Leading US developer Hines teamed up with China’s Gemdale Properties & Investment in May to help kickstart a Boston project that has been in the works since 1990.
Now, just over three months later, the transpacific partners have submitted revised plans for the multi-phase development at Boston’s South Station transportation complex that include adding as many as 475 residential units to what had originally been planned primarily as an office development.
The new plans, which were submitted to the Boston Redevelopment Authority on Friday, come as Chinese developers and institutions scour for opportunities in the US, and Chinese individuals continue to buy more US homes than any other group of foreign buyers.
Chinese Developers Like Condos
“Due to changes in market conditions since 2006, the amount of office space being proposed has been reduced and the portion of space devoted to residential use has been increased,” David Perry, senior managing director at Hines said in a prepared statement cited in the Boston Business Journal.
When approved one decade ago, the previous set of plans for the South Station development had included hotel space, but no condo component.
Shanghai-listed Gemdale, which is a top ten developer in China and has a market capitalisation of more than $8.4 billion, earns most of its revenue from sales of condominiums and has been looking for opportunities to develop residential projects in the US to help grow its sales revenues.
Chinese buyers, including residents of mainland China, Hong Kong and Taiwan, purchased $27.3 billion in US residential property in the year ending March 31st, according to recent statistics released by the National Association of Realtors, making Chinese buyers the top cross-border buyer of American real estate for the fourth consecutive year.
Hines Leverages China Connections to Kickstart Boston Project
The deal between Hines and Gemdale, which was announced on May 13th without mention of any monetary figures on the investment involved, may be partly a product of the US developer’s long history in China. Since entering the mainland market in 1996, the Houston-based developer has built a portfolio of eight projects covering more than nine million square feet in the country.
The ability to bridge the US-China investment divide already was apparent in 2014, when the privately held builder joined China’s largest developer, Vanke, Beijing-based Cindat Captital Management and New York-based RFR Holdings to undertake a 61-storey luxury residential project in Manhattan.
After linking up with Gemdale, Hines’ new plans for its Boston project involve an initial phase centred on a 677 foot (206 metre) tower to include office, retail and other facilities on floors 1-26, and 175 residential units on floors 28-43.
While still not finalised, plans for the 438,000 square foot (41,000 square metre) 17-storey second phase tower could include up to 260 condos or 375 rental units. The developer also is considering a mix of hotel and residential space, or completely hotel development for the structure.
The nine-storey third phase of the development would include 511,000 square feet (47,000 square metres) of office space. Overall, the new plans expand the project to more than 2.5 million square feet.
New Deals for Gemdale and Boston
The deal is Gemdale’s third major investment in the US, and the second large-scale investment by Chinese investors in Boston.
In September last year Gemdale agreed to invest $125 million into a joint venture with California-based developer LaTerra Development on a mixed-use project in Hollywood, California. In 2014, the Shenzhen-based builder linked up with Dallas’ Lincoln Property to take on a 428,000 square foot grade A office project at 350 Bush Street in the San Francisco.
While Boston’s market remains a lesser-travelled destination for Chinese investors, China Life Insurance and Ping An Insurance – two of the mainland’s largest insurers – last year agreed to invest $500 million into New York developer Tishman Speyer’s mixed-use project on city’s Pier 4, a redevelopment area in the city’s Seaport District.