Tall & Urban News

Boston Properties (BXP) has shelved plans for the construction of a 27-story, 660,000-square-foot (61,316 square-meter) office tower at 171 Dartmouth St. in Boston's Back Bay area due to unfavorable financial conditions. BXP President Douglas Linde stated during the company’s third-quarter earnings call that current rental rates do not justify the high borrowing and construction costs, making the project financially unviable to begin within 2025.

The prohibitive construction costs are estimated between $1,400 and $1,600 per square foot. Linde explained that such high costs would require rents that far exceed what the current office market can sustain, even in high-demand areas like the Back Bay. The project, originally approved in 2017 and revised in 2022 to reduce its commercial space by 80,000 square feet (7,432 square meters), will only be reconsidered if there’s a significant drop in construction expenses and debt interest rates. Meanwhile, other parts of the 1.3-million-square-foot (120,773-square-meter) Back Bay project, such as two planned residential towers at 28 and 35 floors were not addressed.

The proposed office tower, approved by the city, would have been built on the site of a parking garage next to the Back Bay MBTA station. It forms part of a larger air-rights development. Despite a prime location, Back Bay’s office market faces challenges, with an 18% vacancy at the end of Q3 2024. BXP recently signed major leases in Boston, including an expansion with Bain Capital at 200 Clarendon St., but the decision to halt construction for 171 Dartmouth St. reduces near-term prospects for new Class A office space. Hines’ South Station high-rise and Skanska’s 380 Stuart St. are the only other major office projects in Boston’s central business district, though neither has secured anchor tenants or financing.

For now, the timeline for when work will begin on the office building remains uncertain.

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