The Silo Hotel. https://www.theroyalportfolio.com/ blog/the-history-of-the-grain-silo-in-capetown/

17 Tsipis, Y. (2025, November 7). Personal interview.

Image Bibliography

1 Billings, Hammatt (artist), and J. H. Bufford’s Lithography (lithographer). View of the new jail for Suffolk County, in the state of Massachusetts, erecting by the city of Boston upon Charles & North Grove Sts., 1848. Boston Public Library, Map 34.1 No. 96. Digital Commonwealth / DPLA. https://commons.wikimedia.org/wiki/ File:View_of_the_new_jail_for_Suffolk_ County,_in_the_state_of_Massachusetts,_ erecting_by_the_city_of_Boston_upon_ Charles_%26_North_Grove_Sts.,_1848_-_ DPLA_-_335a405edcd9457450e7e4f5adf97 ada.jpg

2 CambridgeSeven. “The Liberty Hotel.” CambridgeSeven, https://www.cambridgeseven.com/project/liberty-hotel/

3 Exterior and Interior of the Liberty Hotel Atrium. Photograph taken during site visit, November 2025.

4 Zirkel, Kenneth C. Liberty Hotel Lobby and Bar, Boston. Photograph, July 29, 2025. Wikimedia Commons. https://commons. wikimedia.org/wiki/File:Liberty_Hotel_ lobby_and_bar,_Boston.jpg.

Super-Tall Skyscrapers

New York, Middle East and Asia vs. LATAM

Super-Tall Skyscrapers

Super-tall and tall towers are often presented as evidence of global progress, architectural declarations that a city ranks among worldclass economies. These structures typically emerge in cities that have already achieved high productivity, strong GDP performance, and deep real-estate capital markets that historically reward efficiency. Yet in practice, the feasibility of extreme verticality does not depend on efficiency at all; it depends on whether the market is willing to pay for design ambition and for the symbolic value associated with height. As buildings rise above conventional limits, each additional meter becomes exponentially more expensive because structural, mechanical, vertical transportation, and aerodynamic requirements grow faster than the usable area they produce.

Despite these inefficiencies, some markets willingly absorb premiums for signature architecture whose long-term “icon value” is difficult to model within conventional development horizons. In such cases, form does not follow finance; instead, finance is stretched to accommodate the ambition to build higher. This report examines how these dynamics operate in tall and super-tall skyscrapers in New York, Dubai, and major Chinese cities, where extreme land values, global capital inflows, and deep liquidity pools sustain vertical forms that are shaped primarily by two constraints: vertical transportation and aerodynamic performance. These design imperatives generate financial inefficiencies that only certain markets are able to support.

We contrast these global models with the Latin American context, focusing on the case of Atrio in Bogotá, a project that shares the formal and engineering ambitions of super-talls abroad but exists within an entirely different economic structure. By analyzing how design decisions: core size, vertical circulation, transition floors, aerodynamic shaping, and public-realm generosity, directly influence costs, efficiency, and

financial risk, this chapter asks: Can skyscrapers ever be financially sustainable in emerging markets? Or does the typology itself depend on market conditions that Latin American cities simply do not possess? In markets like Colombia, where investor horizons and market depth differ significantly, will the symbolic returns associated with vertical icons ever materialize? In this sense, the skyscraper becomes not only a design challenge but also a structural mismatch between form, finance, and economic reality.

01.

Global Boom, Regional Patterns: Why Super-Talls Emerged Where They Did

The vertical ambition started in the early twentieth century, when cities such as New York and Chicago pioneered the skyscraper as both a technological achievement and an economic tool, using steel frames, elevators, and zoning envelopes to build upward in response to density and land scarcity. However, after the twenty-first century the scale and geography of their proliferation have changed. According to Global Trends of Supertall and Tall Buildings up to 2024 (Springer, 2025), the number of buildings over 200 meters grew with unprecedented acceleration after 2000, driven by global economic expansion, rapid urbanization, and competition among cities to signal their arrival on the world stage. The report documents how global completions of 200-plus-meter towers rose sharply from 2010 to 2020, with China, the Middle East, and parts of Southeast Asia accounting for the vast majority of activity (pp. 3–5). The skyscraper, once a uniquely American symbol, became a global emblem of ambition.

This boom was not evenly distributed. In cities like Shenzhen, Guangzhou, Shanghai, Dubai, and Abu Dhabi, tall and supertall construction became intertwined with national development agendas, state-backed financing, and speculative real-estate cycles. Many of these cities used skyscrapers as instruments of nation branding, tourism, and global positioning, leading to

clusters of super-talls that far outpaced local occupancy needs. As the Springer report notes, the surge in Asia and the Middle East reflects “the strengthening of emerging economies and their desire to demonstrate modernization through vertical skylines” (p. 10). In contrast, New York’s boom remained more market-driven. Towers like 432 Park Avenue or 111 West 57th Street emerged from a combination of extreme land values, global investor appetite, and zoning strategies that allowed developers to assemble air rights and maximize buildable envelopes. New York’s super-talls aligned with luxury finance, global wealth storage, and the commodification of skyline views.

Across these regions, the common denominator is the presence of economic conditions capable of absorbing the inefficiencies of height. Super-talls are structurally complex and yield diminishing usable area as they rise; their viability therefore depends on financial ecosystems that can monetize symbolic value, whether through sovereign wealth funds, state-led development, or ultra-high-net-worth global buyers. Latin American cities operate under fundamentally different financial realities. Lower land values, higher capital costs, limited institutional investment vehicles, and more risk-averse local investors create structural limits on the height they can sustain. Nevertheless, the early 2010s marked a moment when parts of the region appeared poised for a vertical transformation. As Latin America became more attractive to foreign capital and local markets sought to mirror global real-estate sophistication, a small number of developers began pursuing towers that exceeded 200 meters. In Colombia, the post-2013 economic upswing fueled optimism in the real estate sector and encouraged investors to consider ambitious projects such as Atrio in Bogotá. At that time, both financial and institutional actors felt increasingly prepared to make the leap toward large-scale vertical projects. Whether these conditions could meaningfully replicate the market environments that support super-talls in New York, Dubai, or China becomes a central question explored in the sections that follow.

02. The Physics of Verticality: Aerodynamic Performance and Vertical Transportation

In Skyscrapers, the architectural form is not just the result of a designer’s aesthetic whims. It is the product of a fierce compromise between physical constraints and financial fields. If zoning laws and land shapes design

the primary boundary, the two dominant forces that ultimately determine the massing of a building, floor-by-floor efficiency, and structural cost as aerodynamic performance and vertical transportation.

2-1. Aerodynamic Performance

mitigation of vortex shedding when a building ascends to a super-tall of more than 300 meters, the determinant that governs the structural design is not gravity, but wind loads. The force of the wind increases exponentially with the height, creating a phenomenon called vortex shedding. Low-pressure areas are alternately created as winds pass through both sides of the building, which causes the building to shake at a right angle to the wind direction. When this shaking matches the buildings’ natural frequency, there are major problems with structural safety and residents’ comfort. To offset this, the shape of a building needs to confuse the wind. The narrowing, twisting, or stepping back floors, which are common in modern skyscrapers, were created by this need.

The Tapering Effect: Dubai’s Burj Khalifa uses a “buttressed core” system with a setback applied depending on the height. The design allows the wind to meet different widths on each floor, preventing swirls from occurring regularly. Skidmore, Owings & Merrill (SOM) structural engineer William Baker explains that this “disturbance of the wind” allowed the tower to reach a height of 828m with only a relatively common amount of structural materials. (Civil Engineering Magazine, 2012.)

Aerodynamic Shaping: The Shanghai Tower (632m) also reduced wind load by 24% compared to rectangular towers of the same height through its 120 degree warped shape and narrowing profile. This aerodynamic optimization led to approximately $58 million in structural material cost savings (Thornton Tomasetti. “Shanghai Tower.”)

Blow-Through Floors: In very slim towers like 432 Park Avenue in New York, developers give up valuable floor space and have an open machine room floor. Wind pressure decreases as the wind escapes through the gap, and stability increases without widening the width of the building.

Financial Implication: These aerodynamic imperatives impose a kind of form tax. The narrower shape as it goes up reduces the floor area of the upper floor (which has the best view and is most valuable), and the twisted or irregular shape increases construction complexity and cost.

(Higher and Higher: The Evolution of the Buttressed Core, 2012)

2.2 Vertical Transport

The second constraint is the elevator core. The fundamental paradox of skyscrapers is that they need more elevators to carry the resident population to build higher, but the addition of elevator shafts eats up the floor area they were trying to achieve by raising the height.

Technological Mitigation: To address this, skyscrapers adopt a sky lobby system and a double decker elevator. This zoning strategy moves to a specific floor through a highspeed shuttle elevator, and then uses the elevator shaft of that upper space to overlap the bottom to increase space efficiency. For example, the One World Trade Center utilized the Sky Lobby system to maximize the rentable area on the lower floors.

The Height Limit: There is clearly a point of diminishing returns where the space required for vertical transportation is greater than the value of the added floor. This is even more fatal for residential skyscrapers, as luxury buyers require dedicated elevator rehalls and short wait times, developers have to endure inefficient core layouts to maintain their exclusivity.

(CTBUH, Kim & Elnimeiri, 2004)

03. Loss of Usable Floor Area Over Height

A significant driver in profitability for real estate investors is largely driven by the Netto-Gross Area Ratio (NFA/GFA), a metric that quantifies the percentage of a building’s total area that is usable or rentable space. While typical commercial office and multifamily buildings reach space efficiencies ranging from 82% to 90% of their GFA, skyscrapers inherently suffer from a penalty on this ratio due to the requirements of extreme height. Specifically, studies on contemporary prismatic-form skyscrapers show their efficiency often falls between 56% and 70% (Ilgın & Aslantamer, 2024). This lower efficiency is primarily a result of the enlarged non-revenue-generating core area, which must accommodate greater structural requirements for lateral stability and a larger volume of vertical transportation (e.g., more elevators, and dedicated shafts) and mechanical systems necessary to service a supertall building (CTBUH, 2004).

According to the report Buildings 2024,Investigating Space Utilization in Skyscrapers Designed with Prismatic Form, space efficiency in supertall buildings is fundamentally shaped by the interaction between a tower’s use program and its geometric form. Figure 8 shows that function alone produces clear efficiency patterns: residential supertalls consistently achieve the highest space-efficiency ratios (70%) because their smaller floorplates and repetitive unit layouts allow cores to remain

compact relative to usable area. In contrast, office towers display more limited efficiency ranges (as low as the mid-50%) because they require deeper lease spans, larger structural grids, and disproportionately larger cores to accommodate higher elevator counts and egress requirements. Mixed-use buildings fall in the middle, averaging about 69% efficiency, reflecting the compromises imposed by stacking multiple program types in the same vertical shaft.

section where additional marginal cost increases at a faster rate than additional marginal revenue. This increase in nonlinear costs comes from the following three architectural essentials, which in turn acts as a penalty of height from a financial perspective.

Figure 10 reinforces how building form amplifies or constrains these programmatic efficiencies, showing that towers with more prismatic, regular geometries maintain tighter core-to-GFA ratios, while more irregular or tapered forms require larger structural and mechanical areas, reducing efficiency further. As height increases, the structure and mechanical systems occupy an even greater share of each floor, meaning that the same function becomes less efficient simply because the form is optimized for vertical performance rather than floorplate usability. Together, these figures make clear that efficiency is not a property of use or form alone, but the outcome of how function and shape co-produce the proportion of rentable area, explaining why supertalls often perform worse than mid-rise buildings despite their scale.

04. Convex Cost Function: The Architectural Penalty of Height

A standard pro-forma analysis of real estate development considers design as an outcome, which maximizes returns within an acceptable budget. However, for skyscrapers, especially super-tall structures, this logic is reversed. As soon as the height of a building exceeds the conventional limit, the added one meter / one floor increases the cost in the form of a convex function rather than a linear function. This means that as the height increases, there is a

Structural and lateral load reinforcement: As the building becomes higher, wind force and lateral load reinforcement against earthquakes becomes the dominant factor in structural design. As a result, the area of the pillars and cores increases significantly, which greatly erodes the effective area of the lower part of the building.

Vertical Transportation: Increased space allocation for high-speed elevator systems, sky lobbies, and mechanical floors. This reduces the ratio of gross area to net leasable area, or ‘efficiency ratio’.

Complexity Premium: Safety standards for high-altitude work, difficulties in transporting materials, and extended construction periods are reflected in construction costs in the form of a risk premium.

Academically, these inefficiencies are also quantified. According to a study by Ahlfeldt and Barr, for super-tall buildings, the elasticity of construction costs per unit for height “can increase to beyond unity” (Ahlfeldt & Barr, pg.3) This means that the cost growth rate is higher than the height growth rate, demonstrating that high-rise projects inherently contain financial inefficiency.

The Inversion of Break-Even:

The general development model, or the principle of “pro-forma dictates design” is reversed in skyscrapers. Because skyscrapers have an inefficient structure in nature, their construction takes on the nature of super-talls as design-led financial instruments rather than traditional economic logic.

The only condition to justify this inefficient cost function is that the ‘Revenue Function’ should rise faster than the rate of increase in the cost function. And this is only possible in certain markets.

Case of New York City and Dubai:

In cities like New York and Dubai, land values + global capital flows justify the efficiency. Because the view premium is so high, its revenue increases with “exploiting with building variation, where the estimated floor height is of about 0.07 for New York City” (Ahlfeldt & Barr, Section 6). Global commitment to such a scarce vertical space overwhelms financial inefficiency.

Case of Bogotá:

On the other hand, radical revenue growth like that of New York is not possible in Bogota’s office market. “It shows that New York’s commercial real estate rent elasticity is 0.033 for floor height, which is lower than residential (0.07)” (Ahlfeldt & Barr, Section 6). In emerging markets such as Bogota, this

figure is likely much lower. Thus, the financial implications of the proposition “super-talls only make sense in cities where land values + global capital flows justify the fine efficiency (New York, Dubai, Shanghai) are clear.

Collectively, we can confirm that the proposition “the marginal cost of increasing the height of a building, is a prerequisite for a positive and finite answer to the optimal building height.” (Ahlfeldt & Barr, Section 6). Atrio’s analysis is an example of a building being built even though costs have exceeded the point where profits are overwhelmed, suggesting that an additional force of design and nation’s urban ambition beyond the power of the market worked to form the height gradient.

06. Who captures the return—developer or long-term owner?

Developers rarely capture the long-term “icon premium.”

Ahlfeldt & Barr (2020) make clear that construction cost is immediate, while symbolic value accrues slowly over decades. Developers typically exit after lease-up or stabilization.

They recover returns via: pre-sales, condo sell-offs,rent rolls,partial refinancing.But the “landmark premium” is captured by: the city (tourism, brand, investment),future owners, not the initial developer.

This is a mismatch of time horizons. The one who pays for the inefficiency ≠ the one who benefits from the landmark status. Why buyers/tenants accept these costs: “Symbolic Consumption” Economics. There’s also literature on this (Fuerst & Murray 2011 touches it

indirectly):

Tenants or condo buyers often pay a premium for: status,branding,exclusivity,views,address (“Billionaires’ Row”, “Burj Khalifa District”). Even when: the floor plates are less efficient, the design forces higher service charges, the maintenance and energy loads are absurdly high.

The long-term “icon premium” does exist — but it arrives too late. Research shows that buildings that become landmarks (man-made or organic) accumulate premium value over time through: increased tourism, prestige of location, rising land values around them, cluster effects (Fuerst et al. on “spillover premiums”), strong occupancy in the long run.

Atrio Bogotá:

Ambition, Vision, and the Making of a Latin American Skyscraper

Latin America holds only a modest share of the global skyscraper inventory, roughly 50 towers exceeding 200 meters, compared to the thousands found worldwide. These buildings are concentrated in 7 of the region’s 20 countries, among them Colombia, the fourth-largest economy in Latin America by nominal GDP.

Atrio was conceived in 2010 during a moment of growing optimism in LATAM and Colombia’s real estate sector, when Bogotá sought to redefine its global identity and attract international investment. The project, located at the intersection of Calle 26 and Caracas, one of the city’s

a public-realm agenda unprecedented in Latin America.

From the outset, Atrio was framed as an “icon project”: a two-tower complex, with the completed Tower ‘Norte’ in 2018 rising 201 meters and Tower ‘Sur’ resign 268 meters , making it one of the tallest buildings in the Latin American region. The development team assembled a constellation of global actors, including architect Richard Rogers (Rogers Stirk Harbour + Partners) and engineering firms with experience in high-rise design across Europe, Asia, and the Middle East. The project aimed to introduce world-class engineering practices into a context where super-tall construction was still rare. Its diagrid structure, high-performance façade, and advanced seismic system reflected technical solutions more commonly found in markets like London, Shanghai, or Dubai. Atrio’s vision also extended beyond the building envelope. The developers promoted it as a catalyst for urban renewal in Bogotá’s traditional downtown, proposing a generous public plaza of nearly 150,000 SF, an open, fully accessible civic space positioned as a gift to the city. This gesture aligned Atrio with global precedents where highrise megaprojects incorporate public amenities to negotiate urban presence, such as Hong Kong’s elevated passages or the plazas at the base of New York’s corporate towers. In Bogotá’s case, however, the plaza carried unique symbolic weight, offering a kind of public commons in an area historically marked by congestion, informality, and fragmented public space.

most symbolically charged crossroads, was envisioned as a transformative urban gesture rather than a conventional commercial development. Its creators aimed to position Bogotá within the global conversation of super-tall architecture by delivering a project that combined international design talent, advanced engineering, and

The project stakeholders reflected a hybrid model of local leadership informed by international expertise. QBO Constructores, led at the time by Camilo Fernández, served as the local developer responsible for translating global design ambition into Colombian technical, regulatory, and construction realities. The investor coalition included entities aligned with long-term value creation rather than short-term speculative cycles, seeking to position Atrio as a landmark that would elevate Bogotá’s competitive standing. The team’s stated ambition was to demonstrate that a Latin American city could produce a skyscraper with the architectural rigor, engineering sophistication, and public-realm commitment found in the most advanced global markets.

Atrio therefore emerged not only as a building but as an argument: a statement that Bogotá could join the global skyline of symbolic vertical projects. Whether local financial structures,

market depth, and tenant demand could sustain such ambition is the question that guides the analysis that follows.Design and Efficiency

Atrio’s engineering is driven by the demands of height: wind resistance, stiffness, evacuation, and vertical transportation. Like most tall towers, Atrio uses a central reinforced concrete core that contains elevators, stairs, and all mechanical runs. As the building climbs, two things happen simultaneously: the core becomes proportionally larger relative to the floorplate, and the structural walls and diagonal bracing become thicker to resist lateral forces. On top of that, Atrio incorporates transition floors and outrigger systems—floors that increase structural performance but provide no rentable area. The result is a building with a gross area of 239,000 m², but a much smaller net usable area. Atrio achieved a 70% efficiency.

A snapshot of Atrio Today

Atrio today offers a clear real-world example of how the economics of height, timing, and location interact with market conditions. Although it is one of the most sophisticated and architecturally ambitious buildings in Colombia, it is currently more than half vacant. This outcome reflects a combination of external shocks, structural constraints, and strategic decisions that shaped the project over its long development timeline. In our view, Atrio represents a case of the right product built in the wrong place at the wrong time. Each of these three components can be analyzed separately in order to understand why a project with strong fundamentals has struggled to reach stabilization.

The first element is the right product. Atrio is a prime-grade office tower built with international standards, and the demand for this type of space in Bogotá is strong. Starting in 2015 and 2016, peso devaluation made Bogotá an attractive location for global companies

who could lease premium offices at very low dollar prices. Demand for prime buildings in the central business district began to grow, and this trend intensified after COVID because new development slowed while multinational tenants continued to seek high-quality, efficient, and well-located floors. Market data shows that prime space absorption has been consistently positive in the CBD and that Bogotá has a shortage of new Class A and Class AAA inventory. In this context, the product Atrio offers aligns with what the market wants. The issue is not the building’s quality or positioning.

The second element is the wrong time. Atrio’s development timeline exposed the project to one of the most severe currency shocks in modern Colombian history. The land was acquired early in the process, around 2007 or 2008, and the building went through seven years of design, licensing, and permitting. Construction finally began in 2014, when the exchange rate was close to 2,000 pesos per dollar. Over the four years of construction, the peso depreciated to almost 3,000 per dollar. This represented a 50 percent increase in the cost of all dollar-linked inputs, which accounted for more than 70 percent of the total construction cost. The devaluation hit the project’s budget directly and forced the developer to seek creative financial solutions. The result was a significantly more expensive building than originally planned, and the full impact of this externality shaped Atrio’s financial structure and its later leasing strategy. The development was high quality, but the timing was severely misaligned with macroeconomic conditions.

The third element is the wrong place. Although Atrio is located in Bogotá’s traditional downtown, the city’s office market has shifted north over the past twenty years. The area now known as the CBD has attracted most of the new development and most of the demand. This shift in the geographic center of office activity means that Atrio is the best and most expensive office building in a submarket that tenants increasingly prefer to avoid. Many companies simply do not want to locate downtown, regardless of rental incentives. In my view, if Atrio had been built within the northern CBD, it would likely be a success story. Instead, its location has become a structural disadvantage.

A final factor is the ownership strategy. The original equity partners still own the build-

ing and have been reluctant to lower rents or reposition the asset. They are determined to maintain Atrio’s status as the premier office tower in Bogotá and do not want to compromise the building’s perceived value by offering lower rents. This has contributed to persistently high vacancy. The current tenants illustrate this dynamic. Bancolombia occupies space as part of a debt-for-office trade agreed during development, and PEI occupies the portion it acquired in 2018 because it has not been able to lease it to others. Very few tenants have entered through open-market leasing, and vacancy remains high. Taken together, Atrio’s current state reflects the combination described above. The building offers the right product, but it was delivered at the wrong time, in the wrong place, and under ownership conditions that restrict price flexibility. As a result, an internationally designed, highly efficient, Class AAA asset remains significantly under-occupied despite strong citywide demand for prime office space.

Atrio offers an important case study because it illustrates how the economics of skyscrapers become even more fragile in emerging markets. The margins for tall buildings are already thin

and the risks are always high, but in a context with currency volatility, limited long-term land instruments, and shifting market preferences, the tolerance for misalignment is almost zero. A successful skyscraper in an emerging market must be the perfect product in the perfect place at the perfect time. If any one of these conditions

fails, the financial structure can unravel, even when the design and intention are world class. Atrio shows how quickly a landmark vision can be undermined by timing, location, and macroeconomic forces that lie outside the developer’s control. It is a reminder that in these markets, ambition alone is not enough, and that even the

(Source: Source: JLL Office Market Report 2024)

best buildings can struggle when the broader conditions do not support them.

(Source: Created with data from Banco de la Republica)

Conclusion

The evidence presented in this chapter suggests that the skyscraper is not a universal financial instrument, but a context-dependent product that only works under very specific conditions. In New York, Dubai, and parts of China, extreme land values, deep capital markets, and a global willingness to pay for vertical scarcity allow the convex cost of height to be absorbed and, in some cases, rewarded. The physics of verticality, the aerodynamic penalties of wind mitigation, and the space lost to elevator cores and mechanical systems all erode efficiency, yet these markets can still justify tall and super-tall towers because revenue grows fast enough with height to offset these structural disadvantages. In that setting, design-led finance can survive because capital structures, land tenure systems, and long time horizons align with the slow accumulation of icon value.

Latin American cities operate within a very different set of constraints. Lower land values, higher capital costs, shallow institutional markets, and land regimes based on upfront acquisition rather than long-term leases compress margins and amplify risk. The economics of skyscrapers, already fragile in the best circumstances, become especially unforgiving in environments with currency volatility and shifting demand patterns. Atrio in Bogotá shows what happens when a project imports the formal and engineering language of global super-talls into a market that cannot fully support their financial logic. It is the right product in terms of quality and specification, but its timing, location, and ownership strategy prevented it from

Atrio is the only Class A Building at the Centro Intl submarket.

(Source: JLL Research (2020))

achieving the stabilization that its design would seem to warrant.

For emerging markets, the lesson is not that vertical ambition is impossible, but that it demands a much tighter alignment between form, finance, and context. A successful tower must be the right product in the right place at the right time, supported by capital structures and land strategies that recognize how slowly landmark premiums materialize. If any of these elements

is misaligned, the result can resemble Atrio: a world-class building that struggles to perform within its local market. As Latin American cities continue to aspire to global skylines, they will need development models that respect the convex cost of height, the limits of local demand, and the realities of who actually captures value over time. Only then can tall buildings become not just symbols of ambition, but sustainable components of the urban and financial landscape.

Bibliography

1 “Global Trends of Supertall and Tall Buildings up to 2024.” Springer. 2025. (Report consulted as part of research.)

2 Wikipedia. “Anexo: Edificios más altos de América Latina.” Última modificación [date you accessed]. https://es.wikipedia.org/ wiki/Anexo:Edificios_m%C3%A1s_altos_de_ Am%C3%A9rica_Latina

3 YouTube channel (or uploader name). “Why We STOPPED Building Skyscrapers — What Happened?” YouTube video, 13:42. August 1, 2024. https://www.youtube.com/ watch?v=GTBfdhvmMn0.

4 Ahlfeldt, Gabriel; Barr, Jason (2020) : The Economics of Skyscrapers: A Synthesis, CESifo Working Paper, No. 8427, Center for Economic Studies and Ifo Institute (CESifo), Munich.

5 Fernández, Camilo. Interview by Karen García, Maria Jose Moreno, and Luna Kim. Former General Manager of QBO Constructores during the development of Atrio, Bogotá, Colombia. Conducted on November 23, 2025.

6 ARUP. Anteproyecto Cost Plan 7 – Atrio Bogotá. Prepared for QBO Constructores, 2014. Internal project document.

7 Civil Engineering Magazine. “Higher and Higher: The Evolution of the Buttressed Core.” October 2012. https://www. civilengineering-digital.com/civilengineering/201210/MobilePagedArticle. action?articleId=211019

8 Al-Kodmany K. Tall Buildings and Elevators: A Review of Recent Technological Advances. Buildings. 2015; 5(3):1070-1104. https://doi.org/10.3390/buildings5031070

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10 Council on Tall Buildings and Urban Habitat (CTBUH), Kim, Hyeong-Ill & Elnimeiri, Mahjoub. “Space Efficiency in Multi-Use Tall Building.” CTBUH 2004 Seoul Conference, 2004.

11 Ilgın, H. “Examining Space Efficiency in Supertall Towers through an Analysis of 135 Case Studies.” IJAET Journal, 2021. https://www.semanticscholar.org/paper/ Examining-Space-Efficiency-in-SupertallTowers-an-Ilg%C4%B1n/1797186048669491 6e7354f93d16ecf91349a3d0

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www.jll.com/en-us/insights/office-overview-bogota-colombia-2h-2024

13 JLL. “Bogotá Office Market Report, 2020.” JLL Research. 2020.

Billionaire’s Row

Architecture and Valuation Analysis of NYC

Super Tall Typology

Billionaire’s Row

There’s no denying that Billionaire’s Row in New York City is ‘important’. The strip of land below Central Park South is home to a staggering amount of global capital. These towers rose from the ashes of the Great Financial Crisis to reshape the once-sleepy neighborhood and, depending on who you ask, become the new elevation of luxury or the penultimate symbol of wealth inequality. Press reports chronicle the architects, developers, residents, and egos. But as time progressed a pattern emerged - some projects saw values increase 2x, others buildings faced unsold developer inventory and steep resale losses. Why has the market diverged? By reviewing sales data, architectural typologies, and mixeduse components for Central Park Tower, 220 Central Park South, 111W57 (111 West 57th St, aka Steinway Tower), One57 (157 West 57th St), 53W53 (53 West 53rd St, aka MOMA Tower), 432 Park Ave, 520 Park Ave we aim to drill down to the drivers of value in supertalls.

Context

Before delving into research, it’s important to understand the economic, capital, and design factors that gave rise to the supertall boom:

New Buyer Pool with New Tastes

• Globalization and the BRIC (Brazil, Russian, India, China) nations led to a new generation of buyers seeking a global ‘safety deposit box’. Real estate was seen as a hedge against instability, not just a place to live.

• London and NYC were viewed as stable investments with strong demand (easy resale). Buyers believed their units would appreciate.

The Death of the Co-Op

• Luxury co-ops - long the premier housing class of New York’ s rich - were falling out of favor. Dated floorplans, lack of amenities, and onerous rules to acquire, finance, renovate, and sell dissuaded buyers.

• Successful condos like 515 Park Ave (2000),

Time Warner Center (2004), and 15 Central Park West (2008) overtook co-op pricing and prestige. “[D]evelopers have followed the 15 CPW playbook: Hiring an architect like Stern, Peter Pennoyer, or William Sofield to create something reminiscent of a grand prewar co-op, then adding in lavish amenities and modern layouts.”

• Some developers theorized the market for very high-end residential was underserved.

New Financial Landscape

• Low interest rates plus non-bank lenders such as hedge funds and private credit.

• EB-5 visa allowed foreign investors to receive a green card path in exchange for investment. NYC developers relied on this program, notably Hudson Yards.

• Condo Inventory Loans allow developers to borrow against finished inventory and pay down construction loans, thereby allowing more time to sell units and less short-term incentive to lower prices.

New Technology

• While buying and selling air rights in NYC was not uncommon, changes in technology made it possible for developers to build taller, skinnier towers.

• This includes High Performance Concrete (HPC) able to withstand higher PSI, tuned Mass Dampers to prevent sway, and dualcab (double decker) high-speed elevators with predictive programming.

Tax Breaks

• NYC’s controversial 421-A program allowed for tax breaks in exchange for building affordable housing off-site. With a 10 year drawdown, this lowered taxes below non421-A properties and well below cities like London or Singapore.

Overall these factors led to a perfect storm for development.

Beginnings

Billionaire’s Row is a neighborhood of ultraskinny, expensive residential towers south and southeast of Central Park. Notable local architecture includes the office monolith 9 West 57th Street and the storied Plaza Hotel. In 2009 Extell began construction on One57 on an assemblage of land and air rights acquired over a 15 year period. Starting after the Great Financial Crisis was risky but Gary Barnett hypothesized there was unmet demand at the highest echelon of the market, and that the lack of new projects would mean less competition. Completed in 2014, One57’s landmark sales seemingly validated this investment thesis, captured media attention, and kicked off a building boom that transformed the area.

Methodology

To research Billionaire’s Row, we relied on architectural analysis, sales records, CoStar, and news sources. The buildings included are: Central Park Tower, 220 Central Park South, 111W57, One57, 53W53, 432 Park Ave, and 520 Park Ave.

Disclaimer: A sponsor unit is “an apartment that has never been sold” (StreetEasy). This typically means the unit is purchased directly from the developer, rather than resold from an individual. Since not all developers rely on public listing services, it can be difficult to pinpoint key details about off-market sales. Furthermore, 252 East 57th Street and 50 West 66th Street are not included - both buildings sit outside this neighborhood.

Designing Exclusivity

Spatial Strategies in Ultra-Luxury Architecture

Projects along Billionaires’ Row interpret luxury through distinct architectural style, attempting to address taste, lifestyle, and cultural sensibility. The end results are vastly differentminimalist refinement, neoclassical tradition, or visual spectacle. What connects them is not just exclusivity, but the construction of an identity, using architecture to convey aspiration.

Materiality and Form

The towers of Billionaire’s Row demonstrate a variety of materiality and form, reflecting contemporary taste and classical tradition. For

111W57, SHop Architects’ design used terra-cotta cladding that creates a dynamic pattern, while setbacks articulate a slender profile. In contrast, 432 Park Avenue form emphasizes minimalist elegance, with an exposed concrete grid that defines monumentality and verticality. As of 53W53, Jean Nouvel used a diagonal concrete diagrid that gives each unit a unique layout. One57 and Central Park Tower rely on glass facades to enhance verticality and optimize views. The towers designed by Robert A.M. Stern Architects (520 Park Avenue and 220 Central Park South) follow a conservative approach in terms of form, utilizing rectilinear volumes, limestone, discretely ornamented features and traditional window proportions to evoke a pre-war aesthetic. Across all projects, the interplay of materiality and form produces visually striking buildings.

Arrival Sequence

The arrival sequence is more than a transition between street and building - it is designed to convey a sense of security and exclusivity. The lobby becomes a symbolic threshold separating the noise and density of Manhattan from the calm interior environment. The lobby becomes a space where exclusivity, status, and design converge to define a new urban typology of privilege. 220 Central Park South, 111W57, and 432 Park Ave take this transition further - incorporating private or semi-private motor courts. 520 Park Avenue and 220 Central Park South lobbies follow traditional design cues of New York pre-war apartment buildings. Luxury is expressed in a discreet yet familiar way. 111W57 uses the renovated Steinway Building for a lobby and juxtaposes old world ornamentation with modern sensibility. At 432 Park Avenue, Rafael Viñoly designed a discreet double-height lobby that employs sober materials and minimalism to maximize privacy. In contrast, the Central Park Tower and One57 adopt maximalist expression, using marble, bronze, and mirrored surfaces to create a sense of opulence.

Residential Unit Design in Supertalls

Residential units in these projects aim to balance resident needs with views and site limitations. Buildings offer a wide unit mix from studios (intended for staff or guests) to full-floor penthouses. Higher floors are reserved for larger units and command a much higher price per square foot than lower floors. Special attention is paid to massing and columns. 520 Park Ave, 432 Park Ave, and 220 Central Park West all have more traditional facades and shift structural

columns towards the facade to maximize floor area. In contrast 111W57, One57, Central Park Tower, and 53W53 have glass curtain walls and interior structural columns.

In spite of the different design intentions, floor plans are remarkably similar. The best park view is reserved for a spacious living and dining area, followed by the primary bedroom. Kitchens and bathrooms feature high-end finishes like marble countertops, custom cabinetry, and Miele appliances. A library is optional, private bathrooms for each bedroom are a must. Bathrooms, laundry rooms, and service areas are clustered near the core with the notable exception of the primary suite bathroom - which is oriented for views.

Circulation and Core Layouts

Billionaires’ Row towers rely on single-loaded or private-core layouts. 432 Park Avenue and Central Park Tower are organized around a central core to maximize views. 520 Park Avenue and 53W53 position the core adjacent to a perimeter wall allowing for different spatial configuration while still ensuring views. In the case of 220 Central Park South, a double-loaded corridor runs along the rear, maximizing park views. The key differentiator lies in the separation of service areas. Only 432 Park Ave, 220 Central Park South, and Central Park Tower have dedicated service elevators with separate unit entrances. 520 Park Ave relies on

a hybrid resi-service elevator. This is one of the few areas a building can differentiate itself in.

Starchitects as Value Catalysts

Over the last few decades, Western authorities have used exceptional architectural projects, such as museums, public spaces and infrastructures, to brand or rebrand cities and attract attention. Frank Gehry’s design for the Guggenheim Museum in Bilbao became a model for other locales to replicate. This starchitect model grew to NYC condos in the early 2000s with Richard Meier and Charles Gwathmey - attempting to reposition condos as art and culture.

Billionaire’s Row developments have involved Adrian Smith + Gordon Gill (Central Park Tower), Robert AM Stern (220 Central Park South, 520 Park Ave), SHoP (111W57), Christian de Portzamparc (One57), Jean Nouvel (53W53), and Rafael Vinoly (432 Park Ave). Developers hope to leverage brand name to differentiate their product, reassure buyers of quality, and sell a lifestyle. Due to the scale and cost of these projects, hiring a starchitect is table stakes.

Architectural Recognition through Media Exposure, Awards, and Notable Works

Developers along BIllionaire’s Row select architects who are coming off major prizes. Awards and professional recognition are often required to secure commissions for these high-profile developments. Christian de Portzamparc (One57) and Jean Nouvel (53W 53) both received the highest architectural honor, the Pritzker Prize, years before being commissioned. Rafael Viñoly (432 Park Avenue), SHoP Architects (111W57), and Robert A.M. Stern (220 CPS and 520 Park Avenue) also received prestigious awards, such as the RIBA International Award (Viñoly), the AIA Award (SHoP Architects), and the Vincent Scully Prize (RAMSA). Architectural awards establish credibility and trustworthiness for firms. This can be self-fulfilling as Architectural Digest, Dezeen, and The New York Times highlight these projects’ height, exclusivity, and innovative designs.

Amenity

Strategy

Across Billionaires Row towers, developers allocate roughly 5% of total square footage to amenities. This ‘arms race’ is designed to attract wealthy buyers and create an ultra-luxury lifestyle. For developers amenity strategy is crucial in differentiating and justifying high prices. But do amenities translate into higher prices? Few of the buildings in the analysis have

truly unique features. All boast pools, spas, dining rooms, meeting rooms, gyms, and concierge services. 220 Central Park South and 432 Park Avenue have curated art collections and private restaurants with Michelin star chefs. Central Park Tower and 53W53 boast high floor private clubs. Few projects offer unique aspects - 53W53 comes with a MOMA membership, 11W57 boasts an indoor paddle court. Lavish features are table stakes for developers in this echelon - necessary to compete, but not sufficient to singlehandedly

with Vornado. The building offers large fullfloor and half floor units. It is one of few towers along the row with a dedicated service elevator and corridor for back-of-house functions - allowing for multiple entrances and an exclusive experience. Slow absorption may indicate that unit size or styling is not popular with the buyer pool.

• 220 CPS: Vornado and RAMSA intentionally used a neo-classical design to evoke NYC’s prestigious co-ops. The only project

drive premium values.

From an architectural lens, amenities are a compelling use of sub-par spaces. Basements can be turned into pools or monetized as storage units, lower floors can be gyms or event rooms, and partial mechanical floors can be paired with private clubs. This adds to construction costs, but leaves the more valuable (high-floor) square footage of the building. However amenities can result in higher common charges which discourage potential buyers. Increased common charges for 432 Park Ave’s restaurant resulted in a lawsuit.

Design Conclusions

Design plays a central role in driving value across Billionaires’ Row towers. We noticed a trend - architectural boldness attracts headlines, but lowers values if functionality suffers. Livability is key.

• Central Park Tower: Extell cantilevered over the landmarked Art Student League to maximize views in response to a lawsuit

with actual Central Park frontage, 220 CPS comprises the main 70-story tower and the smaller 18-story Villa directly on the park. Both buildings feature dedicated service elevators/cores for back-of-house functions. Floor plans evoke co-ops with distinct formal and informal spaces. The tower also took an unusual step of massing elevators near the rear of the building and pushing support columns into the front facade - resulting in a flexible floor plate that maximizes views.

• 111W57: The terra-cotta facade and setbacks pay homage to art deco icons like the Chrysler building. The tower has an extremely small site - roughly 60 ft wide with a slenderness ratio of 1:24. The floor plate is roughly 5,000 SF (unit size 4,000 SF). Tower units have an “I-shaped” configuration flowing around elevators and service areas. Floor plans are smaller and less flexible, with narrow living rooms and little privacy between formal and service spaces.

1.

Image 1: New York City aerial view. Imagery © 2025 Google, Maxar Technologies, and other data providers. Image captured using Google Earth. https://earth.google.com/

• One57: The blue facade is meant to evoke running water and capture views. The only hotel-residential hybrid on Billionaires Row gives residents shared services and branded amenities. However the buildings’ L shape (a function of combining multiple smaller lots) leads to long hallways and awkward unit access.

• 53W53: The distinct facade was expensive and complex to execute, but cuts across unit windows and obscures park views. Sloping windows and support columns reduce unit flexibility. MoMA is a double edged sword - proximity to art comes with tourists and foot traffic. 53W53 is striking at the cost of functionality and views - resulting in slow absorption.

• 432 Park Ave: Unapologetic in its monolithic nature, this building draws inspiration from a Josef Hoffmann wastebasket. Large floor plates (9k SF, 8K SF units) feature views and dedicated service areas. But design may be its downfall - issues with trash chutes, blown water pipes, sway, and facade cracking. Resale values are uncertain.

• 520 Park Ave: In spite of being on Park Avenue in name only, the building uses a limestone facade and crown to evoke a traditional co-op. Service areas are carefully separated from formal areas - but more limited in scope than competitors. Layouts are arranged to evoke older apartments while minimizing visible columns.

Sales Data and Market Performance

Sales and resales are the most telling sign of a project’s success. While few notable transactions dominated headlines, the sales trends are more nuanced. By 2019, sales volume slowed due to oversupply and geopolitical uncertainty. ‘Unique’ buildings now faced competition from similar projects targeting the same buyer pool.

• Central Park Tower Sales: This building faced a softening market and ‘aspirational’ pricing. In 2021, 33 units closed with an average discount of 25% due to developer discounting. The penthouse, listed at $250M, was reduced to $195M before being removed from the market. A duplex on the 107th floor closed for $115M in 2024 per Eklund Gomes. Between 2021 - 2025 136

units traded at an average of $4,751 SF and a 15% discount.

• 220 Central Park South Sales: From a condo sales playbook, Vornado did everything wrong - eschewing the lavish sales office, launch party, and public listings. Instead Vornado marketed the project privately, relying on word-of-mouth. Reportedly Vornado’s CEO personally curated who was allowed to tour units. This hyper-exclusive strategy paid offKen Griffin purchased a $238M unit in 2019. A penthouse purchased in 2020 for $95M resold for $188M in 2022. The villa penthouse sold for $67.5M. Between 20182025, 137 units trade at an average of $8,180 / SF. The few resale units traded at a 6.5% discount, indicating high demand.

• 111W57 Sales: Steinway Tower is the only building on Billionaire’s Row to blend old and new. It features historic landmark “Steinway Hall” residences at the base and tower rising above. Notable transactions include: Penthouse 74 for $50.6 million (2022), Penthouse 78 for $47.2 million (2023), and Penthouse 72 for $56 million (2025). However the building suffered construction delays and lawsuits including: a long-running dispute between developer JDS and equity partner AmBase, litigation with contractors, and a lawsuit from their own sales team after JDS shut down the sales office without notice. These controversies created uncertainty for a buyer pool already spoiled for choices. In 2022 JDS secured a large condo-inventory loan from Apollo, who later wrote off a portion of the junior mezzanine debt indicating that sales absorption lagged. The combination of legal disputes, construction issues, oversupply, and financing signals explain underperformance relative to peers with cleaner execution and early sales momentum. Between 2020 - 2025, 57 units traded for an average of $3,184 / SF with an average discount of nearly 11%.

• One57 Sales: the first to market saw notable sales of the $100.5M penthouse to Michael Dell in 2014 and a $91.5M duplex to Bill Ackman in 2015. The developer initially set aside lower floor units for rentals but is now selling them. There have been notable losses - unit 58A sold for $34M in 2014, resold in 2021 for $16.75M. Unit 79 sold for $51M in 2014, resold for $36M in 2017. Between 2013 - 2025 191 units traded at an average $4,216 SF and 11% discount.

• 53W53 Sales: This project grappled with Covid, slow buyer urgency, ambitious pricing, and poor sight lines. Hines going to court with the other development partners to reduce prices did not help. 53W53 is the furthest from Central Park than any project on Billionaires Row. Between 2020 - 2025, 122 units closed with an average of $2,777 SF and a 16% discount.

• 432 Park Ave Sales: The building has seen highs and lows. From 2014 to 2025, 198 units traded at an average of $4,871 SF and a 13% discount. In 2021 residents sued the board alleging construction defects - sales dropped from 8 units in 2021 to 4 in 2022, and 7 in 2023. The average discount pre-2021 lawsuit was 13% - post lawsuit it jumped 100 bps to 14%. In 2025 the NYTimes published a report on facade defects. As of Nov 2025 there are 9 units currently on the market but none in contract.

• 520 Park Ave Sales: With 31 units, this building has less sales activity. When the three floor penthouse failed to sell at $130M, Zeckendorf split the penthouse into two smaller units (a simplex and duplex) and sold them separately. Between 2018 - 2025; 46 units traded at an average of $5,259 SF with a 15% discount. In 2025 the penthouse buyer filed a lawsuit against Zeckendorf over potentially obscured views. Sales impact remains to be seen.

Key Sales Findings:

Supply outpaced demand. According to a 2021 Serhant study, nearly 44% of the units across the seven towers were empty at one point. Developers overestimated the depth of the buyer pool. New units coming to market have hurt resale values.

• 220 CPS is the king of sales with resales trading above sponsor prices. One57 reaped rewards from being first to market, but now faces losses. Resale gains are an exception, but not the norm across all buildings.

• Market Sentiment is key. 432 Park Ave initially saw strong sales, but lawsuits and perceived defects have tanked resales.

• Contextual Design and Value. 220 CPS combined timeless design and an experienced developer. Experimental designs like 111W57 and 432 Park Ave faced greater risk when market sentiment shifted.

Mixed Use

Does having a luxury retailer or hotel really drive value on Billionaires Row? Incorporating hotel or retail changes not only the programmatic mix of a tower but has an influence on the capital stack and value of the residential units. One57 boasts a hotel, while 111W57, 432 Park Ave, and Central Park Tower have retail components. 53W53 sits above MoMA, while 220 Central Park South and 520 Park Ave are purely residential.

Hotel

One57 sits atop a 5-star, 210 room Park Hyatt. Hyatt acquired this hotel for $390M in 2014. Savills / Knight Frank report an average 30% premium globally for branded residences compared to comparable non-branded stock –yet One57 has seen sharp losses. Why?

First, selling the hotel component allowed Extell to de-risk their balance sheet. Having a hotel on premises in 2014 allowed Extell to create a sense of place in a previously untested neighborhood. (Recall the 57th St corridor was less luxurious in the early 2010s).

Second, the Hyatt brand is more known for timeshares than luxury branded residences. Compared to Ritz Carlton, Aman, and Four Seasons’ robust residential programming, the Hyatt synergy feels uncertain. Finally, at this echelon of the market buyers already expect hotel style amenities. A hotel does not add services a potential resident could not find in a competing supertall. In conclusion, hotel mixed-use is beneficial to the developer and neutral to the resident.

Brand Comparison:

• Aman New York (Crown Building): 83 residences

$7,000 - $9,000 psf 3 years to sell out. Record-setting $psf, limited volume

• One57 / Hyatt:

$5,000 - $6,500 psf at peak Faster initial sell-out but price volatility during resale

Retail

111W57, 432 Park Ave, and Central Park Tower take separate approaches to retail. Central Park Tower sold the 323K SF 7-floor retail condo to Nordstrom for $400M. 432 Park Ave sold

the retail condo to Mackelowe for $411M who leased it to Phillips Auction house. Bonhams auction house announced plans to occupy the retail portion of 111W57. Selling the retail condo at Central Park Tower gave Extell capital to pay down debt and continue developing the tower. Nordstrom’s ownership ensures the retailer will be less likely to vacate the store. Retail is part of aspirational brand building. Associating with high-end stores or art auction houses help align a project with prestige and luxury. It signals to potential buyers an affiliation with culture. We suspect tenants were carefully selected for both urban activation and creating the brand. As with amenities, retail allows developers the chance to create value via lower floors. In conclusion, retail can de-risk development and create a sense of place for a new tower. However choosing the right retailer is pivotal.

Mixed Use Findings:

Retail and hotels are tools for brand creation in this high-end market, especially when building in an untested area. At best they add prestige – haute couture with Nordstrom and art with the auction houses. Pivotally, mixed-use allows developers to monetize lower floor space and reduce financial risk via sales or leases. For wealthy residents who have similar amenities at purely residential towers, mixeduse is neither additive nor detractive. However the wrong tenant – unclear brand partnership or disruptive (introduces traffic, noise, and visitors that undermine residential experience) – create risks beyond the developer’s control.

Conclusions

What drives value along NYC’s Billionaires Row?

Architectural Typologies:

• Location is king. Buyers favor direct Central Park frontage and unobstructed views. Obstructed views lead to lower sales prices.

• Buyers in this market favor floor plans with clear front-of-house (entertaining, family life) and back-of-house (service areas, kitchen, separate service elevator).

• 220 CPS, 432 Park Ave, and 520 Park Ave feature traditional layouts that shift structural columns into the facade (out of living areas). They lack curtain glass walls, opting for a more solid feeling.

• Architectural gimmicks (111W57 slenderness, 53W53 fenestration) and overly subjective interiors (One57) lose value when the market turns.

• Amenities are a balancing act. Lavish

amenities are table stakes, not value creators. However, failing to include amenities hurts values. Over-amenitization comes across as gimmicky.

• Application:

1. For a new market or product, focus on traditional, timeless, contextual architecture for the area.

2. Buyers want views, but not the vertigo or columns reminding them they live in a 1300 ft tower. Buyers want solidity.

3. Popular but overlooked amenity for NYC luxury market - porte cochere or private motor court for privacy and security.

Sales and Resales

• Confirmation Bias is real. Landing one wealthy buyer will attract others. Cultivating a sense of exclusivity stokes buyer demand.

• Developer execution is key - being able to cleanly complete a project. PR nightmares like lawsuits over defects can spook the market and tank a project faster than any design choices.

• 220 CPS buyer pool was largely Americando not over focus on flight capital.

• Being 1st to market with an A product is less effective than being 2nd to market with an A+ product (for NYC supertall condo).

• High value sales on higher floors drive building sales PSF - lower floors with smaller units do not command equal prices.

• Application:

1. Resale Values = great sites + great execution. 220 CPS succeeds because it is a different product - direct frontage and best layouts.

2. For UHNW clients, success depends on exclusivity, discretion, and premium product.

3. Breathless headlines screaming x PSF is usually a blended average.

Mixed Use

• Retail condos or hotels can be a powerful tool for developers to de-risk, monetize lower floors, create a sense of place, and pay off debt. It can also provide a sense of legitimacy and attract buyers who know the brand name.

• At this echelon of the market, mixed-use components are rarely additive to residents. They are neutral to negative.

Picking the wrong mixed-use tenant (either disruptive or brand not aligned) can have a negative effect on values.

Bibliography

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7 CityRealty Staff. “Two Super-Luxury Homes Linked to Jennifer Lopez Lead $570M Manhattan Sales; Resale at The Aman Closes Nearly $11K per Square Foot.” CityRealty, www.cityrealty.com/nyc/ market-insight/features/great-listings/ two-super-luxury-homes-linked-jenniferlopez-lead-570m-manhattan-sales-resalethe-aman-closes-nearly-11k-per-squarefoot/63704](http://www.cityrealty.com/ nyc/market-insight/features/great-listings/ two-super-luxury-homes-linked-jenniferlopez-lead-570m-manhattan-sales-resalethe-aman-closes-nearly-11k-per-squarefoot/63704).

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“Intellectualization” of real property in the ultraluxury housing market.

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20 Kahn, E. (2021, October 27). Why Gary Barnett is selling Central Park Tower at 25% off. The Real Deal. https://therealdeal.com/

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22 Mansion Global Staff. “Aman New York Penthouse Sells for $66 Million - A

Record Price Per Square Foot.” Mansion Global, www.mansionglobal.com/articles/ aman-new-york-penthouse-sells-for66-milliona-record-price-per](http:// www.mansionglobal.com/articles/ aman-new-york-penthouse-sells-for-66milliona-record-price-per).

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26 Staff, TRD. “Aman New York’s Final Closing Breaks Manhattan Record.” The Real Deal, 9 Jan. 2025, therealdeal.com/ new-york/2025/01/09/aman-new-yorks-final-closing-breaks-manhattan-record/

27 Staff, TRD. “Vlad Doronin Snags Final Closing at Aman New York for $66M.” The Real Deal, 9 Jan. 2025, therealdeal.com/ new-york/2025/01/09/aman-new-yorksfinal-closing-breaks-manhattan-record/. StreetEasy. (2023, July 10). Billionaires’ Row NYC: Midtown’s most luxurious street. StreetEasy Blog. https://streeteasy.com/ blog/billionaires-row-nyc/

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32 The Real Deal. (2024, September 13). Barnett’s Central Park Tower moves another discounted unit. The Real Deal. https:// therealdeal.com/new-york/2024/09/13/

barnetts-central-park-tower-moves-another-discounted-unit/

33 6sqft. (2023, May 15). $130M penthouse at 520 Park Avenue is now two separate units. 6sqft.com. https://www.6sqft. com/130m-penthouse-at-520-park-avenueis-now-two-separate-units/

34 6sqft Staff. “Facing Poor Sales, the Partners Behind Jean Nouvel’s 53W53 Seek Additional Price Chops.” 6sqft, www.6sqft. com/facing-poor-sales-the-partners-behind-jean-nouvels-53w53-seek-additional-price-chops/](http://www.6sqft.com/ facing-poor-sales-the-partners-behindjean-nouvels-53w53-seek-additional-pricechops/).

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Odd Lots

Odd Lots: Lessons for Infill Housing Development

Introduction

Approximately one out of every two renters struggle to find an adequate rental unit, instead paying a rate that is considered burdensome and deleterious for household wellbeing.1 At the same time, the median age of first-time homebuyers has increased to 40 years old, and the annual income required to afford the costs associated with entering homeownership now exceeds $125,000.2, 3

Against this backdrop, calls for increasing the housing supply are numerous. At present, the United States is confronting a housing shortage that some estimates indicate could be as high as 5.5 million units.4 To many, this is a key explanatory variable for the challenging conditions described above.

While these problems are far reaching, the severity of the housing shortage remains unevenly distributed. Housing markets in many highly developed cities are often the most undersupplied. This suggests that efforts to build new units will, at least in part, need to

occur within already-developed areas (i.e., “infill development”). Doing this presents the potential for several other positive outcomes as well, such as locating new development near existing job centers, transit, and other amenities. To the extent that new units are affordable for low-income households, these efforts can also play an important role in creating access to economic opportunities for households that may have previously struggled to find a foothold. Such aspirations inevitably confront the dilemma of securing land for these projects. In urban areas, surplus land is often scarce, difficult to develop, or expensive. As prime cuts of developable land become increasingly hard to come by housing developers are looking towards the offal of urban space: “odd lots.” These are parcels that, for one reason or another, pose development challenges beyond that of a more conventional site.

This study examines some of these efforts in order to answer the research question: What are the opportunities and challenges posed by odd lots, especially as it relates to infill development?

Defining and Identifying Odd Lots

The concept of an ‘odd lot’ is just as amorphous as the parcels it seeks to describe. As publications in the professional literature and news media suggest, odd lots earn their designation by demonstrating precisely what they are not – ‘normal’ lots, whose features pose ‘normal’ design & development challenges. A vast array of spaces have been lumped under this umbrella: legally encumbered lots, lots with rocky outcroppings, lots too far from transportation, yet also lots too close to highways.5

Towards a Geometric Definition of Odd Lots

However, one feature is mentioned far more frequently than any other as a defining quality of a lot’s oddness: its geometry. Invariably, articles have described parcels that are too small for a conventional market-driven design typology, and too irregularly shaped for anything but creative design solutions to work. Lots with “narrow”, “trapezoidal”, “triangular”, even “Nevada-shaped” geometries.6, 7 Can be identified analytically by calculating parameters based on their dimensions, allowing for systematic hypothesis testing and visual display of these oddly shaped parcels. To investigate the potential contained within undeveloped “odd lots” we leverage geometric features embedded in parcel datasets to derive their ‘oddness’ relative to their surrounding urban context and used GIS to

visualize and identify vacant odd lots with promising development potential. We next examined parcels in three cities, Boston, Philadelphia, and New Orleans, and explored case studies of odd lot development in the latter two to identify how financial, policy, and design intersect to produce development outcomes on buildings where irregular parcel geometry has a decisive effect on massing and form.

Methodology

Two major sources of precedent inform this project’s geospatial methodology. We began by learning from the work of Certain Measures studio in their “Form Maps” project. Leveraging data science and computational design techniques, the Form Maps team built an automated generative engine, the “RoweBot”, which analyzes, computes, relates, and develops a taxonomy of urban space. When applied to urban parcel datasets, RoweBot produces maps which allow designers to investigate urban morphological patterns through computation rather than intuition alone.8

Building on the RoweBot, Matt Conway and Nate Imai collaborated with students of their Texas Tech architecture studio to produce the research described in their published paper, “Pet Parcels”. Drawing on qualitative descriptions of odd, leftover “pet parcels” from decades of architecture theory, the authors leveraged the computational techniques of the Certain Measures team to systematically identify a subset of undeveloped parcels in Lubbock, Texas characterized by challenging spatial dimensions and potential for creative infill development.9

Our research builds on Certain Measures and Pet Parcels in three ways. First, we adapt their methodology to an R coding environment, building a custom script which, takes parcel geometries, and identifies three critical ratios (based on Pet Parcels methodology) that serve as hallmarks of parcel irregularity. These three ratios are: perimeter to area ratio, aspect (height to width) ratio of the minimum bounding box, and the ratio between the parcel’s area and the area of its minimum bounding box. From these three ratios we produce an ‘oddness index’ derived from their normalized sum. We next tested the hypothesized relationship, emergent in literature about odd lots, between the irregularity of parcel geometry and the absence of development on the parcel. Finally, we applied these calculations to parcel datasets of three cities – Boston, New Orleans, and Philadelphia –and identified promising sites for infill housing development on highly irregular, vacant parcels.

Results

To examine the relationship between parcel geometry and the presence or absence of development, we analyzed the correlation between the oddness index and parcel vacancy (i.e., lack of developed area) in Boston. We defined vacant parcels as parcels with no street address, and that did not have a use description indicating the presence of greenspace, utilities, infrastructure, or other public uses that render sites infeasible for development. Initial inspection of all parcels grouped by quintile according to oddness score indicates that the most irregular parcels are roughly three times as likely to be vacant as the least irregular. Though parcel vacancy rises with increasing lot irregularity, the majority of lots in Boston have seen development regardless of their position on the oddness distribution. This correlation between parcel irregularity and absence of development becomes much stronger when controlling for building age. Filtering for lots developed after 1990, we find that the majority of recent development has

occurred on more conventionally shaped lots, with the percentage of development occurring on highly irregular lots far lower than the broader population including developments from deeper in Boston’s past. A more robust analysis is required to make causal statements about lot development, but these trends fit closely with broader narratives of contemporary urban development. This exploratory analysis suggests a declining tolerance by developers for geometric irregularity in site selection.

To confirm the development potential of lots with high oddness scores, we mapped highly irregular Boston parcels using GIS and conducted a visual scan of parcels throughout Boston using Google Earth to identify sites that displayed promising development potential in spite of potentially challenging geometry. Though this was far from a comprehensive analysis of each mapped parcel, this exploratory analysis revealed several attractive sites throughout Boston.

Sachem Place, Roxbury

Lot size: 4.4k sf

Land value: $134,400

Owner: City of Boston

Monument Square, Charlestown

Lot size: 2.8k sf

Land value: $253,900

Owner: Private

Vacant parcels in Boston that are in the 95th percentile of the oddness index. Three “odd lots” with apparent development potential are highlighted as illustrative examples

Webster Street, Jefferies Point

Lot size: 5.6k sf

Land value: $163,800

Owner: Private

4 mi

Case Studies

To understand the specific mechanisms that govern development on odd lots like those identified in our analysis, we conducted two case studies. By interviewing architects that had completed projects on irregular parcels, we identified the opportunities that initially motivated them, as well as the unique design, regulatory, and financial challenges they encountered throughout the development process.

Philadelphia, Pennsylvania

Based in Philadelphia, the firm IS Architects (ISA) has designed several residential projects for odd lots within the city. This includes both multifamily projects, such as their 2019 project, XS House, as well as single-family homes, such as their 2018 project, Tiny Tower.

Tracing the origins of these sites, these odd lots were often created by past patterns of urban development, particularly urban renewal era projects. These lots, whether small or oddly shaped, pose development challenges due to their spatial configuration. As a result, many remain underutilized, serving purposes such as surface parking instead.

For example, the team’s XS House project was built on a parcel that is 93 feet wide and just 11 feet long. Located in the city’s Chinatown neighborhood, this parcel was a byproduct of construction on the Vine Street Expressway, which opened in 1959 and split the neighbor-

hood into two. The firm’s design ultimately helped to transform this long-vacant parcel into a 63-foot-tall building that boasts seven apartment units.

The firm’s Tiny Tower project, by contrast, is located on an alley street. Like its neighbors, the 12-by-29-foot parcel was once a parking lot for the adjacent residential buildings. The site now contains a six-level, 1,250-square-foot home. Notably, adjacent parcels have since followed suit, adding similar infill buildings.

Regulatory and Financial Takeaways

These efforts from Philadelphia offer multiple takeaways for projects that also seek to leverage odd lots.

1. Regulations imposed by city zoning and building codes both set the ceiling of what is feasible for these projects and make them developable in the first place.

One architect from ISA described the importance of “maximizing minimums” in these endeavors. For example, in the Tiny Tower project, the designers expanded several floors by approximately 30 percent beyond the lot’s footprint by incorporating code-permitted 3-foot façade projections. Meanwhile, when ISA’s XS House was constructed, the Philadelphia building code was notably more relaxed regarding staircase requirements. As a result, the project was able to provide the maximally allowed six levels of living space with just a single staircase. This was critical for maximizing the amount of usable space the project could deliver. Now, following a revision to the building code in 2018, this project would no longer be allowed by-right.

2. Unconventional projects may present unusual costs.

When designing Tiny Tower, ISA learned that conventional, prefabricated stairs would prohibit the team from meeting minimum head clearance requirements, as specified in the building code. This meant the team needed to procure a custom-built, steel staircase that could be hoisted into the site. The unique staircase created an interesting design feature that has appealing benefits, such as increased natural light, but it also significantly increased project costs. In total, the costs necessitated by the staircase represented half of the overall project budget. Though the firm explored ways to reduce this cost in a subsequent project, they found that it was ultimately too difficult to do so.

New Orleans, Louisiana

Based in New Orleans, the Office of Jonathan Tate (OJT) has explored odd lot residential development through it’s “Starter Home*” project. Spurred by rising demand for housing following the financial crisis and hurricane Katrina, OJT began exploring the potential for development on small, non-conforming lots throughout the city in 2014. This project led to the design and construction of multiple single-family homes, including 3106 St. Thomas.

The design team conducted a GIS analysis which revealed countless small lots throughout the city that had previously been overlooked. These lots were often physically hidden behind fences or overgrowth and were also restricted by complex zoning overlays, including historic preservation and flood regulations, layered on top of traditional land use controls.

3. Local housing policy can influence whether these projects are financially viable.

After XS House was completed, the owner took advantage of Philadelphia’s permissive short-term rental rules and listed several units on AirBnB. This suggests that allowing alternative tenancy models can broaden the potential market for unconventional units. In turn, this may help to offset the higher costs associated with odd lot projects.

Odd lots were particularly interesting to the OJT team in the context of first-time homebuyers. Their initial guiding question was “can we build a house [on an odd lot] for the median price of a home in the US?” (at the time, $250,000). To do this, OJT took a unique approach to pricing, attempting to think from the perspective of a homebuyer, not the real estate industry. They focused on delivering a home with standard per-square-foot development costs, but a lower overall price due to its smaller size, making it more desirable for first-time buyers.

To build 3106 St. Thomas, OJT worked closely with a development partner. This was

essential because “the [traditional] model for infill development is really driven by builder developers who don’t spend resources on custom housing” and prefer lots where they can implement pre-existing plans. This partnership came out of work OJT was already engaged in and was essential for the success of their odd lot development.

Regulatory and Financial Takeaways

Odd lot development in New Orleans provides several key learnings for development elsewhere.

1. Early adopters of odd lot development benefit from reduced acquisition costs.

Because many odd lots in New Orleans were seen as undevelopable prior to the construction of 3106 St. Thomas, the land value of small parcels was very low. OJT acquired the St. Thomas lot for roughly $25,000 dollars—a steep discount compared to land value in the surrounding area. These savings were then passed on to other parts of the project where costs were higher, making development feasible.

2. Vertical integration of architects and developers is critical to ensuring success and feasibility of construction on odd lots. Because odd lots demand tailored design solutions, close collaboration between developers and architects is essential for success. Size constraints combined with zoning requirements make it difficult for builder-developers to reuse existing designs, pushing them instead to commission highly customized drawings otherwise reserved for luxury development. This additional effort is balanced by the firm’s stake in development and construction enabled OJT to profit from a percentage of the houses sale in addition to a traditional architect fee.

3. Floorplans that do not compromise on program keeps odd lot development desirable. OJT’s single-family homes present smaller than average square footage, but the team’s clever designs enabled them to retain the same program as a traditional home. Reduced acquisition costs also allowed OJT to utilize higher quality materials and spend more time on spatial design solutions. Ultimately, this resulted in homes, like 3106 St. Thomas, that were in high demand, as evidenced by their quick sale after development.

Broader Reflections

At present, odd lot development often results in bespoke designs that respond to the peculiarities of the site which the building seeks to occupy. These unique conditions introduce idiosyncratic challenges in the development process, which may be exacerbated when projects require coordination across many different parties. Together, these characteristics risk rendering projects infeasible and undermining scalability. To take full advantage of the opportunities that odd lots present, contemporary home design practices will need to be reimagined.

Our analysis suggests that past eras of home building, which utilized smaller lots, may provide a helpful jumping off point, though innovation will also be essential. Cities can play an important role in this process by helping to create the conditions for odd lot development to flourish, such as by establishing flexible, by-right zoning. As odd lot projects are small by most current standards, they struggle to absorb cumbersome variance processes.

In the future, this topic would benefit from further research on the role that public land can play in catalyzing development. Our research showed that public agencies in cities such as Boston are the owners of numerous odd lots. To the extent that these sites can be leveraged, cities may be able to reduce acquisitions costs and pave the way for new affordable housing development.

Bibliography

1 (2025). The State of the Nation’s Housing 2025. The Joint Center for Housing Studies of Harvard University. https://www.jchs. harvard.edu/sites/default/files/reports/ files/Harvard_JCHS_The_State_of_the_ Nations_Housing_2025.pdf

2 Ibid.

3 Carpenter, Julia (2025, November 6). FirstTime Home Buyers Are Older Than Ever. The New York Times. https://www.nytimes. com/2025/11/06/realestate/first-timehome-buyers.html

4 McCue, D. & Huange, S (2024, January 29). Estimating the National Housing Shortfall. The Joint Center for Housing Studies of Harvard University. https://www.jchs. harvard.edu/blog/estimating-national-housing-shortfall

5 Chen, S. (2019, February 15). Wanted: The Oddest Lots. The New York Times. https:// www.nytimes.com/2019/02/15/realestate/ wanted-the-oddest-lots.html

6 ibid.

7 CityRealty Staff. (2016, July 20). Upper East Side Building Rises on Sliver of Land Alongside Queensboro Bridge Off-Ramp | CityRealty. City Realty. https://www. cityrealty.com/nyc/market-insight/features/ the-new-skyline/upper-east-side-buildingrises-sliver-land-alongside-queensborobridge-off-ramp/4744

8 Witt, A. (n.d.). Certain Measures. Retrieved December 7, 2025, from https://www.certainmeasures.com/projects/form-maps

9 Imai, N., & Conway, M. (2022). Pet Parcels. 660. https://doi.org/10.35483/ACSA. AM.110.89

The Great Repositioning

How Policy and Economics are Reshaping New York City through Office-to Residential Converisons

The Great Repositioning

Introduction

The New York City real estate market is currently going through one of its biggest and most important changes in nearly a century. For most of the 20th century, the city was built on a very strict idea of how space should be used. This idea created a city of separate zones. There were quiet neighborhoods where people lived and slept, and there were massive, busy districts where people worked. These Central Business Districts, or CBDs, like Midtown Manhattan and the Financial District, were designed to be packed with workers during the day and empty at night. However, the COVID-19 pandemic acted as a huge force that broke this old model forever. It started a crisis that has forced city planners, developers, and government leaders to completely rethink the potential of the built environment.

The cause of this change is not just one thing. It is a mix of big economic factors that have all happened at the same time. These factors include record-high vacancy rates, the permanent shift to hybrid work where people stay home part of the week, and a painful rise in interest rates. Together, these forces have made millions of square feet of office space functionally useless¹. In the past, a drop in demand might have just lowered rents. Today, the problem is deeper. Old buildings are not just expensive; they

are unwanted. In response to this emergency, New York has started a bold two-part plan to save its downtowns. This involves a major tax break called the 467-m tax abatement and a massive new set of zoning rules known as the City of Yes for Housing Opportunity3,4

To understand why these programs are so urgently needed, one must first understand how deep the hole is for the office sector. COVID-19 did not merely pause office usage for a few months. It fundamentally changed how companies and workers behave. The “flight to quality” has become the main story in the rental market. Big companies are shrinking their office footprints. When they do sign a lease, they are choosing smaller, brand-new spaces in trophy buildings like One Vanderbilt or Hudson Yards. They want high ceilings, fresh air systems, and modern designs to get workers back to their desks. Meanwhile, they are leaving older, Class B and Class C buildings to sit empty. These are the buildings built in the 1960s, 70s, and 80s that feel dark and dated.

The numbers are shocking. According to data from Moody’s and Cushman & Wakefield, the citywide vacancy rate is stuck around 12.7%¹. Even more concerning, Manhattan’s office availability rate skyrocketed to 22.3% as of August 2025¹. This is more than double the average of 9.4% seen in the five years before the pandemic.

The total amount of empty space is hard to imagine. Available supply has climbed 81.6% over the last five years, reaching nearly 98 million square feet¹. To put that in perspective, that is equal to dozens of Empire State Buildings sitting empty.

This sudden increase in empty space crashed violently into the Federal Reserve’s money policy. In an effort to stop high inflation after the pandemic, the Fed raised interest rates 11 times in under two years. This hurt the finances of office owners more than almost anything else. Real estate is an industry that runs on debt. Landlords buy buildings with loans. Many landlords who borrowed money at historic low rates of 3% found themselves facing new rates of 9% or higher when their loans came due. The math simply stopped working. Buildings that used to make enough money to pay the bank could no longer cover their debts. This led to property values dropping by 50% to 70% compared to 2019 levels. For example, the building at 1740 Broadway saw its value crash from hundreds of millions of dollars to a small fraction of that. Similarly, the value of 222 Broadway dropped from $664 per square foot to just $195 per square foot4

Faced with a “death spiral” of falling rents, rising vacancies, and growing debt payments, owners began to look for a way out. They needed an exit ramp to avoid losing their properties to the bank. At the same time, New York City was dealing with a serious problem on the other side of the equation: a severe shortage of housing. The number of available apartments in Manhattan had fallen to a critical low of roughly 3%, driving rents to record highs and hurting working families4. The solution seemed obvious. The city needed to turn the empty offices into needed homes.

However, conversion is not a simple fix. It is physically complicated and financially risky. Office buildings are often built with very deep floors, meaning the center of the building is far from any windows. Residential laws require every bedroom to have a window, which is hard to do in a thick office tower. Also, plumbing and heating systems in offices are built for the whole building, while apartments need individual control. Furthermore, zoning rules often ban apartments in business districts entirely5. To bridge this gap, the state and city introduced two main supports. The 467-m program provides the tax relief needed to make the budget work. It effectively pays for the high cost of construction

in exchange for affordable housing². Meanwhile, the City of Yes plan removes the old rules that made it illegal to convert buildings built after 1961³. Together, these plans are not just saving failed buildings. They are attempting to turn the crisis of the 2020s into the housing supply of the 2030s.

The Impact of the 467-m Program

While the desire to turn offices into homes is strong, the financial reality is often a block. The 467-m Tax Incentive, formally known as the Affordable Housing from Commercial Conversions (AHCC) program, was designed to solve this “penciling” problem². “Penciling” means making the math work so a bank will lend money for the project. Without tax relief, the cost of totally rebuilding a skyscraper is often higher than the rent money it would make. This includes replacing outer walls, cutting holes in concrete floors for courtyards, and running thousands of feet of new plumbing pipes. This is especially true when factoring in New York City’s very high property taxes, which can eat up a huge part of a landlord’s income.

Program Mechanics and Economics

The 467-m program is not a simple handout. It is a structured deal between the developer and the city. It offers a large property tax cut for a period ranging from 20 to 35 years². The length of the tax cut depends on where the building is located and when the project starts. The best benefits are reserved for the Manhattan Prime Development Area (MPDA). This area is generally everything south of 96th Street in Manhattan, where the biggest office towers are. In this zone, the tax cut can last for up to 35 years if the construction begins early enough.

The program also includes a “phase down” period. After the main benefit period ends, the tax break does not disappear all at once. Instead, the discount is reduced by 10% every year over a five-year period until the building pays full taxes again². This helps the owner adjust slowly to the normal tax rate.

In exchange for this massive help, developers must agree to a strict rule. They must promise that 25% of the converted units will be for low-income households². This is a permanent

requirement. Specifically, the income limit for these units ensures that the new housing serves normal people, like teachers or service workers, rather than just the very rich who usually live in luxury towers.

The effect of this incentive on a project’s profit is huge. An analysis of projected cash flow shows the difference clearly. In a sample conversion project without the 467-m benefit, a developer might face a property tax bill of $21 per square foot. This high cost eats into the profit, resulting in a Net Operating Income (NOI) of roughly $40 per square foot. This low profit margin makes it hard to get a loan. However, under the 467-m program, that tax bill collapses to just $2 per square foot. This is a 91% reduction in tax costs. Even though the developer has to charge less rent for the affordable units, which lowers the total rent collected from a projected $75 per square foot to $64 per square foot, the tax savings are much larger than the lost rent. The final profit actually increases by roughly 21% to $48 per square foot4. This “tax wedge” is the key profit margin that makes the project worth doing.

Case Study: 25 Water Street

No project better shows the power and potential of the 467-m program than 25 Water Street, also known as SoMa. Located in the Financial District near the South Street Seaport, this property was originally a monolithic office tower finished in 1969. For decades, it was used by huge banks like JPMorgan Chase. By the early 2020s,

however, it was a perfect example of a “stranded asset.” It was a massive, aging building with very deep floors and small windows that no modern office tenant wanted to rent.

Developers GFP Real Estate and Metro Loft, leveraging the 467-m program, embarked on the largest office-to-residential conversion in the history of the United States. The scale of the project is hard to overstate. It involves a gut renovation of the existing structure and a 10-story vertical expansion. This means they are building a new building on top of the old one. When finished, this site will be a luxury rental complex with approximately 1,320 residential units.

The conversion required radical architectural intervention. Because the original building was so thick, simply putting walls up would create apartments with no windows in the bedrooms, which is illegal. To fix this, the developers had to carve two massive courtyards through the center of the building, cutting through steel and concrete from the roof down. This ensured light and air could reach the interior units. This costly procedure would have been financially ruinous without tax incentives. The project also features amenities that rival the city’s top hotels, including a swimming pool, fitness center, spa, and an indoor basketball court.

Crucially, 25% of these 1,320 units are permanently affordable under the 467-m guidelines. This creates a mixed-income community in the heart of the Financial District. This is an area historically exclusive to high finance and wealthy renters. The financial benefits to the developer are equally significant. The project is estimated to realize $67 million in total tax savings in present value terms. 25 Water Street serves as the proof-of-concept for the entire program. It activates an underutilized asset, adds meaningful supply to a constrained market, and aligns private developer returns with the public policy goal of affordable housing.

Broader Impact

The success of 25 Water Street has triggered a wave of activity. Other projects, such as the conversion of 55 Broad Street, have followed suit. The program has turned potential foreclosures into active construction sites. By 2025, conversion starts had surged to 4.1 million square feet in just the first eight months of the year¹. This surpassed the total for the entire previous year. With another 8.8 million square feet proposed,

467-m has arguably saved the downtown office market from a total collapse in values¹. It provides a floor price for old buildings based on their conversion potential rather than their failing office rents.

The Impact of City of Yes

If 467-m provides the money, the “City of Yes for Housing Opportunity” provides the permission. Prior to this initiative, New York City’s zoning code was a relic of a different era. The most paralyzing restriction was the “cutoff date.” In many commercial districts, only buildings constructed before 1961 or 1977, depending on the specific zone, were legally eligible for conversion to residential use3,5. This meant that the surplus of office buildings constructed during the booming 1980s was legally locked into commercial use regardless of vacancy rates. Even if a building was empty and the owner had the money to convert it, the law said no.

The Zoning Unlock

The City of Yes amendment, passed in late 2024, shattered these barriers. The most significant change was moving the eligibility cutoff date to 1990³. This single administrative stroke instantly made millions of square feet of “younger” office stock eligible for conversion. It expanded the conversion zone citywide rather than limiting it to traditional enclaves like the Financial District.

Furthermore, the City of Yes introduced the Universal Affordability Preference (UAP). This allows developers to add 20% more density (Floor Area Ratio, or FAR) to a project if the additional space is used for affordable housing³ This bonus space can make a huge difference in

the profit of a project. The plan also addressed the practical nightmares of conversion. It relaxed bulk requirements and allowed for the transfer of development rights (TDR) from landmarked sites more easily. Critically, it eliminated parking mandates in the “Inner Transit Zone,” which covers most of Manhattan and parts of the other boroughs³. In a city where digging underground parking garages can cost millions of dollars and delay projects by years, removing this requirement was a major unblocking mechanism.

Case Study: 1730 Broadway

One of the beneficiaries of this new environment is 1730 Broadway. A 26-story office tower located near 56th Street, this building was purchased by Yellowstone Real Estate Investments for approximately $185 million. This price was a steal compared to its prior valuation, showing how much values have dropped. Under the previous zoning regime, converting a building of this era and density in Midtown would have been fraught with regulatory hurdles regarding light, air, and rear yard equivalents.

Leveraging the new flexibility provided by City of Yes, Yellowstone has filed plans to convert the property into 422 residential units8. The project highlights the “Midtown migration” of conversions. While FiDi was the cradle of conversions due to its pre-war stock, City of Yes has pushed the trend north. 1730 Broadway demonstrates how mid-century and late-century office buildings, which often have better views and locations than their downtown counterparts, can be repurposed. The conversion is budgeted at roughly $34.7 million for the alteration work alone. This figure is only viable because the zoning allows for the maximization of the existing building envelope without punitive reductions in floor area.

Case Study: 29 West 35th Street

If 25 Water is the giant of 467-m, 29 West 35th Street represents the “missing middle” that City of Yes serves. This project is notable for being the first major conversion to move forward under the specific Midtown South Mixed-Use Plan, a component aligned with the broader City of Yes goals. A joint venture led by Infinite Global Real Estate Partners purchased the property with plans to convert it into 107 rental apartments9

This project utilizes both the City of Yes zoning flexibility and the 467-m tax incentive. The developers plan to deliver 80 market-rate units and 27 affordable units. The significance of 29 West 35th lies in its location. Midtown South has historically been a manufacturing and office district with very little residential zoning. It was a place where people worked, not lived. City of Yes effectively re-zones these central, transit-rich blocks to allow people to live near where they work. The project anticipates a “live-work” lifestyle and offers amenities like coworking spaces within the building, acknowledging the hybrid work reality. It proves that conversions need not be 50-story skyscrapers to be impactful. Smaller, infill conversions in dense districts are crucial for neighborhood vitality.

Case Study: 5 Times Square

Perhaps the most ambitious test of the new zoning landscape is 5 Times Square. This is a relatively modern building completed in 2002 for Ernst & Young6. Under the old 1961/1977 cutoffs, converting a building built in 2002 would have been impossible. It would have been considered too new to touch. City of Yes, by pushing eligibility to 1990 and offering flexibility for newer buildings through special permits and the UAP, has opened the door for this massive undertaking.

RXR Realty is spearheading the plan to convert this 1.1 million-square-foot tower into 1,250 residential units. The irony of 5 Times Square is palpable. It was built as a state-of-the-art office tower only 20 years ago. Its obsolescence is not structural; the building is strong and safe. The obsolescence is economic. The tenant moved to Hudson Yards to get an even newer building, and backfilling a million square feet in Times Square became impossible in the current market. The conversion of 5 Times Square is a massive engineering challenge due to its deep floor plates. However, the sheer scale of housing it provides, including 313 affordable units, makes it a city-shaping project. It signals that even the core of the commercial core, the “Crossroads of the World,” is destined to become a residential neighborhood. The project relies heavily on the density bonuses and the relaxed regulations regarding residential amenities in commercial zones facilitated by City of Yes.

Case Study:

55 Broad Street and 30 Broad Street

55 Broad Street serves as a perfect counterpoint to the Midtown examples. It is a 30-story, 970,000-square-foot building in the Financial District purchased for $163 million in 2023. Unlike the pre-war towers of Wall Street, 55 Broad is a post-war modernist structure. The conversion is transforming it into 571 luxury rental units. This project exemplifies the “lifecycle” of the new conversion market. A developer buys at a distress price, executes the conversion using tax incentives, and then seeks an exit. As noted in industry reports, the property is already being marketed for sale at approximately $475 million post-conversion. This potential 3x return on cost is the signal the market needs that conversions are not just charity. They are a profitable business.

If we consider 30 Broad Street in this context, it represents the evolution of the market. Initially, ownership at 30 Broad considered a “repositioning” strategy, which involved upgrading the lobby and amenities to compete for the remaining office tenants¹¹. They hoped to stay as an office building. However, the momentum of the market has shifted. New filings indicate that InterVest Capital Partners is now planning to convert the 48-story tower into 571 residential units¹¹. This pivot from office renovation to residential conversion highlights the new reality. Even well-located office buildings are often more valuable as apartments in the current economic climate.

Cons and Criticisms of City of Yes

Despite the optimism from developers and city planners, the City of Yes is not without its detractors. The plan involves huge changes, and naturally, there are concerns. The “Cons” section of the proposal highlights significant structural inequities that have sparked debate in city hearings.

First, there is the issue of Uneven Geographic Impact. Critics argue that the City of Yes is described as a “blanket” policy for the whole city, but in reality, it covers the city unevenly. Wealthier, lower-density neighborhoods in the outer boroughs have historically been very successful at resisting upzoning¹. They use political pressure and legal challenges to get “carveouts,” meaning the rules don’t apply to them. Consequently, the bulk of the new density and conversion activity is concentrated in already dense areas or lower-income neighborhoods that lack the political capital to fight back. This raises concerns about spatial equity. Critics ask why the burden of solving the housing crisis is not being shared equally by all districts10.

Second, and perhaps most pragmatically, there is the issue of Infrastructure Strain. This concerns the “unseen city,” which is the sewer and water systems underground. New York’s infrastructure is ancient, and many sewer pipes date back 100 years. The City of Yes encourages high-density residential use in areas with these aging pipes. The problem is that residential buildings use much more water and generate much more sewage than office buildings. Offices are empty at night and on weekends, but apartments have people showering, running dishwashers, and doing laundry 24/7. Residents and community boards have testified that the grid cannot handle

the load. They fear increased street flooding and sewer backups, especially as climate change intensifies rainfall events, leading to more “Combined Sewer Overflows” where sewage mixes with rainwater¹.

Third, there is the fear of Transit Congestion. While the removal of parking mandates is lauded by urbanists who want a car-free city, locals in the “Outer Transit Zones” fear it will lead to chaos. They worry that new residents will still own cars but will park them on the street, increasing congestion. Furthermore, adding thousands of residents to neighborhoods like Midtown South or the Financial District puts immense pressure on subway platforms and bus lines. These systems were designed for commuter flows that move in during the morning and out at night. They were not designed for the chaotic, bidirectional travel of a 24/7 residential population, and critics argue the MTA is not ready for this shift¹.

Conclusion

The convergence of the 467-m tax incentive and the City of Yes zoning reforms represents the most significant reimagining of New York City’s real estate market since the 1961 Zoning Resolution. We are witnessing the end of the single-use Central Business District and the birth of the 24/7 mixed-use metropolis.

The 467-m program has successfully bridged the financial chasm. By reducing the property tax burden by over 90% in some cases, it has made the impossible math of conversion possible². Without it, buildings would simply rot. Projects like 25 Water Street and 55 Broad Street stand as testaments to this success. They prove that obsolete office towers can be reborn as vibrant housing engines that generate developer profit while delivering thousands of permanently affordable units.

The City of Yes has provided the necessary regulatory oxygen. By updating the archaic cutoff dates to 1990 and introducing the Universal Affordability Preference, it has expanded the playing field from a few blocks in Lower Manhattan to the entire city³. 1730 Broadway and 5 Times Square show that even the most corporate, commercial corridors of Midtown are ripe for residential reinvention.

However, this transition is not risk-free. The concerns regarding infrastructure strain, spatial

equity, and the uneven distribution of density are valid and require careful management. As the city rushes to approve an additional 8.8 million square feet of conversions, it must ensure that the sewers, subways, and schools can keep pace with the population shift¹. If the city adds people without adding infrastructure, the quality of life will suffer.

Ultimately, the conversion movement is a survival strategy. New York City cannot afford to have 98 million square feet of empty office space hollowing out its tax base. If those buildings lose value, the city loses tax money, which pays for police, fire, and schools. The combination of 467-m and City of Yes is an imperfect but necessary evolution. It is a bold attempt to turn the “death spiral” of the commercial office market into a lifeline for a housing-starved city. As cranes dismantle the cubicles of the past to build the living rooms of the future, New York is once again proving its defining characteristic. It is a city of resilience through reinvention.

Bibliography

1 Cushman & Wakefield. Office to Residential Conversions Surge to Record Levels in New York City. October 2025.

2 New York City Department of Housing Preservation & Development (HPD). 467-m Tax Incentive: Affordable Housing From Commercial Conversions. 2025.

3 City of New York, Department of City Planning. City of Yes for Housing Opportunity: Zoning Resolution Amendment. 2024.

4

Office of the New York City Comptroller. Office-to-Residential Conversions in NYC: Economics and Fiscal Estimates. 2025.

5 Greenberg Traurig. NYC Zoning Updates: City of Yes Reshapes Housing Development Rules. January 2025.

6 New York State Press Office. Governor Hochul and Mayor Adams Announce Major Office-to-Housing Transformation at 5 Times Square. May 2025.

7 Financial Times. New York’s empty offices get a second life as apartments. 2025.

8 Commercial Observer. Yellowstone Plans 422-Unit Office-to-Resi Conversion at 1730 Broadway. March 2025.

9 Connect CRE. JV Acquires Offices for First Major Conversion Under New Midtown South Plan (29 West 35th Street). October 2025.

10 Community Service Society of New York (CSSNY). A City of Yes and a City for All: The Mayor and City Council’s Grand Zoning Bargain. 2025.

11 Commercial Search. InterVest Files To Convert FiDi Office Tower (30 Broad St) Into 500+ Apartments. November 2025.

High-rise Mixed-use Hotels

Four Seasons Hotels in the U.S., China and Middle East

High-rise Mixed-use Hotels

Introduction

High-rise mixed-use hotels have evolved into powerful urban instruments, shaping value far beyond their hospitality function. In this chapter, we will compare these certain developments in the U.S., Middle East, and China, under the premise of Four Seasons, to reveal how regional context drives differences in form, program stacking, and market positioning. By examining architectural strategies, functional integration, and economic outcomes, we highlight how the luxury brand operates as an anchor, lifting residential premiums, supporting mixed-use performance, and influencing entire submarkets. Understanding these dynamics is essential for grasping why super-tall hospitality projects matter not just as buildings, but as catalysts for broader urban and economic transformation.

History and development timeline

For these three regions, North America built the earliest high-rise hotels, evolving from early skyscraper hospitality to 1970s megastructures and finally today’s hoteldriven branded residences such as One Dalton. China’s progression mirrors its real-estate boom: starting with diplomatic and JV hotels in the 1980s–1990s, then landmark sky-hotels in the 2000s, and now large mixed-use towers with branded residences where the hotel acts as a value anchor. The Middle East followed a different path, using hotels as iconic, highly expressive architectural statements since the 1999 Burj Al Arab era, with hospitality consistently serving as the core driver of districtlevel value and identity.

Thus, the development patterns vary across regions. North America clusters in major gateway cities and is dominated by global luxury brands, with mature hotel–residence hybrid typologies. The Middle East concentrates on Gulf capitals, featuring a broad mix of international operators and highly integrated

mixed-use towers. China’s clusters align with top-tier economic centers, where international and Asian luxury brands coexist, and sky-hotels are commonly embedded within dense multiprogram developments including retail, office, and branded residences.

Four Seasons Hotel Brand

Four Seasons Hotels and Resorts began in 1961 when founder Isadore Sharp opened a small motor hotel in Toronto. What started as a modest venture soon became a global hospitality leader, driven by Sharp’s belief that exceptional, personalized service, not extravagance alone, would define the future of luxury travel. This philosophy shaped the company’s early growth across North America and Europe in the 1970s and 1980s, where Four Seasons introduced industry-changing standards such as 24-hour concierge service, twice-daily housekeeping, and a service culture rooted in the “golden rule.”

As the brand matured through the 1990s and 2000s, Four Seasons transitioned from a traditional hotel operator into a global luxury platform, expanding into major international markets including the Middle East and AsiaPacific. Its asset-light management model allowed the company to scale while maintaining strict control over quality and consistency. Iconic properties, such as Four Seasons Riyadh at Kingdom Centre, demonstrated its ability to blend local context with globally recognizable service excellence.

Today, with more than 125 hotels, resorts, and branded residences, Four Seasons continues to evolve through wellness innovation, luxury residential offerings, and design-led experiences, solidifying its position as one of the most respected names in hospitality.

Typical Four Seasons Hotels in the U.S., Middle East

and China

Four Seasons Hotel One Dalton Street

The first case examined in this comparative study is the Four Seasons Hotel One Dalton Street, Boston, a project that demonstrates how luxury hospitality, branded residences, and high-rise design intersect in a mature North American gateway market. Located in Boston’s Back Bay, one of the city’s strongest commercial and cultural districts, the tower benefits from proximity to Newbury Street, the Prudential Center, major museums, universities, and Boston’s core leisure and business generators. The property enjoys excellent transit accessibility, uninterrupted visibility, and expansive city and river views. However, relative to global luxury hotel benchmarks, its uniqueness, a key differentiator in the ultra-luxury segment, lands slightly below that of more iconic or historically distinctive competitors.

Opening in 2019, One Dalton stands 742 feet tall and spans 850,000 square feet, combining a 215-key hotel with 180 branded for-sale residences. The architectural design by Pei Cobb Freed & Partners, with interiors by Bill Rooney Studio, employs a sharply refined triangular floor plate that gives the tower a sleek vertical expression. This clarity of geometry, coupled with generous glazing and a sharply tapered crown, positions the building as a designforward tower within the Back Bay skyline. The

lobby, amenity floors, and upper-level residence spaces are expressed through large, open interior volumes, reinforcing a consistent aesthetic of understated luxury.

Programmatically, One Dalton is a case study in clear functional stacking, a defining characteristic of branded residence–hotel towers in North America. The hotel occupies floors 1–23, including meeting spaces, F&B outlets, ballroom levels, wellness/spa floors, and administrative back-of-house functions. The residences begin on floor 24 and extend to the top, with private amenities placed at strategic vertical breaks, such as the dedicated residential amenity floor on 24F and the Private Residences’ Club Lounge on 50F. Each use has an independent ground-floor lobby, separate elevator banks, and controlled circulation. This intentional separation minimizes crosstraffic between guests and residents while strengthening the exclusivity of the residential component. In effect, the building’s organization uses hotel service excellence to elevate the branded residence experience, without allowing the hotel’s high volume of daily activity to dilute residential privacy.

Turning to market fundamentals, the hotel competes within the Boston CBD luxury and upper-upscale segment. CoStar market data indicates that while the broader Boston hotel market saw sharp pandemic-era fluctuations, performance has stabilized with healthy leisuredriven demand and partial recovery in business travel. Forward projections suggest that RevPAR growth will moderate to around 0.1% by late 2025, signaling a return to steady, rather than expansionary, performance. Segment-level analysis shows that the Luxury–Upper Upscale category consistently outperforms in Boston, driven largely by leisure guests, who maintain the strongest spending power and willingness to pay for premium experiences. This dynamic has supported ADR resilience even as contract and group segments lag.

Yet, when benchmarked against nearby luxury competitors, One Dalton does not emerge as the submarket’s rate leader. Using OTA-based daily pricing (since single-property ADR data is limited), One Dalton ranks around merely sixth among comparable hotels within a 10-minute drive. This finding suggests that high-rise form alone does not secure rate leadership, a key insight from this case. In Boston, cultural character, historical resonance, and differentiated design identity play substantial roles. Properties such as XV Beacon and The Newbury demonstrate how strong architectural heritage and lifestyle resonance can translate into superior pricing power. Brand premium, height, design, and mixed-use synergy remain meaningful, but they do not fully override the nuanced competitive dynamics of a mature luxury hotel market.

Where height and branding show far clearer value-capture is in the building’s residential component. Market data from CoStar and BLR indicates that Back Bay/South End market pricing averages $810,000 per unit for 4–5 Star properties and $580,000 per unit for 3 Star assets. Against this backdrop, One Dalton’s branded residences command prices roughly 2x higher on a per-unit basis. Even after accounting for data imperfections and the fact that these figures reflect per-unit rather than per-squarefoot pricing, an adjusted estimate still suggests an 80%–100% premium attributable to brand, height, design quality, and service standards.

Cap rate implications further illustrate this premium. A simplified cap rate calculation using third-party rental and sales data shows that One Dalton’s implied cap rate is at least 49 basis points lower than the market average, an indicator of strong willingness to accept a lower yield in exchange for the stability and prestige of the Four Seasons brand. In essence, the branded residence model transfers the tower’s architectural and hospitality-driven value into higher, more stable residential pricing, a pattern consistent with North American high-rise mixed-use development.

Collectively, these findings reinforce a key conclusion: high-rise hotels do not automatically dominate hotel ADR in mature markets, but their integration with branded residences can generate significant value uplift on the residential side. One Dalton demonstrates how design clarity, brand strength, and mixed-use configuration converge to create a project where the hotel’s operational excellence elevates residential value, even if the hotel itself occupies a middle position within the luxury pricing hierarchy. This duality, moderate hotel pricing performance but outsized residential premium, is at the core of why the branded-hotel-residence model has become so economically compelling in North American gateway cities.

Four Seasons Hotel Riyadh

The Four Seasons Hotel Riyadh at Kingdom Centre stands as one of the leading luxury hospitality assets in Saudi Arabia and the wider Gulf region. Since opening in 2003, the hotel has played a central role in defining high-end accommodation in Riyadh, serving business leaders, diplomats, and international travelers who seek privacy, world-class service, and convenience. Its exceptional performance is rooted in the strength of the Four Seasons brand and the strategic advantages of its placement within the Kingdom Centre tower, one of Riyadh’s most iconic mixed-use developments. Together, these attributes enhance the hotel’s pricing power, stability, and long-term real estate value.

Like all Four Seasons properties, the Riyadh hotel emphasizes personalized service, discretion, and elevated design. Its 274 guestrooms and suites blend contemporary luxury with subtle cultural influences, appealing to both international executives and regional guests. The hotel’s amenities, award-winning restaurants, gender-separated fitness facilities, a spa, and extensive meeting and event spaces, establish it as a hub for corporate gatherings, government delegations, and high-profile social events.

Four Seasons’ global operational standards reinforce this positioning. The brand’s rigorous training, consistent service culture, and loyalty network attract high-spending travelers accustomed to Four Seasons properties around the world. As a result, the Riyadh location commands premium ADRs and strong occupancy levels relative to regional competitors. Even during economic fluctuations, the hotel has retained its footing, demonstrating the resilience of both the brand and Riyadh’s growing importance under Saudi Arabia’s Vision 2030 development strategy.

The Kingdom Centre is one of the most significant real estate landmarks in Saudi Arabia, combining luxury retail, premium office space, the Four Seasons Hotel, private residences, and the iconic Sky Bridge. For the Four Seasons Riyadh, this placement provides several intrinsic advantages that strengthen operational performance, elevate the guest experience, and enhance the hotel’s long-term value.

The Kingdom Centre includes some of Riyadh’s most desirable Grade A office floors, home to major financial institutions, private equity firms, global corporate offices, and advisory firms. This co-location fosters a mutually reinforcing ecosystem:

• Business travelers stay at the Four Seasons because their meetings are within or near the tower.

• Corporate tenants value having a worldclass hotel in the same building for client hosting, executive accommodations, private dining, and conferences.

• The hotel benefits from a built-in base of recurring corporate demand, which stabilizes occupancy and revenue across business cycles.

This ecosystem strengthens both tenant retention in the office portion and demand stability for the hotel, an advantage not shared by standalone luxury hotels.

The Kingdom Centre Mall is one of Riyadh’s top luxury retail destinations, offering high-end brands, cafes, fine dining, and essential services. Direct access from the hotel enhances guest convenience while increasing the property’s appeal to leisure travelers and long-stay business guests. The mall’s foot traffic and retail offerings complement the hotel’s amenities and broaden non-room revenue opportunities through partnerships and events.

The Kingdom Centre tower’s distinctive inverted arch and Sky Bridge give it global architectural recognition. This visual identity symbolizes Riyadh’s economic and cultural transformation. Being located within a landmark building amplifies the hotel’s marketing reach and attractiveness for internationally significant events, conferences, and diplomatic missions. This symbolic capital contributes directly to sustained pricing strength and the hotel’s position as one of the most desirable hospitality assets in the region.

Security is a top priority for prominent travelers, foreign officials, and business executives. The Kingdom Centre’s design, controlled entry points, and security infrastructure allow the hotel to offer a level of safety that standalone hotels cannot easily replicate. This has significant implications for long-term demand, among embassies and international corporations.

The mixed-use composition of Kingdom Centre, retail, office, hospitality, and residential, reduces volatility across economic cycles. Declines in office leasing can be offset by strong hotel demand; fluctuations in retail spending do not necessarily impair hotel performance. This diversification helps the property preserve longterm value and makes the Four Seasons Riyadh more resilient than single-use assets.

Real estate market data and reports show that properties near Kingdom Centre experience premium rent growth, higher land values, and stronger investor interest. The presence of the Four Seasons within the building reinforces these dynamics by anchoring a global luxury standard in the heart of Riyadh’s commercial district.

The Four Seasons Hotel Riyadh at Kingdom Centre exemplifies how a globally recognized luxury brand can thrive within a landmark mixed-use development. The hotel’s integration into Kingdom Centre enhances its prestige, operational efficiency, and market positioning, while providing substantial advantages through office synergies, retail access, prime location, security, and architectural identity. As Riyadh continues its rapid economic transformation, the Four Seasons stands as both a beneficiary and contributor to the city’s evolution, ensuring long-term stability and sustained demand within one of the Middle East’s most dynamic urban landscapes.

Four Seasons Hotel Guangzhou

The last case in this comparative study examines the Four Seasons Hotel Guangzhou, an award-winning project demonstrating how luxury hospitality integrates into a mega-scale mixed-use tower in China’s fastest-growing urban districts. Located in the heart of Tianhe CBD, this project benefits from its prime location and proximity to major civic institutions such as the Guangdong Museum, Guangzhou Opera House, and the city library. Across the Pearl River is the Guangzhou International Convention and Exhibition Center, which hosts the Canton Fair and draws significant international business travel. The tower sits directly above a metro interchange, providing fast connections to expressways, high-speed rail stations, and the airport. With panoramic Pearl River views and clear skyline visibility, the location works well for both business and leisure travelers.

Opened in 2012, the Four Seasons occupies the upper third of the Guangzhou IFC (International Finance Center), a 103-story, 1,439-foot tower designed by Wilkinson Eyre Architects with interiors by Hirsch-Bedner Associates. The building’s triangular floor plan and softly curved edges improve wind efficiency and allows for more varied room orientations than a rigid rectangular plan. The hotel’s iconic vertical atrium, rising nearly 30 floors from the sky lobby on the 70th floor, is one of the tallest hotel atria in the world.

Programmatically, the tower reflects a highly integrated mixed-use stacking approach typical of Chinese CBDs. The five-story podium houses a shopping mall, large conference and ballroom facilities, and other lifestyle amenities. Two adjacent mid-rise buildings provide 314 serviced apartments. Premium office space fills the lower two-thirds of the tower (floors 4-66), while the Four Seasons takes the upper section (floors 67-103). The hotel has a groundlevel arrival lobby, express elevators to the 70th-floor sky lobby, and guest rooms from floors 74 to 100, with specialty suites at the top. This arrangement leverages office density and mall traffic to maintain stable weekday demand, while placing the hotel high up increases privacy, exclusivity, and room rates. This stacking strategy deliberately creates value by making the hotel a destination in the skyline.

Within the Tianhe luxury hotel market, the Four Seasons Guangzhou competes with the Rosewood at the CTF Tower, the Park Hyatt, and other international brands. Daily pricing comparisons show that the Four Seasons are consistently in the upper tier, though usually below the newer and higher Rosewood. Even so, the hotel’s height, expansive views, and dramatic atrium spaces attract both international business travelers and domestic guests looking for high-end skyline experiences. Its upper-floor restaurants and bars also draw visitors from across the city, bringing in customers beyond hotel guests.

The mixed-use nature of the IFC creates values across all functions. Office rents in the tower exceed the Tianhe CBD average by a significant margin, supported in part by the presence of the Four Seasons and the overall prestige associated with an internationally branded mixed-use complex. A similar pattern appears in the adjacent serviced apartments: rents for 314 Ascott units is approximately 40% higher than the CBD’s serviced apartment average and nearly four times the average for standard rental units in the area. The hotel’s brand and visibility drive these premiums, while the retail and offices help keep hotel occupancy stable during the week.

Monthly rental premiums in Tianhe CBD. GZIFC serviced apartments command rates approximately 40% above CBD serviced apartment averages and nearly four times standard residential rents

In summary, the Four Seasons Guangzhou exemplifies the distinctive value-creation model of high-density Asian supertall developments. Its skyline visibility, transit connectivity and mixeduse functions together generate substantial spillover benefits across the complex. The hotel functions as both an anchor and a branding tool. It enhances the tower’s overall market value while benefiting from the offices, retail, and transit access that stabilize its own demand.

Design Highlights

All three Four Seasons projects share a common design choice: none use straight, orthogonal floor plans. Instead, each uses curved or angular geometries to reshape the typical high-rise hotel model. This is not an aesthetic coincidence. Non-rectilinear plans create more varied room orientations along the tower’s perimeter and allow more units to have premium views. These geometries also strengthen skyline profiles, supporting brand visibility in cities where architecture itself functions as a marketing asset. Despite this shared geometry, each tower applies curvature for different reasons:

In Boston, the Four Seasons One Dalton responds directly to its triangular parcel. A conventional rectangular plan would not sit well on the site. Softened triangular curves allow the tower to fit the site while avoiding unmarketable sharp corners. Geometry turns a constrained site into an asset by giving all three sides comparable exposure.

In Riyadh, the almond-shaped, tapered plan is shaped by climate as much as form. The profile reduces east–west solar exposure in a desert environment where heat gain is a major concern. At the same time, the taper creates a recognizable outline that reinforces the tower’s symbolic role on Riyadh’s skyline.

In Guangzhou, the tower uses a triangular plan with bowed sides. This increases facade surfaces for angled views toward Pearl River and CBD, both key value drivers in this market. The curved edges also improve wind performance at supertall heights, an important consideration in Guangzhou’s humid, typhoon-prone climate.

Across all three cases, curvature is not a stylistic flourish. It is used to solve site constraints, respond to climate, improve structure, and expand premium-view inventory. Each tower demonstrates how geometry can operate as both a technical solution and a commercial strategy by reshaping the building’s performance, its skyline presence, and its ability to command a premium in the luxury hospitality market.

Economic Drivers

Economic drivers in high-rise mixed-use hospitality projects operate through multiple layers, and luxury brand premium is not confined to the hotel alone. Value creation unfolds at three distinct scales: the singlefunction level, the integrated project level, and the surrounding submarket. Each scale activates different mechanisms, which explains why the spatial organization, stacking logic, and overall development strategy differ so widely across global Four Seasons towers.

At the single-function level, a luxury hotel or branded residence can independently command a pricing premium. In Boston’s One Dalton, the hotel itself is not the highest-margin component, yet its presence enables the branded residences above it to achieve a substantial uplift in pricing and a lower cap rate than local market comparables. Here, the brand premium is captured primarily within the residential function.

At the integrated project level, the luxury brand strengthens the performance of the entire mixed-use ecosystem. The Four Seasons Guangzhou illustrates this dynamic: the hotel serves as a brand anchor that increases the attractiveness of adjacent office, retail, and serviced apartment components. Even though the hotel’s operating margins are not the highest within the tower, its role as a prestige signal elevates the rent and pricing levels of the whole development.

Finally, at the submarket level, luxury hospitality can shift the identity and economic trajectory of a broader district. Riyadh’s Kingdom Centre exemplifies this larger-scale influence. Because the tower performs a citylevel symbolic and functional role, both the Four Seasons brand and the building’s iconic form reinforce the district’s luxury positioning. This effect cascades outward, supporting higher land values, attracting investment, and raising achievable rents for surrounding developments. Together, these cases show that branddriven economic value is multi-scalar, with each level shaping how mixed-use high-rise projects are conceived and executed.

Conclusion

Across the U.S., Middle East, and China, our research reveals a consistent pattern: the luxury hotel component is rarely the highest-margin function, yet it is the most reliable engine for elevating the value of the entire building and its surroundings. One Dalton shows how refined design and a clear stacking logic allow the branded residences, not the hotel, to capture the deepest premium. In Guangzhou, the integration of hotel, retail, office, and serviced apartments transforms the tower into a unified landmark, with the hotel acting as a brand anchor that lifts rents and prices across all programs. In Riyadh, the Kingdom Centre demonstrates an even broader effect: its iconic form and luxury positioning reshapes the district’s identity and raises the submarket’s achievable ceiling.

Insights from our industry expert, Mr Song Kang, the Chief Business Development Representative of Capella Hotel Group in China, a major competitor to Four Seasons and Aman, reinforce this conclusion. He describes luxury hotels as “the largest jewel on the crown” of any development. Capella’s Shanghai flagship, developed as a hotel + long-stay residence, achieves nightly rates around USD 1,000 and long-stay rents of USD 30,000 per month, vastly outperforming nearby competitors. A decade after opening, land, residential, and commercial values within a 3-km radius have increased nearly tenfold, illustrating how luxury hospitality, when paired with design excellence, can reshape an entire urban ecosystem. Ultimately, the luxury hotel is the lever that converts design ambition into durable market impact, turning isolated buildings into anchors that redefine both project economics and urban context.

Bibliography

1 Deloitte Middle East. (2025). KSA Real Estate Predictions 2025. https://www. deloitte.com/middle-east/en/Industries/ real-estate/perspectives/ksa-real-estate-predictions-2025.html

2 Four Seasons Hotels and Resorts. (n.d.). History of Four Seasons Hotels and Resorts. https://www.fourseasons.com/about_four_ seasons/four_seasons_history/

3 Four Seasons Hotels and Resorts. (n.d.). Four Seasons Hotel Riyadh at Kingdom Centre. https://www.fourseasons.com/ riyadh/

4 Four Seasons Hotel Guangzhou— Guangzhou Hotels—Guangzhou, China. (n.d.). Forbes Travel Guide. Retrieved October 16, 2025, from http://www.forbestravelguide.com/hotels/guangzhou-china/ four-seasons-hotel-guangzhou

5 G.P. Hall und Sohn. (n.d.). The Waldorf Astoria Hotel, New York City. MeisterDrucke. https:// www.meisterdrucke.us/fine-artprints/G.P.-Hall-und-Sohn/255841/ The-Waldorf-Astoria-Hotel,-New-York-City. html

6 Guangzhou International Finance Center— The Skyscraper Center. (n.d.). Retrieved October 16, 2025, from https://www. skyscrapercenter.com/building/guangzhou-international-finance-center/174

7 Guangzhou Serviced Apartment | Ascott IFC Guangzhou. (n.d.). ASR - Ascott Star Rewards. Retrieved October 30, 2025, from https://www.discoverasr.com/en/ ascott-the-residence/china/ascott-ifcguangzhou

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10 IFC Guangzhou / Wilkinson Eyre Architects | ArchDaily. (n.d.). Retrieved October 16, 2025, from https://www.archdaily. com/356679/ifc-guangzhou-wilkinson-eyre-architects

11 MMCG Invest. (2025, October 31). Saudi Arabia Hospitality Market Analysis 2025. https://www.mmcginvest.com/post/saudi-arabia-hospitality-market-analysis-2025

12 New Four Seasons Boston Residences one dalton tower. Boston Luxury Residential LLC. (n.d.). https://www.bostonluxuryresidential.com/luxury_buildings/ four-seasons-boston-one-dalton

13 Omrania. (n.d.). Four Seasons Hotel Riyadh. https://omrania.com/project/ four-seasons-hotel/

14 One Dalton: Four seasons hotel and private residences. Pei Cobb Freed & Partners. (n.d.). https://www.pcf-p.com/projects/ four-seasons-hotel-private-residences-one-dalton/

15 Overview of Zhujiang New Town, Guangzhou, China. The map illustrates... (n.d.). ResearchGate. Retrieved November 16, 2025, from https://www.researchgate. net/figure/Overview-of-Zhujiang-NewTown-Guangzhou-China-The-mapillustrates-the-catchments_fig2_390399974

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17 Wikipedia contributors. (2025, April 12). Kingdom Centre. In Wikipedia, The Free Encyclopedia. https://en.wikipedia.org/ wiki/Kingdom_Centre

What Is Green Worth?

Performance, Policy, and the Price of Sustainability in

Three Office Markets

What Is Green Worth?

Performance, Policy and the Price of Sustainability

Three Office Markets

Green buildings rent for more. They sell for more. In commercial real estate, these claims are treated as settled knowledge passed from report to report, folded into investor pitches, and repeated in every third panel discussion on the future of cities. A LEED plaque in the lobby, a WELL sticker on the brochure, and the assumption follows: certified space instantly means higher value.

Quantifiably the numbers appear to support the story. Certified buildings command higher rents, post lower vacancy, and often trade at better cap rates.1 But sometimes the most obvious narratives hide the more complex questions. A premium, after all, is not a principle. It is a result. It does not explain what created it, how long it will last, or what happens once the signal becomes ubiquitous. If every building were certified, would any of them still be special? If green has become a shorthand for value, we have to ask—what kind of value, and for whom? Anyone who has worked on a pro forma knows that determining value is never that clean. A rent bump is an input. Not an argument. What drives it? Is the tenant paying for lower utility bills, better ventilation, and higher productivity? Or are they paying for a label that lets them check a box in an ESG report? Is the developer chasing sustainable development standards because the city offers bonus floor area and faster permitting? Or because someone on the investment committee genuinely believes in low-carbon design?

And what happens when the market tightens? When the only space left is a half-empty brown tower across from the expressway, will the

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plaque still matter then? The standard narrative around sustainable buildings leans toward moral certainty. These buildings, we are told, are better for people and the planet. They lower emissions. They support health. They show that the owner cares. None of that is wrong. But it is not the whole picture either.

Most developers do not build with mission statements in mind. They build with spreadsheets. Inside the capital stack, equity carries risk, and debt carries deadlines. Altruism, if it exists, is rarely the line item that gets underwritten. What gets underwritten are lease-up projections, construction costs, and exit valuations. Tenants, too, are pragmatic. They ask how close the building is to transit. They count how many desks fit on a floor. They weigh rent against recruiting. Somewhere in that process between what is required and what is rewarded—a decision gets made about whether or not to go Green.

And that is where the real story begins.

When the debate over the economic value of green building is limited to “Does LEED (or any other ESG) certification translate into higher rent?” it fails to address the real issue: What are the underlying motivations and market forces that make sustainability a marketable feature in the first place? What exactly is the market paying for when it pays that premium?

To answer that, we look at three very different cities: Boston, Miami, and Taipei. Each represents a distinct drivers in adoption and the market factors in place to sustain value and perception. Boston shows us what happens when sustainability is mandated. Miami shows what happens when it is rare. Taipei shows what happens when it is incentivized and expected. They are not ranked. They are lenses. Each gives us a sharper view of what makes sustainability work in real estate and what stalls it.

The idea that green premiums come from one source and motive, be it ethics, code, or brand, is too simple. In all cases, they come from overlap.

Boston

When Regulation Turns Green into a Baseline Boston’s commercial office market is embedded within one of the strongest sustainability regulatory frameworks in the United States. Developers working in the city do not choose to implement green design; they navigate it. The city formalized this approach in 2007 with Article 37, which required most large developments to demonstrate compliance with LEED-based green building standards. The aim was to normalize sustainable building practices into the planning process rather than treat them as optional upgrades.

This regulatory framework has become more stringent over time. In 2025, Boston expanded Article 37 to limit operational greenhouse gas emissions for most projects and to require lifecycle embodied carbon analysis for buildings over 50,000 square feet. Even smaller developments, those with fifteen or more residential units, came under the new net-zero rules. Meanwhile, the Building Emissions Reduction and Disclosure Ordinance (BERDO), passed in 2013, set citywide emissions targets for existing buildings: a 50% reduction by 2030 and full net-zero by 2050.2 Together, cities’ policies have created a landscape where sustainable development standards are no longer a premium feature but a baseline requirement.

According to CBRE research, Boston’s tenants uphold these standards. Many of the city’s largest employers in finance, higher education, healthcare, and technology have formal ESG objectives. They consider building performance essential to their brand, cost management, and attracting employees. For them, a green building is not a luxury but an expectation.

Quantitatively, the premium in Boston is most noticeable in the Class B segment. A national CBRE study found that LEED-certified buildings command rents that are 31% higher than those of non-certified buildings across the U.S. When adjusted for building features, the hedonic premium is smaller but persistent. In downtown Boston, CBRE found that Class B LEED office buildings earn an average premium of $9.18 per square foot over non-LEED Class B assets and have vacancy rates roughly 180 basis points lower. This reflects both performance gains and repositioning strategies that help older buildings stay competitive with newer Class A stock.

In Class A space, the LEED premium is available but narrower. Most new Class A buildings in the Seaport, Back Bay, and Kendall Square submarkets already meet high sustainability standards. With fewer non-certified Class A buildings available in Boston’s comparison group, the premium shrinks. This reflects a natural market trend in which green design has become the norm rather than the exception.

Yet Boston’s most significant green story revolves around risk, not rent. Because BERDO and Article 37 establish a path toward net-zero, every building in the city is now somewhere on a decarbonization journey. New buildings are designed to comply with the rules, but many older ones are not.3 Interviews with researchers involved in the CBRE work highlight increasing concern about stranded asset risk: the chance that older buildings, due to high retrofit costs, will become uncompetitive or non-compliant without substantial investment.

The retrofit math becomes especially difficult for early green buildings—those certified under prior LEED standards that prioritized

Boston’s path to net zero began in 2007 with Article 37, expanded in 2013, and became enforceable in 2021 through BERDO

The policy sets strict carbon reduction targets—50% by 2030 and full net zero by 2050—forcing every large building in the city onto a retrofit timeline.

3.

setting emissions standards from 2025 onward, with goal of net-zero by 2050[5][6].

“Building Performance Standards: A Wake-Up Call for CRE Owners.” – Industry analysis noting non-compliant buildings face declining values, higher cap rates, and that carbon liabilities now appear in underwriting due diligence[2][3].

energy modeling over actual emissions. These buildings now fall short under BERDO’s declining cap structure. As one CBRE economist put it:

“There is a poison pill baked into the retrofit math for some of these early LEED buildings.”

If the cost of the upgrade outweighs the rent lift or if the tenant pool shrinks due to compliance concerns then even iconic properties face the risk of becoming stranded assets.

This challenge comes into sharp focus at 200 Clarendon Street, known as the John Hancock Tower. Once celebrated for its energy efficiency and awarded LEED Gold certification in 2010, the 60-story tower now faces a different test. Under Boston’s updated emissions ordinance, BERDO 2.0, even buildings with a green past are now on notice. Previous targets, including a 38% cut in carbon emissions during a major modernization push in the 2010s, are no longer enough to meet 2025–2030 emissions caps. Boston Properties, the tower’s owner, now aims for a 45% reduction by the end of 2025, an aggressive benchmark that brings tens of millions of dollars in capital costs. Estimated retrofit costs range from $20 to $50 per square foot.4 For a building of Hancock’s scale, over 1.7 million square feet, this implies a retrofit budget between $30 million and $50 million, depending on the final scope. HVAC modernization, new window glazing, building electrification, and on-site renewable

4 RMI (2014). “Deep Retrofit Value.” – Estimates that comprehensive energy retrofits for large office buildings cost on the order of $10–$20 per square foot[14]. Thus a 300k sq. ft. building might require roughly $3–$6 million (or more if including electrification and envelope upgrades) to significantly cut emissions.

procurement may all be on the table. While the building’s location and tenant mix may justify the investment, it prompts a more complex question for the rest of the market. The Hancock may be able to absorb this blow because it commands Class A rents and global recognition. But what happens to the Class B or legacy BERDOs scattered across the city that face the same emissions thresholds without the same valuation cushion? For them, the retrofit cost could exceed their valuation upside.

BERDO’s enforcement timeline compounds the pressure. Starting in 2025, any building that exceeds its assigned emissions limit must either comply, purchase clean energy credits, or pay a fine of $234 per excess metric ton of CO. A building that “misses the mark” by 1,000 tons would owe $234,000 annually, an amount that could significantly impact net operating income.5The reality is some building owners may opt to pay the fine, viewing it as a stopgap. Others will sell, convert to residential, or hope for policy adjustments.

The Hancock’s retrofit is thus not just a case study in climate compliance. It is a harbinger of an asset class that was once green but must prove itself again. The structure may keep its skyline prestige, but it no longer gets a regulatory pass. The city has picked a retrofit-first route. It rewards early adopters and makes clear that yesterday’s compliance does not ensure today’s conformity. For every John Hancock Tower that retrofits and prospers, there will be dozens

5 RMI (2014). “Deep Retrofit Value.” . – BERDO 2.0 made Boston one of the first U.S. cities with binding building emissions limits (along with NYC and DC)[7]. The ordinance imposes fines of up to $1,000/day for large buildings that fail to meet annual C02 caps.

of mom-and-pop offices quietly crumbling into obsolescence. The true worth of Boston’s emissions policy may have little to do with fines or disclosures, but with pushing landlords toward an ultimatum: re-invest or get left behind.

As more buildings enter the regulatory framework, the green premium decreases, not because green is less valuable, but because brown buildings start to carry a discount. In Boston, the question for developers is no longer “Should we build green?” but “What is the risk of not doing so?” For tenants, the decision is shifting from seeking green buildings for virtue to avoiding buildings that could pose operational and regulatory risks later on.

Miami

The Premium of the Few Miami presents a different kind of green value equation—one driven by scarcity, climate risk, and tenant signaling. The city faces some of the country’s most severe storm surge exposure and steeply rising insurance costs, yet offers limited access to certified Class A office space. In a county with roughly 100 million square feet of office inventory, only an estimated 5 to 8% is certified under LEED or WELL, based on ArcGIS building records. By comparison, approximately 35 to 40% of Boston’s office stock meets certification standards, while in Taipei, nearly all new construction aligns with national green building requirements. The disparity in adoption is visible even before rent premiums are considered. That scarcity helps explain why Miami’s certified towers consistently command the highest asking rents in the market. In Brickell, Class A office space averages around $100 per square foot, compared to a county-wide average of roughly $70. Certified Class A buildings— especially those with green or wellness branding—often list between $120 and $130 per square foot, with trophy assets like 701 Brickell, 1450 Brickell, and 830 Brickell reaching as high as $140 to $160. This places the premium at 20 to 60% above Brickell’s own submarket average, and more than double the county-wide average in some cases.

While this premium partly reflects trophy effects, waterfront views, larger floorplates, and better amenities, green branding remains central to the positioning. For firms with ESG mandates, International Certification are quickly becoming a prerequisite. Some will not even touch” noncertified buildings. As Alexandra Escudero, a leading commercial broker in Miami, explains, “Multinationals will not even consider touring

buildings without certification.” 6 Others may compromise when the market is tight, but only with reluctance. The direction is clear: green space is no longer a nice-to-have—it is a screen.

More than prestige, these designations also reduces risk perception, especially in the insurance market. Since 2020, insurance costs for commercial buildings in South Florida have risen by 30-50%. Developers and lenders no longer view insurability as a make-or-break factor in deals.

“The number that tells you how sustainable a building really is in Miami is not always the rent—it is the insurance quote,” explains Walter DeFortuna, a local developer planning an 80-story tower in Brickell.

In this context, Certification becomes less about ESG optics and more about operational resilience. Reinforced glazing, flood systems, and backup power are not just check boxes or risk mitigation strategies they are coverage qualifiers. Many LEED or WELL-certified buildings will have these systems installed, even if code does not require it in Miami. In a nutshell, Certification is a shortcut to risk mitigation for Miami-Dade’s residents and insurers. This trend, which is rare in Boston and nonexistent in Taipei, helps explain Miami’s notably high green premium.

The city boosts the story. While MiamiDade’s Class A vacancy rate hovers around 14-15%, new certified towers have demonstrated rapid lease-up. For example, 830 Brickell, the city’s first central Class A+ tower delivered in over a decade, reported 97-100% pre-leasing before opening. Similar trends are seen in new wellness-focused buildings in Miami Beach and Bay Harbor. When green buildings fill quickly in a softening office cycle, the underlying demand signal is clear. Without regulation, certified buildings remain rare. Rarity increases premiums. In Miami, green design sets a project apart in ways that green cannot in Boston.

For developers, this creates a straightforward yet impactful financial message. A LEED or WELL designation can generate an additional $20 to $40 per square foot in rent for premium space, depending on the tower. They can also attract tenants with more substantial credit, reduce vacancy risk, and enable lower cap rates at sale. Even if implementation increases construction costs by 2-5%, the return on that

6 JLL (2023). “The Green Tipping Point: 2024 Carbon Commitments and Lease Markets.” – Observes that “flight to quality” is evolving to include energy performance, as corporate occupiers seek spaces aligned with their carbon goals.

investment is often significant in Miami’s limited Class A pipeline.7

In contrast to Boston, the debate over Miami’s fit is often rendered moot by re-development. One glaring example is One Bayfront Plaza, a 19-story mid-century office tower. At one time, it dominated downtown’s CBD, but over the years, high vacancies, low rents, and aging infrastructure made it unattractive to tenants seeking new buildings with up-to-date systems. The property’s historic charm was long gone, but its 2.2 acres of bayfront directly on Biscayne Bay were worth more than the structure itself.

of which will be replaced with products made using carbon-intensive processes. Retrofitting the existing office shell might have avoided this embodied carbon debt. Instead, the new development will likely spend years repaying the climate cost of deconstruction before it even achieves operational parity.

Yet in Miami, the market incentives favor new. There is little local policy pressuring reuse. There are no emissions caps like BERDO. Most pressure comes from insurance markets or climate resilience, not emissions accounting. Developers are rewarded for maximizing density and delivering skyline-changing projects, not for optimizing carbon trajectories. And the condo pre-sale market makes large-scale capital available up front. This model is structurally opposed to deep retrofits. One Bayfront Plaza is not just an exception; it is a template.

The irony is sharp. The new tower will likely earn LEED designation. It will operate efficiently. But in the circular economy in construction, it will likely produce more carbon over the first five years than the original building would have in 30. These embodied emissions rarely appear in financial disclosures but have long-term climate implications. In Miami, where development moves fast and preservation is rare, the economics still favor new. The cost of carbon, for now, is free.

Florida East Coast Realty, the property’s owner, chose not to retrofit. They chose to raze. The new plan, now approved, is ambitious: a 93-story, 1,049-foot-tall tower with over 3 million square feet of mixed-use programming. The replacement is hotel space, luxury condos, retail, and a gleaming Class AAA office product. The city’s height exemptions and zoning incentives made the economics obvious. Why spend tens of millions of dollars retrofitting a tired building when you could triple your yield and presell high-end condos with 40% deposits long before you top out?

Demolition began in 2024; the city required a $2.4 million site clearance budget alone. The environmental costs are harder to measure, but just as real. Demolishing a building puts its stored carbon back into the atmosphere. It also creates waste: steel, concrete, glass, insulation, much

7 Green Building Adoption in Miami – Miami’s market has seen high-profile LEED projects (e.g. Brickell City Centre, Miami Worldcenter) and a general trend toward sustainable luxury developments Any premium in Miami likely manifests in Class A space where tenants like finance firms seek ESG credentials. On the whole, resilience features (hurricane-resistant design, elevation, etc.) are a unique selling point in South Florida, often factored into pricing and insurance rather than explicit rent uplifts.

In this context, Miami is in the earlyto-middle stage of the green adoption curve: premiums remain high, scarcity persists, and green designations indicates resilience and prestige. The question is how long that imbalance will continue. As more developers enter the green market and insurers, lenders, and tenants tighten their requirements, Miami might follow Boston and Taipei into a phase in which premiums decrease and the penalty for staying brown becomes more severe.

Taipei

Incentives Make Sustainability Inevitable

Taipei is on the opposite end of the spectrum from Miami. Miami’s green premium is based on scarcity; in Taipei, it is driven by policy and incentives, reflecting over two decades of national focus on actual building performance. Taiwan’s EEWH system (EcoTaiwan’s Energy Saving, Waste Reduction, and Health) was introduced in 1999, making it the first primary Asian national building performance standard and the fourth in the world.

Taiwan’s green building program is extensive today. The total number of EEWH certificates and candidate certificates to date is 13,670, with 1,185 issued in Taipei, the highest number

Source of Image: KPF

a

for a single year.8 Second only to residential buildings, office buildings account for 15.55% of all sustainable certifications so far. In sheer size alone, Taipei’s certification system surpasses that of most Western cities.

Taipei stands out because EEWH policies also grant access to FAR incentives under the Regulation on Bulk Reward for Urban Renewal, increasing from 2% FAR for developers’ who elect to build following minimal building codes to an additional 10% FAR for those that choose to develop following LEED Diamond requirements.9 Since FAR determines the saleable area and revenue in high-EEWH office development, By tying certification to buildable area, EEWH embeds environmental strategy directly into the pro forma.

The economics are strongest at the LEED Silver level, which the author considered EEWH’s mainstream standard. Developing following the LEED Silver requirements offers a 6% FAR bonus, often leading to a nearly proportional increase in asset value. This single advantage far outweighs the cost of stricter energy efficient development. As per New Taipei City’s standard, EEWH construction premiums are:

These costs amount to roughly 0.2-1.5 percent of total construction expenses. With a 6 to 10 percent increase in value, the cost-benefit ratio can range from 4:1 to 30:1. In this context, EEWH is not a sustainability choice. It is a pragmatic developer strategy.

Today, the stock of Grade A cities remains heavily concentrated in Xinyi. JLL’s Q2 2025

report shows Grade A rent at NTD 3,216 per ping monthly citywide, while Xinyi district’s NTD 3,700 per ping.

Demand supports the supply-side story. In 2023, the Climate Change Response Act strengthened the country’s net-zero standards, speeding up developers’ focus on guidelines that protect their assets in the future. Tenant demand is also rising as multinational corporations now walk in with ESG policies and require credible green-rated assets.. By the end of 2024, Taipei had: 28 LEED-certified office buildings, 11 WELL-certified buildings, 11 dual-certified buildings (LEED + WELL).10

Multinational tenants—especially in tech, finance, and professional services—are the primary drivers. According to Kevin Hou of JLL Taiwan, these tenants account for roughly 70 percent of JLL’s demand for certified space. And the fact that an internationally recognized ESG certification and standard is in place, not necessarily level, is what matters.

“The plaque is what matters,” Hou notes, “not the version.”

Rentals reflect this demand. JLL’s 2023 APAC research finds certified Grade A offices in Taipei trading at 10 to 15% premiums. As with Singapore, where sustainable office towers now make up nearly 90 percent of inventory and premiums have shrunk to 4-9% Taipei could see compression eventually as the pipeline of certified space begins to catch up.

In Taipei, retrofitting is not about checking a regulatory city’s demands, it’s about staying in the market. The Taipei World Trade Center (TWTC), built in the late 1980s, had long housed highprofile foreign tenants. Located in Xinyi, one of the city’s most valuable commercial districts, it faced growing pressure from newer buildings offering better systems, stronger measureables, and ESG-aligned amenities.

By 2021, that pressure became real. Anchor tenants like HSBC, PwC, and EY11 warned they would not renew unless the building met international sustainability standards. Their global leasing policies required third-party standards. Without action, the TWTC risked losing its most valuable tenants. Demolition was

8 GreenJump Taiwan (2023). Overview of EEWH System. –Notes Taiwan has issued over 7,000 Green Building Labels as of late 2023, making it one of the world leaders in per-capita green buildings[57]. By 2024, sources indicate the figure grew to nearly 13,000 EEWH certifications nationwide.

9 MDPI Journal (2025). “Cost and Incentive Analysis of EEWH Upgrades in Taiwan.” – Details Taiwan’s FAR bonus incentives: EEWH Silver certification grants +6% FAR, Gold +8% (for urban renewal projects)

10 National Development Council (Taiwan, 2022). “Taiwan’s Pathway to Net-Zero Emissions in 2050.” – The government’s roadmap includes making 100% of new buildings nearly zero-carbon by 2050 and improving existing buildings (85% to near-zero by 2050)

11 Tenants; HSBC refers to HSBC Bank and its affiliates. PwC refers to PricewaterhouseCoopers. EY refers to Ernst and Young.

not an option. Zoning restrictions, land value, and vertical infrastructure made it too costly and complex. The only viable strategy was retrofit.

The landlord’s solution was an upgrade to the entire building. In a few years, TWTC replaced its mechanical systems, installed innovative energy management systems, upgraded HVAC equipment, and installed water-saving fixtures. It applied for WELL and LEED, not as a marketing tool, but as a way to keep tenants rooted. In 2023, TWTC became the first existing office building in Taiwan to obtain WELL and LEED Gold designations.

use in real time..

The project was a milestone, but it was also a survival plan. The renovation was done without emptying the building. To avoid disruption, construction work was done at night and on weekends, in phases. Technical challenges added complexity. Low floor-to-floor heights limited daylight upgrades. Rooftop solar was ruled out due to structural wind loads. Still, the retrofit delivered results. Indoor air quality improved. Lighting, acoustics, and thermal comfort were measured and upgraded. The building also maintains ISO 50001 energy management software, allowing it to track and reduce energy

The lesson here is simple: regulation is not the only motivator. When the ESG goals of the built environment align with tenant priorities and financial sense, buildings get upgraded. TWTC did not retrofit because the law did not require it. It did so because the market made it necessary. In a city like Taipei, where high land costs, zoning limits, and building height restrictions make teardown rare, retrofitting is not just greener. It is often the only option that makes spatial and economic sense. And in this case, it worked. The building retained its major tenants, improved its performance, and sent a clear signal to the market: even without regulation, sustainability can be EEWH’s positive advantage. These policies demonstrate Taipei’s transformation of green practices into financial strategies that influence new construction and retrofits. EEWH’s FAR incentives align developers’ profits with the public interest in environmental benefits. LEED and WELL help assets meet multinational ESG standards. As Taipei continues certifying more buildings, it will likely go through the same late-stage evolution now seen in Boston: the green premium decreases, and the brown discount increases.

Comparable Analysis

Three Distinct Versions of Green Value

Placed in conversation, Boston, Miami, and Taipei reveal a clear truth about green premiums: they stem from different combinations of performance, risk, policy, and perception. The premium is not fixed. It varies with context, and as the market learns to interpret sustainability signals.

In Boston, green design has shifted from being unusual to becoming the norm. Article 37 and BERDO have mandated LEED standards into the basic requirements for commercial development. Most new Class A buildings meet these standards automatically, and many tenants

will not consider spaces that are not certified. As a result, premiums in Boston are modest and mainly seen in Class B assets where green upgrades help reposition older buildings. Boston demonstrates how a market responds when the standard rises, and the premium decreases. The real financial risk is not in being less green than competitors, but in being left outside the regulatory framework.

In Miami, green premium is inflated by its dual identity as a trophy market: waterfront views, amenity-rich towers, and international tenant profiles boost the price signal. Climate risk and rising insurance costs add another layer of complexity. The city is in the middle of the adoption curve; premiums are high now, but could decrease if policy or EEWH mandates eventually mandate broader adoption.

Taipei offers a third model, where international certifications like LEED and WELL complement a deeply embedded local policy system. Taipei demonstrates how policy can synchronize private and public incentives. Across these three cities, the same question plays out in different dialects: What happens when a building built following the previous Green Building Standard meets increasingly tougher requests. Boston mandates its way to reinvention: every tower, even the iconic kind, is a retrofit candidate. Miami lets the market call the shots, the old is replaced wholesale, the skyline and amenities are upgraded, but embodied carbon is lost. Taipei straddles two worlds: tenant pressure and piecemeal reinvestment let much of the existing stay standing. Retrofitting, in every scenario, is not just a technical process. It is a signal of what the city values: continuity or renewal, policy or profit. And as emissions targets tighten globally, the economics of retrofitting will determine not just which buildings survive but what kind of cities we leave behind.

Together, these cases demonstrate that green premiums are not driven by idealism. Instead, they result from a mix of financial logic, policy incentives, tenant screening, and market structure. When green buildings are rare, premiums are substantial. When compliance becomes mandatory or expected, premiums level off, and the risk shifts to older buildings. When policy links sustainability with profit, market adoption speeds up, and sustainable development becomes the logical choice.

This may signal a much larger shift in the valuation of office markets. In the future, as sustainability is taken for granted in big urban markets, the green premium will diminish while the cost of being brown will increase.

Conclusion Beyond the Premium

Sustainability in real estate is not a yes-orno proposition. It is a system of decisions about what gets built, who it gets built for, and under what conditions capital deems a building worth the risk. That system looks very different in Boston than it does in Miami or Taipei. And understanding those differences lets us move beyond headlines about green premiums into a more urgent question: how do those premiums form, who controls them, and how long do they last?

None of these approaches is static. A premium that exists today “may” narrow tomorrow. A regulation that feels burdensome now might insulate a building from obsolescence later. And a developer who targets LEED not out of ideology, but because it “pencils,” still delivers a better asset, one that may lease faster, insure easier, and hold value longer.

For developers, this shift reframes the decision. Sustainability is not optional, but it is not symbolic either. It is a line item in the pro forma. It influences floor area, rent, absorption, interest rates, exit cap rates, and valuation. For policymakers, the challenge is to align the moral and the financial. If green is to be mainstream, it must show up on the spreadsheet through zoning bonuses, tax credits, faster permitting, or access to public financing. And for tenants, the signaling power is real but only if it results in hard decisions at lease time. ESG goals do not matter unless they are backed by square footage and signatures.

So what is green worth? That depends on the city, the system, and the moment. Sometimes it is a rent bump. Sometimes it is a hedge against future risk. Sometimes, as in Boston, it is just enough to stay in the game. The task now is not just to celebrate green buildings, but to plan for what happens when the ones already standing need to catch up. That includes the capital at stake, the tenants inside, and the neighborhoods around them.

In a market that remains firmly capitalist, green premiums are real, but so is the brown discount. And the next phase of this conversation is about how quickly that discount grows and what tools cities and markets use to ensure that buildings and people are not left behind.

Bibliography

Boston

1 CBRE. “Class B LEED Office Buildings Offer Noteworthy Opportunities.” CBRE, December 2023. https://www.cbre.com/ insights/briefs/motm-class-b-leed-officebuildings-offer-noteworthy-opportunities

2 CBRE. “Green Is Good: The Enduring Rent Premium of LEED-Certified U.S. Office Buildings.” 2023. https://www.cbre.co.uk/ insights/viewpoints/green-is-good-theendurance-of-the-rent-premium-in-leedcertified-us-office-buildings

3 City of Boston. “Mayor Walsh Releases Draft Climate Action Plan for Public Comment.” 2014. https://www.boston.gov/ news/mayor-walsh-releases-draft-climateaction-plan-public-comment

4 Decarb Summits. “Fines Alone Won’t Make Our Buildings More Resilient: Why Penalties Need Sharpening (Or Just Better Incentives).” Accessed December 2025. https://www.decarbsummits.com/blogs/ fines-alone-wont-make-our-buildingsmore-resilient-why-penalties-needsharpening-or-just-better-incentives

5 Holland & Knight. “Boston Passes Ambitious Ordinance Targeting Zero Emissions for Large Buildings by 2050.” October 6, 2021. https://www.hklaw. com/en/insights/publications/2021/10/ boston-passes-ambitious-ordinancetargeting-zero-emissions

6 JLL. “The Green Tipping Point: Is 2024 the Year When Carbon Commitments Change Lease Markets at Scale?” JLL, 2024. https:// www.jll.com/en-us/insights/the-greentipping-point

7 ProptechOS. “The Price Premium for Sustainable Offices.” 2023. https:// proptechos.com/the-price-premium-forsustainable-offices/

8 Stok. “Building Performance Standards: A Wake-Up Call for CRE Owners.” Stok Insights. 2023. https://stok.com/news-insights/ building-performance-standards-what-creowners-need-to-know-to-protect-value/

Miami

9 Florida Building Energy Codes Program. “Florida Energy Code Overview.” U.S. Department of Energy. https://www. energycodes.gov/status/states/florida

10 Governing Magazine. “The DisasterResilient Building Codes We Need.” 2025. https://www.governing.com/resilience/thedisaster-resilient-building-codes-we-need

11 Grist. “A Florida City Wanted to Move Away from Fossil Fuels. The State Just Made Sure It Couldn’t.” April 20, 2021. https:// grist.org/cities/tampa-wanted-renewableenergy-resolution-florida-lawmakersmade-sure-it-couldnt-gas-ban-preemption/

12 JLL. “The Green Tipping Point: Is 2024 the Year When Carbon Commitments Change Lease Markets at Scale?” JLL, 2024. https:// www.jll.com/en-us/insights/the-greentipping-point

13 Touchstone IQ. “Miami Energy Benchmarking.” https://touchstoneiq.com/ blog/press-release-boston

14 ProptechOS. “The Price Premium for Sustainable Offices.” 2023. https:// proptechos.com/the-price-premium-forsustainable-offices/

Taipei

15 Business Weekly Taiwan. “Taipei 101 Achieves the World’s Highest Score for LEED v5 Platinum.” August 23, 2025. https://www.businessweekly.com.tw/ business/indep/1005824

16 Green Jump Taiwan. “EEWH Certification and Consulting Services.” https://www. greenjump.com.tw/en/service/eewhservice

17 International WELL Building Institute. “One of the World’s Tallest Buildings, Taipei 101, Achieves WELL Core Platinum Certification.” 2023. https://resources. wellcertified.com/press-releases/ one-of-the-world-s-tallest-buildings-iconictaipei-101-achieves-well-core-certificationat-platinum-level-with-top-scores/

18 MDPI. “Cost and Incentive Analysis of Green Building Label Upgrades in Taiwan’s Residential Sector: A Case Study of Silver to Gold EEWH Certification.” Buildings 15, no. 16 (2023): 2956. https://www.mdpi. com/2075-5309/15/16/2956

19 Ministry of the Interior (Taiwan). “Regulations Governing Floor Area Ratio Incentives for Urban Renewal Projects.” 2025. https://law.moj.gov.tw/LawClass/ LawAll.aspx?pcode=D0070027

20 Ministry of the Interior (Taiwan), Department of Statistics. “Weekly Statistical Bulletin: Green Building Promotion, Week 40 of 2025.”

21 New Taipei City Government. “Guidelines for Transfer of Development Rights Valuation in New Taipei City.” February 2023.

22 Taiwan Today. “Taiwan Shares Best Practices at International Green Buildings Conference.” 2025. https:// www.taiwantoday.tw/Environment/TopNews/143445

23 Wealth Magazine. “Low-Carbon Building Challenges: Foreign Tenants Push Landmark to Pursue Green Certification.” https://www.wealth.com. tw/articles/0f46a61e-9f31-4afb-b775649f7f72704f

24 Yang, Y.-T. “The Effect of Green Certification on Office Building Rents: A Case Study of Taipei.” Master’s thesis, National Chengchi University, 2019. https://doi.org/10.6814/THE.NCCU. MPLE.003.2019.A05

General / Multi-City / Academic

25 American Economic Association. “Certification Matters: Is Green Talk Cheap Talk?” 2015 AEA Annual Meeting. https:// www.aeaweb.org/conference/2015/retrieve. php?pdfid=3066&tk=BA3GEtRi

26 Globest.com. “LEED Certification Makes More Sense for Class B Properties.” December 6, 2023. https://www.globest. com/2023/12/06/leed-certification-makesmore-sense-for-class-b-properties/

27 Tandfonline. “Parametric Optimisation of Building Envelopes for Energy-Efficient Architecture.” 2025. https://www. tandfonline.com/doi/full/10.1080/14786451. 2025.2560863?src=

28 Ye, Zhongnan et al. “Identifying Critical Building-Oriented Features in City-BlockLevel Building Energy Consumption: A Data-Driven Machine Learning Approach.” Applied Energy 301 (2021): 117453. https:// doi.org/10.1016/j.apenergy.2021.117453

Lily Friedland, Adam Drummond, Eesha Sanghrajka

Wellness Design

What We Can Measure, What We Can’t, & Why It Matters

Adam Drummond Eesha Sanghrajka

Wellness Design: What We Can Measure,

What We Can’t & Why it Matters

In the post-COVID office market, wellness design has emerged as a powerful tool for developers seeking to bring employees back into physical workspaces. The relationship between buildings and human health has entered mainstream real estate discourse which has elevated design strategies that prioritize the lived experience of indoor environments focusing on air, light, acoustics, comfort, and psychological well-being, alongside traditional measures of function and efficiency.

At the same time, the rapid rise of “wellness design” has generated scrutiny: What does the term actually mean? How should it be measured? And are current wellness certifications meaningful indicators of the health impact, or merely “health washing”? This research paper examines the evolution of wellness design through the various institutions attempting to define or measure it, the debates surrounding its credibility, and ultimately whether certification is arbitrary or essential.

Defining Wellness Design

At its core, wellness design refers to shaping the built environment to support human health, comfort, and cognitive performance. It encompasses the felt experience of air, light, sound, movement, thermal conditions, and spatial quality, and is often framed as “salutogenic” or occupant-centered design (Allen & Macomber, 2020). Although some dimensions of wellness design appear intuitive to quantify, wellness design straddles architecture, interior design, building science, psychology, and public health, fields that measure and quantify using different standards and best practices.

Some elements of wellness design are easily defined and measured: ventilation rates, particulate concentrations, luminous intensity, acoustic thresholds, etc. Others are more emotionally

driven or contextual: subjective experience of well-being and belonging, reduction of stress and anxiety, perceived control over one’s environment. The combination of these easily measured environmental conditions with this less-measurable human experience is what makes wellness design both compelling and controversial. It’s a term that requires rigor because it claims measurable impacts on human health and performance and therefore requires evidence-based evaluation rather than aesthetic judgment alone, but has no universal unit of measure.

Why Wellness Design Has Become

So Popular

Wellness design has grown in real estate because of both expanding health science research and shifting employee expectations. Workplace wellness amenities have gone from being a niceto-have to a differentiator for tenants driven by pandemic increased awareness around the health of buildings. As GWI notes, the COVID-19 crisis “forced us to reckon with how our health is shaped by our built environment” (GWI, 2024). Elements perceived as invisible such as airflow, ventilation, humidity, and filtration became the forefront of tenant concerns, prompting the reassessment of a building’s role as protective health infrastructure.

This shift has transformed wellness from a niche sustainability concern into a baseline expectation. According to the GWI, “the total number of wellness-certified building projects increased more than forty-fold from 2017 to 2023” (GWI, 2023). Citi’s Global Headquarters, now the largest WELL Platinum–certified office building in the world, illustrates how wellness has become a strategic imperative for major employers (IWBI, 2024). Wellness design therefore expanded its scope and became understood as a strategic requirement for attracting health-conscious occupiers and risk-aware employers.

Return-to-office policies reinforced this momentum. Employers aiming to rebuild culture and stabilize workforces have recognised that employees are more willing to commute to workplaces perceived as healthy and supportive. Surveys indicate that air quality, daylight, acoustic comfort, and overall wellbeing are now central determinants of whether employees choose to return on site (JLL, 2022). These expectations were shaped both by pandemic experience and the broader cultural shift toward environments seen as restorative and safe.

As a result, wellness-driven design has become a mechanism for employers to improve attendance, productivity, and retention, while enabling landlords to differentiate assets in markets with elevated vacancy rates. Buildings that do not align with these expectations face both functional and reputational risks, particularly as the idea of a “healthy building” continues to shift from exceptional to standard practice (IWBI, 2023). The merging of scientific insight, behavioural expectations, and competitive pressure explains why wellness design has moved from discretionary amenity to foundational value proposition in contemporary real estate.

The Landscape of Wellness Frameworks

Wellness design often encompasses three distinct definitional approaches: 1. intuitive or best-practice design strategies that improve comfort without formalized metrics; 2. evidence-based guidelines rooted in public health and building science; and 3. formal certification systems that attempt to quantify wellness using structured scoring, performance thresholds, and verification requirements. Together, these systems illustrate the fragmented landscape of wellness design and set the stage for examining how the field is being measured and whether those measurements meaningfully reflect human well-being.

Qualitative Wellness Design Strategies

Qualitative wellness design strategies represent the most abstract and experience-driven category of wellness frameworks. Unlike certification systems or scientifically defined environmental thresholds, these approaches focus on the sensory, emotional, and psychological qualities of space. These dimensions shape how occupants

feel but resist strict quantification. Research from the Harvard T.H. Chan School of Public Health supports this connection and links healthy building strategies to improved cognitive function, reduced absenteeism, and enhanced productivity (Allen & Macomber, 2020).

Biophilic design is the most widely recognized of these qualitative strategies. Stephen R. Kellert, author of The Practice of Biophilic Design, describes biophilic design as a reconnection with natural patterns, textures, geometries, light, and spatial configurations that people instinctively perceive as restorative (Kellert, 2015). Terrapin Bright Green’s 14 Patterns convert this intuition into a structured framework by identifying the sensory channels through which occupants experience natural qualities (See Figure 1 & 3). While evidence links biophilic experiences to stress reduction, improved attention, and emotional well-being, much of their impact remains subjective. These effects are rarely measured consistently in practice, and adoption often relies more on how occupants perceive a space than on quantified performance metrics.

Although informed by emerging research, these strategies remain inherently qualitative. Human responses to natural cues vary across culture, geography, and personal history, which limits the ability to standardize them into universal performance requirements (Terrapin Bright Green, 2014). Subtle sensory inputs such as non-rhythmic movement or diffuse light can have meaningful psychological effects yet cannot be captured through a checklist or sensor. Workplace studies reinforce the commercial relevance of these sensory strategies. A 2025 Gensler study found that offices integrating daylight, natural materials, plants, terraces, and views achieved higher productivity and creativity along with rent premiums in major markets such as New York (Gensler, 2025). This aligns with broader evidence that the built environment is a major determinant of human health and influences performance as directly as many behavioral factors (Allen & Macomber, 2020).

Despite their growing influence, biophilic and sensory-driven approaches remain under-integrated into certification systems because wellness real estate reflects diverse and evolving value systems that complicate standardization. Scientific understanding of how specific environments relate to health outcomes is still developing, which places natural limits on formalization. Qualitative strategies therefore

illustrate that wellness design begins with the human experience of space and its textures, light, forms, and atmospheres. They bridge health science and architectural intuition and shift wellness from a risk mitigation model toward a framework centered on restoration, satisfaction, and psychological well-being.

Non-Prescriptive, Evidence-Based Guidelines

Evidence-based guidelines form the second major category of wellness frameworks. Unlike qualitative design strategies that emphasize sensory experience, these guidelines draw directly from empirical studies on environmental health, and can be consistently and reliably measured. They quantify the environmental conditions that support human health and cognitive function but intentionally avoid imposing standardized metrics or score-based requirements.

The Harvard T.H. Chan School of Public Health’s “9 Foundations of a Healthy Building” exemplify this approach. The Foundations distill decades of research into nine environmental drivers of health: ventilation, air quality, thermal health, moisture, dust and pests, safety and

Figure 1: An application of the 14 Patterns of Biophilic Design, specifically Pattern 5: Risk/Peril, which creates a momentary sense of danger through a visually precarious element while maintaining real structural safety.

security, water quality, noise, and lighting and views. Each component is evidence-backed and quantifiably tied to physiological and cognitive processes.

For example, ventilation directly influences par-

ticulate exposure, inflammatory responses, and cognitive function, with research showing that occupants in buildings with sufficient outdoor air exchange and distribution are “more productive and healthy than those who work in poorly ventilated spaces” (Allen et al., 2017). Under the “9 Foundations” framework, this translates into meeting or exceeding established outdoor air requirements, which in practice means providing at least 20 cfm per person of outside air, supported by high-efficiency filtration and properly located air intakes. The quantifiable thresholds underscores that ventilation is one of the most empirically grounded wellness strategies, linking measurable building operations to health, comfort, and performance outcomes.

Among other research or government frameworks like ASHRAE, EPA and WHO, these evidence-based guidelines demonstrate that wellness design is anchored in environmental health research, even before it becomes codified in a certification. The frameworks provide a scientific vocabulary for understanding how architectural and indoor design affect human physiology and performance and bridge the gap between intuitive wellness strategies and fully quantified measurement systems. While they do not enforce compliance or verification, they supply the foundational knowledge and basis of which certification systems reference.

Format Certification Systems acting as Market Signals (Quantified, Score-Based)

Formal certification systems are the most structured and measurable strand of wellness frameworks. Rather than relying on qualitative design intent, they translate wellness into performance criteria that can be scored, benchmarked, and independently verified. WELL and Fitwel remain the two leading systems dedicated specifically to occupant health (GWI, 2023). Their importance lies not only in defining standards but in acting as credible market signals, offering tenants and investors assurance that wellness claims are founded on evidence rather than marketing.

WELL Certification (IWBI)

WELL v2 is the most performance focused of these systems. It organizes wellness into ten concepts delivered through mandatory Preconditions and optional Optimization, with compliance verified through on-site testing. Projects must meet thresholds for air and water quality, acoustics, lighting, thermal comfort,

and material exposure, operationalizing the idea that “health performance is invisible unless proactively measured” (Allen et al., 2016). Its points-based scoring and tiered certification levels convert wellness into quantifiable outcomes, reinforcing its value as a trusted indicator

scious design. By grounding wellness initiatives in auditable criteria, they help reduce perceived operational risk and differentiate assets at a time when wellness has become a central competitive attribute rather than a discretionary upgrade.

of building performance for tenants and capital markets.

Fitwel Certification (CDC / GSA)

Fitwel also uses a structured scoring approach but is oriented toward public health outcomes rather than sensor-based verification. Developed by the CDC and GSA, and now overseen by the Center for Active Design, it assesses policies, operations, and spatial strategies linked to physical activity, social connection, safety, healthy food access, and mental wellbeing (CfAD, 2018; 2020). Without requiring onsite testing, Fitwel evaluates alignment with epidemiological evidence and enables consistent benchmarking across large portfolios, making it effective as a scalable governance tool.

The growing adoption of WELL and Fitwel reflects their dual role as technical frameworks and market signals. Organizations increasingly consult them to guide portfolio-wide improvements, even when only select buildings pursue formal certification (GWI, 2023). For occupants and investors who cannot independently assess environmental performance, these certifications offer a reliable proxy for rigor and health-con-

The gap between qualitative guidance and formal certification reflects a central tension in wellness design: human experience is subjective and culturally contingent, yet meaningful health performance remains largely invisible without structured measurement. Research from GWI (2018) shows that wellness expectations vary widely across cultures, with regional norms shaping what occupants perceive as restorative or health-promoting. This variability makes it difficult to formulate universal qualitative guidelines.

Together, these insights explain why the wellness landscape is stratified into qualitative best practices, evidence-informed guidelines, and quantified certification systems. The first two provide conceptual flexibility and cultural responsiveness, but only certification offers the standardized metrics needed to verify wellness at scale. This gap helps clarify why wellness remains both compelling and contested: it is grounded in subjective experience, shaped by context, and only partially measurable with current tools.

Wellness Design Follows Finance

Wellness design now carries measurable financial weight. Market analysis shows that wellness focused developments command sales premiums of 10-25%, and in some cases up to 55% when supported by strong amenities (Boston University, 2022). Early frameworks such as The Drive Toward Healthier Buildings (Dodge Data, 2016) and the World GBC Health, Wellbeing and Productivity report (2014) outlined the economic logic: healthier environments improve tenant performance and asset value. Although early studies varied in rigor, their premise was clear. Personnel costs represent 80-90% of tenant expenses, while energy is under 5%. Even modest gains in cognition, satisfaction or absenteeism yield large financial returns (Allen and Macomber, 2020).

More recent evidence, such as Minkow et al. (2024) show that wellness features are capitalised directly into pricing. In a hedonic analysis of more than 5,000 United States office assets, indicators such as air quality, daylight, access to nature and WELL certification correlate with rent and transaction premiums of 4 to 7%. These effects are strongest in competitive and supply constrained markets, suggesting that wellness acts as a targeted competitive strategy rather than a universal yield driver. Certification further amplifies this signal. WELL and Fitwel now qualify projects for sustainability linked loans and green bonds, lowering borrowing costs and reinforcing the financial rationale for wellness initiatives (IWBI, 2023; Fitwel and CBRE, 2023). Certification turns wellness into an externally verified asset attribute associated with reduced operational risk, improved tenant experience and alignment with institutional ESG expectations.

Portfolio level evidence reflects the same pattern. Deloitte Real Estate (2022) reports that wellness-oriented assets achieve higher renewal rates, lower vacancy, more stable income and modest cap rate compression. Institutions are beginning to integrate health metrics into underwriting, valuation and ESG linked financing.

GRESB (2024) now includes health indicators in its benchmarks, allowing investors to connect wellness performance with stabilised income and risk reduction. As a result, WELL and Fitwel increasingly function as financial instruments as much as design frameworks.

Developers are now internalising these dynamics. Projects such as Hines T3 Minneapolis and Kilroy Realty Oyster Point incorporate biophilic design, enhanced ventilation and low VOC materials not only as experiential upgrades but as components of underwriting assumptions and ESG linked debt strategies (Hines, 2021; Kilroy Realty Corporation, 2022). In this context, design becomes both an economic and ethical act that aligns occupant wellbeing with the financial logic of asset management.

Collectively, these trends mark a shift from intuition to evidence. Wellness design now operates as a competitive differentiator, a risk reduction practice and a measurable driver of real estate value. De Graaf’s (2021) account of the 1976 Legionella outbreak highlights the long-standing financial risk of unhealthy buildings, a risk made explicit in the contemporary wellness movement, where indoor environmental quality is treated as both an ethical responsibility and a determinant of asset performance. Yet the rise of wellness design has also prompted questions about its rigor and reliability.

Debates and Criticisms

Despite its growing adoption, wellness design continues to struggle to define well-being in measurable, universally applicable terms. Criteria tied to reducing stress, improving cognition, and enhancing productivity are difficult to attribute to a single design intervention and often provoke skepticism. As one consultant in Wellness by Design noted, “employee happiness and wellness are, in part, perceptions,” raising the question of whether reported gains stem from cleaner air and stronger daylight or simply from newer, more visually appealing offices (Building Design + Construction, 2016). Without consistent post-occupancy data, it is challenging to separate the experiential preference from demonstrable physiological benefit.

This ambiguity extends to wellness frameworks, which often prioritize input-oriented strategies over evidence verified by outcomes. WELL organizes health around air, light, movement,

materials, and mind, with many features serving as proxies for well-being rather than actual measurements. Paul Scalia, founder of WELL, acknowledges that the core question of whether healthier practices produce healthier spaces remains “too abstract for most building owners” (Building Design + Construction, 2016). The more conceptual elements, such as restoring visual ergonomics or designing healthy entryways, reflect wellness intentions but lack the standardized methods for assessing their actual physiological impact.

This creates a landscape where developers and office owners can strategically gravitate toward and implement the most ambiguous criteria, in the effort to choose features that are more difficult to validate and difficult to challenge. When wellness outcomes cannot be conclusively proven or disproven, it becomes easier to claim success based on inputs that look good on paper but do not necessarily improve health in practice.

Best Practices & The Path Forward

The credibility of wellness design depends on post occupancy performance rather than design intent. Clements Croome (2020) notes that post occupancy evaluation (POE) provides the feedback loop linking architectural decisions to lived experience (See Figure 4). As building operations become more data driven, POE is evolving into a continuous governance model in which wellness conditions are monitored, verified, and adjusted throughout a building’s life.

Financial evidence reinforces the need for ongoing validation. Minkow et al. (2024) show that wellness related rent premiums persist only when operational metrics remain visible and credible; when monitoring lapses or conditions decline, premiums erode. The core principle is clear: wellness must be proven in operation, not assumed in design documentation.

Skepticism grows further when certification systems invest heavily in branding and celebrity partnerships. WELL, Fitwel, and similar systems allocate significant expense to promotion, which raises the question of why such extensive marketing is needed when the health benefits are supposedly self-evident. For some critics, the reliance on celebrity endorsements only reinforces the perception that wellness certification risks drifting toward healthwashing and brings a negative connotation to the concept as a whole.

However, continuous monitoring also introduces ethical risk. De Graaf (2021) warns that poorly governed systems can resemble workplace surveillance, making occupants constant data subjects. Owners must balance transparency and privacy to ensure that monitoring supports health rather than managerial oversight.

Even as measurement grows in importance, the strongest leverage for wellness occurs in early design. The ULI Building Healthy Places Toolkit

(2015) emphasizes that massing, orientation, floor plate depth, and core placement determine daylight, ventilation potential, acoustic conditions, and access to nature, factors that become difficult to modify later. At this stage, wellness shapes fundamental form rather than added features. Corinne Courtney summarised this feeling perfectly, the impact of design is such that “when I walk into a building, I need to feel nature. The lighting needs to be there. The more integrated it is with the outside, the better.”

During schematic and design development, these intentions translate into specific strategies: daylighting informs facade geometry, air quality goals shape mechanical zoning, and access to nature guides terrace placement and indoor-outdoor transitions.

By construction, most determinants are fixed, but material choices and execution still affect emissions, acoustics, and thermal comfort.

Across all phases, the drivers of wellness are architectural and infrastructural. Their success depends on early design decisions and must ultimately be confirmed through post occupancy performance. Wellness, therefore, is not a finishing layer but an upstream design commitment that requires continuous validation in use.

Conclusion

Wellness design has moved from a niche architectural interest to a defining priority in contemporary real estate. The research makes clear that indoor environmental quality influences cognition, comfort, absenteeism, and overall wellbeing, and these effects carry tangible financial outcomes. Across intuitive strategies, evidence based guidelines, and formal certification systems, a consistent insight emerges: the conditions that support health are shaped by design. Decisions about massing, orientation, floor plate depth, airflow, acoustics, materials, and access to nature set the baseline for wellness long before sensors or scorecards are applied.

Certification sits at the center of this landscape. Systems such as WELL and Fitwel give structure and legitimacy to wellness claims, translate scientific evidence into operational requirements, and create signals in markets where tenants and investors cannot directly verify performance. Their limitations, subjective criteria, uneven measurement, cultural blind spots, and the risk

of health washing, reflect a developing field rather than a failed one. Debate around these shortcomings signals a discipline working to align intent, evidence, and lived experience.

The path forward relies on refinement rather than reinvention. Wellness cannot depend solely on prescriptive checklists or exclusively on operational data without addressing questions of privacy, ethics, and human perception. Nor can it neglect the architectural foundations on which health performance rests.

The future of wellness design lies in balancing quantifiable metrics with a deeper understanding of how people experience space, and in recognizing that the most consequential decisions occur at the earliest design stages. Ultimately, wellness design matters because buildings shape daily life in ways that are both measurable and deeply felt. Certification provides a starting point, establishing minimum expectations and expanding the conversation and accountability. Design grounds those expectations in form and performance. As the field matures, wellness design will move closer to what it has always aimed to be: a reliable indicator of buildings that support human health and a bridge between scientific insight, architectural intention, and the lived environments people inhabit.

Bibliography

1 Allen, J. G., & Macomber, J. D. (2020). Healthy buildings: How indoor spaces drive performance and productivity. Harvard University Press.

2 Allen, J. G., MacNaughton, P., Satish, U., Santanam, S., Vallarino, J., & Spengler, J. D. (2016). Associations of cognitive function scores with carbon dioxide, ventilation, and volatile organic compound exposures in office workers: A controlled exposure study of green and conventional office environments. Environmental Health Perspectives, 124(6), 805–812. https://doi.org/10.1289/ ehp.1510037

3 BCO. (2022). The post-pandemic workplace report. British Council for Offices.

4 Boston Properties. (2023). Sustainability report.

5 Boston University. (2022). The global wellness real estate report. Boston University School of Hospitality / Global Wellness Institute.

6 CBRE. (2023). EMEA office occupier sentiment survey. CBRE Research.

7 Center for Active Design. (2018). Fitwel v2.1: Scorecards and certification system. Center for Active Design.

8 Center for Active Design. (2020). Fitwel research and evidence base. Center for Active Design.

9 Clements-Croome, D. (2020). Creating the productive workplace: Places to work creatively (3rd ed.). Routledge.

10 De Graaf, R. (2021). Architect, verb: The new language of building. Verso.

11 Deloitte Real Estate. (2022). Wellbeing and real estate: A value-based approach. Deloitte.

12 Building Design + Construction. (2016, September 12). Wellness by design. BD+C. https://www.bdcnetwork.com/home/ article/55145293/wellness-by-design

13 Dodge Data & Analytics. (2016). The drive toward healthier buildings: The market drivers and impact of building design and construction on occupant health, well-being, and productivity.

14 Fitwel & CBRE. (2023). Health and wellness in real estate finance report. Center for Active Design & CBRE.

15 Gensler. (2025). Why biophilic design is crucial: Workplace performance insights. Gensler Research Institute.

16 Global Wellness Institute. (2018). Build well to live well: Wellness real estate and com-

munities report. Global Wellness Institute.

17 Global Wellness Institute. (2023). Wellness real estate: Developments and global data. Global Wellness Institute.

18 Global Wellness Institute. (2023). Wellness real estate: Global market report. Global Wellness Institute.

19 Global Wellness Institute. (2024). Global wellness economy monitor 2024. Global Wellness Institute.

20 Global Wellness Institute. (2024). Wellness real estate market growth 2019–2023 and future developments. https://globalwellnessinstitute.org/industry-research/ wellness-real-estate-market-growth-20192023-and-future-developments/

21 GRESB. (2024). GRESB real estate reference guide. GRESB.

22 Hancock, T. (2021). Health, design, and certification: Market signals in contemporary real estate. Journal of Urban Design, 26(4), 567–585. https://doi.org/10 .1080/13574809.2021.1878123

23 Harvard T.H. Chan School of Public Health. (2017). The 9 Foundations of a Healthy Building: Building Evidence for Health. ForHealth. https://forhealth. org/9_Foundations_of_a_Healthy_ Building.February_2017.pdf

24 Hines. (2021). Environmental, social & governance report. Hines.

25 International WELL Building Institute. (2018). WELL v2: Building Standard. International WELL Building Institute.

26 International WELL Building Institute. (2023). WELL building standard v2: Market impact report. International WELL Building Institute.

27 International WELL Building Institute. (2023). WELL performance rating: Finance applications and verification. International WELL Building Institute.

28 International WELL Building Institute. (2024). International WELL Building Institute announces Citi Global Headquarters as the world’s largest building to achieve WELL Certification Platinum [Press release].

29 JLL. (2022). The future of work: Employee expectations and office demand. Jones Lang LaSalle.

30 JLL. (2022). The future of work survey: Health, safety, and risk priorities. JLL Research.

31 Kellert, S. R., & Calabrese, E. F. (2015). The practice of biophilic design. www. biophilic-design.com

32 Kilroy Realty Corporation. (2022). Sustainability report. Kilroy Realty.

33 Leesman. (2023). Hybrid working and workplace experience index. Leesman Insights.

34 McKinsey & Company. (2023). The workplace reset: Redesigning the office for resilience and performance. McKinsey Global Institute.

35 Minkow, M., Li, D., Wu, J., & Brodie, M. (2024). Healthy buildings and pricing premiums: Evidence from U.S. office markets. Real Estate Economics. Advance online publication. https://doi. org/10.1111/1540-6229.12498

36 Sanalife. (n.d.). Indoor air quality monitoring. Retrieved December 7, 2025, from https://www.sanalifeenergy. com/energy-monitoring-software/ indoor-air-quality-monitoring

37 Siemens. (2021). The Crystal: Smart building case study. Siemens Smart Infrastructure.

38 Stok, J., International WELL Building Institute, & Pacific Northwest National Laboratory. (2023). Investing in health pays back: The financial case for healthy buildings. IWBI & PNNL.

39 Terrapin Bright Green. (2014). 14 patterns of biophilic design: Improving health and well-being in the built environment. Terrapin Bright Green, LLC.

40 Urban Land Institute. (2015). Building healthy places toolkit: Strategies for enhancing health in the built environment. Urban Land Institute.

41 World Green Building Council. (2014). Health, wellbeing and productivity in offices: The next chapter for green building. WGBC.

San Gabriel Valley, the First Ethnoburb, the Ability to Invest

San Gabriel Valley, the First Ethnoburb, the Ability to Invest

The Ethnoburb

What is the first and foremost determinant of an ethnic minority group’s “permanence” within the dominant culture? Traditional notions of ethnic enclaves are of less importance in today’s American society. Instead, newer immigrants move toward suburban ethnoburbs for preferred education and job opportunities. An ethnoburb is functionally different from traditional ethnic-centric regions, which are ghettos or ethnic enclaves. The reader should imagine a Chinatown. Traditional and most contemporary Chinatowns are ghettos or ethnic enclaves mainly due to the following differentiators:

1. They are located within inner cities, and are of high urban density.

2. They are ethnically homogenous, and are inward-facing communities.

3. They are results of historical redlinings, and various legacies of post-redlining policies.

Meanwhile, an ethnoburb is:

1. Suburban, and follows density patterns of the pre-existing surroundings.

2. Multiethnic communities, in which one ethnic minority group has a significant concentration but does not necessarily constitute a majority.

3. Clusters that replicate some features of an ethnic enclave, but any and all features are subsumed within suburban characteristics that lack any specific minority identity.

Readers should take special notice of the third differentiator, that redlining was unmistakably the most significant determinant for forms of ethnic-concentrations.1,2

The Los Angeles Chinatown was a legally segregated area between the 1860s-1930s. Part of its segregation status was due to the fact that

Chinese Americans were all illegal immigrants within the United States until the passage of the Immigration and Nationality Act of 1965, which allowed for legal naturalizations of Chinese Americans. Chinatown, then, was a concentration of Chinese Americans who could not legally own properties, yet act as a necessary reserve of labor forces for the predeindustrialized Los Angeles.

The 1974 film “Chinatown” had a famous ending line of “Forget it, Jake. It’s Chinatown.” Throughout the film, the Los Angeles Chinatown acted as a metaphor to the moral and legal dubious nature of various events, as well as the inability of the protagonists to affect any outcomes in their life. And that was exactly what happened to Los Angeles Chinatown in 1939. Due to Chinatown’s legal gray zone status, it eventually became an area known for its gambling houses and opium dens. The area was condemned by the Supreme Court, and now the famous Los Angeles Union Station was built atop the leveled Chinatown, its original residents dispersed through forced evictions with no plan for community relocation.4

To the northeast of both Old and New Los Angeles Chinatown lies a series of suburban cities, collectively referred to as the San Gabriel Valley (in some instances affectionately as the

“626,” taken from the valley’s phone number area code). The San Gabriel Valley, starting from its most southwest city of Monterey Park, is the first recognized United States ethnoburb. The previously mentioned Immigration and Nationality Act of 1965 invited an influx of immigrants of Chinese origins, from Taiwan, Mainland China, Hong Kong, and Southeast Asia. Meanwhile during the 1960s, the general population trend of the United States is flight toward the suburbs. The new immigrants, escaping the density of East Asian cities, with an idealized suburban image of white America, followed suit in their relocation towards suburbs. Monterey Park became the ideal first city to settle in, with its preexisting populations of Asian Americans, its proximity to major freeways (the I-10, I-710, and State 60), and its proximity to New Chinatown.

The Ability to Invest

The new incoming population to San Gabriel Valley were not only labor seeking workers, but also Capital-wielding investors. Readers should consider that the immigrants from East and Southeast Asia during this time were not necessarily leaving their home due to economic conditions, but also mainly due to political strife. The military dictatorship of South Korea, the White Terror of KMT Taiwan between 1940s-80s, the Vietnam War between 1950s-70s, the Chinese Cultural Revolution that started in 1966, the Taiwan Strait Crisis of 1954, 1958, and 1995, and Hong Kong’s imminent return to CCP China in 1997, were all fuels that spurred immigration out of East and Southeast Asia, and especially for those who have the political or economical power, to move far away to the United States. Soon the investment patterns became clear within San Gabriel Valley, with the symptomatic real estate and banking boom around the 1980s. In 1979 and 1980 in

Monterey Park, Cathay Bank established their first branch office and Monterey Park National Bank (now New Omni Bank, N.A.) established their headquarters. In 1982, Monterey Park contained 40 real estate firms, with an increasing number of Chinese professionals working in or with the real estate sector. A commonly mentioned man in ethnoburb studies is a firstgeneration Mainland Chinese immigrant named Frederick Fukang Hsieh, who started his real estate career in the 1970s. He became the first Chinese realtor in San Gabriel Valley, and his tactics were truly aggressive and speculative. For comparable properties that were selling around $3-5 per square foot, Hsieh was able to sell for $7.50. He actively advertised Monterey Park as “Chinese Beverly Hills” in Taiwan and Hong Kong. His business was rooted in transnational transactions and investments.5

San Gabriel Valley’s border can be defined in many ways by many authorities. Here is a defintion by the Los Angeles County Metropolitan Transportation Authority. In the map at bottom, the encircled areas are above 25% Asian according to the 2020 Census.7,8

A similar investment pattern followed the food heaven of Valley Boulevard. The Valley Boulevard is an east-west artery running through 10 San Gabriel Valley cities, and features the densest Asian commercial concentration on its stretch between Alhambra to Rosemead. Valley Boulevard prominently features the strip-mall typology, each strip-mall featuring prominent displays of various styles of Chinese cuisines and snack shops. The section of Valley Boulevard within the city of San Gabriel alone hosts 300 restaurants, including the San Gabriel Square, a mega-strip-mall that is a 2-3 story building taking up enough land space for 2 residential blocks.9 But this level of investments into restaurants is not mainly due to convenience for ethnic food, but rather a convenience for speculative investment. Urban Design Professor Magaret Crawford of UC Berkeley’s College of Environmental Design summarizes this incentive the best:

There is very little non-Asian investment in the San Gabriel Valley. It is important to remember that a major determinant of physical forms of investment is EB-5 investors visa. This requires from $500,000 to a million investment in a business that creates 10 jobs. 99% of these visas, which lead directly to a green card, go to Chinese people. The need for appropriate investments creates a lot of spaces for restaurants, boba shops, other small businesses, or franchises, even American franchises. This explains all of the dense shopping malls you see in places like San Gabriel and Temple City. Often the business closes after the investor gets the green card or is sold to other EB-5 investors. This explains why there were 300 restaurants on Valley Boulevard.10

Readers should also consider the case of the 99 Ranch Market. The Tawa Supermarket Companies was founded in 1984 by Taiwanese immigrant Roger Chen. Their supermarkets are nowadays more commonly known as 99 Ranch Market. Their business model, however, is not really focused on supermarkets themselves, but rather is a real estate model similar to how McDonalds operates. In 1988, Tawa created a development division named Tawa Commercial Property Development Corp. 99 Ranch Market then acted as two roles. First, similar to McDonalds, Tawa would buy or construct shopping plazas or strip malls, and then rent the space out to 99 Ranch Market itself, along with other Asian-friendly businesses. Second, 99 Ranch Market will move into pre-established big-box storefronts, and from there act as stable anchor points for smaller Asian-friendly businesses (often when a big-box store dies, smaller businesses within the same plaza would suffer from decreased foot-traffic). In these two ways, even though the incentive for new 99 Ranch Markets is purely for investment and return, new communities centered around Asian businesses do start to grow. Most evident is the start of east-side-San-Gabriel-Valley growth of Asian American population after Tawa’s construction of Rowland Heights Shopping

Plaza, which brought Chinese businesses to Rowland Heights and its surrounding eastern San Gabriel Valley, supporting further Asian American population growth in the east side.11

The title of this article is called “San Gabriel Valley, the First Ethnoburb, the Ability to Invest,” and indeed these are three concepts of equal importance. San Gabriel Valley is the geographical area for ethnic concentration. Ethnoburb is a collective cultural identity this concentration assumed. The ability to invest is the means to proactively tie an identity to an area.

Are ethnoburbs permanent? The current Chinatown of Downtown Los Angeles is “new” due to a very simple fact — the original Chinatown could never have been permanent with its dubious legal status. Permanence, to be judged in the American speculative real estate model, is simple, it is the ability to invest in real estate. Traditional ethnic enclaves are areas of exclusion, areas outside redlined from investments, while contrastingly San Gabriel Valley is formed with transnational real estate strategies and Capitals.

San Gabriel Valley

But what are the expressed forms of this newly gained permanence? Crawford again liked to describe San Gabriel Valley in this way:

There are multiple municipalities in the San Gabriel Valley, all very different from each other, each one having their own regulations, plans, negotiations, that shape the built environment. Alhambra followed a

New Urbanist model that involved a lot of design review, forbade mini-malls, required street fronts, and wanted

“American” restaurants, while adjacent San Gabriel was completely open to any kind of development like the mini-mall and Hilton hotel, and San Gabriel Square with a very irrational plan. San Marino, although it is mostly Asian, still retains its White Anglo-Saxon Protestant, upper class commercial district characteristics with zero formal evidence of Chinese influence.

Indeed if readers remember the third definition of an ethnoburb, that they “replicate some features of an ethnic enclave, but any and all features are subsumed within suburban characteristics that lack any specific minority identity,” readers should question the root cause of such formal expressions.

San Gabriel Valley, as is any other suburban space around the United States, is undergoing densification with 5-over-1 apartment projects. Two typical types of development exist in San Gabriel Valley — the appealing-to-AsianAmerican and the generic.12

Celadon in Monterey Park is a good example for appealing-to-Asian-American new development.13,14 Celadon is a mid-rise multifamily building, with 2 stories of retail. Its developer is Jerde. Jerde is an international development and investment firm, yet it is also keenly aware of the Asian American concentration in the area. On their website, Jerde has done population research and is

actively advertising towards their anticipated occupant mix. Their retail spaces are advertised to lease more towards Asian food, and the project name “Celadon” is also a reference towards East Asian ceramics-glazing process.

Yet if we examine the mass and form of the building, beneath the advertisement strategies, nothing concrete is really conforming to an Asian American lifestyle, which might involve multigenerational living, heavy-oil-cooking, or Asian American activities for amenity areas. The mass of the whole project is a typical double loaded corridor building. The floor plan is entirely typical for speculative real estate.

Another project, the Arcadia Town Center, is a good example for the other end of the spectrum — an entirely generic development project.15,16 Arcadia Town Center is also a mid-rise multifamily building, with one story of retail. It has local investments and local developers (New World International L.L.C., PSOMAS), and is located at a central location of

importance in Arcadia. It is near the Arcadia city park, a local landmark (the Denny’s windmill), a middle school and a high school, an important transit station, and the most important mall in the San Gabriel Valley (The Shop at Santa Anita). However, despite all the locality, the project itself is entirely detached from any attempts to appeal to Asian Americans, neither in advertisement strategies or massing-form.

More data must be gathered to reach a solid conclusion on the relation between local ethnic identities and investment forms, but so far it can be presumed that investment patterns follows greater trends of efficiency seen across the United States. What is the foundation of ethnoburb culture, and guides the culture’s formalization? A purely ethnicallyfocused study of San Gabriel Valley must be reconsidered to incorporate generic real estate strategies. Is the San Gabriel Valley really “the first ethnoburb,” or is it just an “Asian American suburb?” The ability to invest is at once freeing, liberating ethnic identities through providing them with land-based permanence, but also subsuming, all ethnically unique aspects of culture and expression of culture reabsorbed into the ultra-efficient forms of speculative investment patterns. Investment shifts from being a mere ability to a choice. An ability is an innocent potential-action. A choice is a considered-trade-off.

Bibliography

1 2020 Census Demographic Data Map Viewer, United States Census Bureau, maps. geo.census.gov/ddmv/map.html. Accessed 20 Nov. 2025.

2 Arcadia Town Center Project, Initial Study/ Mitigated Negative Declaration, 2024.

3 Berthelsen, Christian. “Frederic Hsieh Is Dead at 54; Made Asian-American Suburb.” The New York Times, 20 Aug. 1999, p. C16.

4 “Celadon.” JERDE, www.jerde.com/projects/7958/celadon

5 “Celadon Project.” City of Monterey Park, Community Development, www.montereypark.ca.gov/1079/Celadon-Project

6 Cheng, Suellen, and Munson Kwok. “The Golden Years of Los Angeles Chinatown: The Beginning.” Chinatown Los Angeles, 50th Year: The Golden Years, 1938–1988, Chinese Historical Society of Southern California, Los Angeles, California, 1988.

7 Cheng, Wendy. “‘Diversity’ on Main Street? Branding Race and Place in the New ‘Majority-Minority’ Suburbs.” Identities: Global Studies in Culture and Power, 2010

8 Crowds gather in 700-block North Alameda Street after police raids in Los Angeles, Calif., 1938. 25 May 1938.

9 “Current Projects.” City of Arcadia, www. arcadiaca.gov/shape/development_services_department/current_projects.php

10 Hung, Yu-Ju. “Migration, Social Network, and Identity: The Evolution of Chinese Community in East San Gabriel Valley, 1980–2010.” University of California, Riverside, 2013.

11 Li, Wei. Ethnoburb: The New Ethnic Community in Urban America. University of Hawai’i Press, 2016.

12 Lin, Jan, and Melody Chiong. “How Chinese Entrepreneurs Transformed the San Gabriel Valley.” PBS SoCal, 20 May 2016.

13 Rothstein, Richard. The Color of Law: A Forgotten History of How Our Government Segregated America. First edition, Liveright Publishing Corporation, a division of W.W. Norton & Company, 2017.

14 “San Gabriel Valley.” Metro, Los Angeles County Metropolitan Transportation Authority, www.metro.net/about/sgv/ . Accessed 20 Nov. 2025.

15 Terence Yuqiao Zhao. (5/13). 626: The Rise of an Asian American Suburb and the Future of Housing and Place in America. Stanford Digital Repository.

16 Zhang, Leo Tianju, and Margaret L. Crawford. Interview, 1 Dec. 2025.

Design For Real Estate: Contemporary Topics

Instructors

Timothy Love Report Design / Editor

Justin Joel Tan

Chair of the Department of Urban Planning and Design

Rachel Weber

Founding Director of the Master in Real Estate Program

Jerold S. Kayden

Copyright © 2025 President and Fellows of Harvard College. All rights reserved. No part of this book may be reproduced in any form without prior written permission from the Harvard University Graduate School of Design.

Image Credits

Cover Image: Jane Messinger

All other images credited in their respective chapters.

Text and images © 2025 by their authors

The editors have attempted to acknowledge all sources of images used and apologize for any errors or omissions.

Acknowledgement

We would like to extend our heartfelt thanks to our guest speakers who graciously shared their experiences and unique perspectives on these topics. The knowledge not only enriched our understanding but also opened up new avenues of thought for our investigation.

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Course Report

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Harvard GSD Department of Urban Planning and Design

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