July 19, 2024
Government Center Garage collapse highlights tightrope walk of large real estate developments

Dubbed Bulfinch Crossing, the project is a decadelong effort to transform the hulking concrete garage into a complex of soaring towers and new lab space, and in the process remake a key juncture of downtown Boston. It’s set to include the world headquarters of State Street Corp. and generate thousands of jobs and tens of millions of dollars in taxes and other fees for the city. But just as the potential benefits are massive, so too is the potential for tragedy to prove economically devastating, as delays and other unexpected financial hits mount.

John Ferrante, chief executive of Associated General Contractors of Massachusetts, said demolition work is among the more dangerous aspects of construction.

“Especially when you’re operating on these large megaprojects, that compounds that risk,” Ferrante said. “Safety is still engrained in the culture of construction at this point. It’s top of mind for every contractor that’s out there working, for exactly this reason.”

Work is on hold at Bulfinch Crossing while a variety of local and federal agencies investigate last month’s accident. No timeline has been given. It’s expected an investigation could take months, though the site could be handed back over to developers sooner than that.

Those delays could result in big financial losses, said Ilyas Bhatti, interim dean of Wentworth Institute of Technology’s School of Management.

“That will have an economic impact, no question about it,” said Bhatti.

Bhatti, a construction management professor who worked as an associate project director on the Big Dig, has studied construction failures and collapses across the United States. While most projects are successful, he said, accidents do happen.

In the past five years, 67 construction workers in Massachusetts have died on the job due to workplace hazards, according to the Massachusetts Coalition for Occupational Safety and Health.

“The pressure on building in a highly urbanized area is always greater than if you were building in an open area,” Bhatti said, given the vehicular and pedestrian, tight space in which to build, and proximity to residential neighborhoods. “It’s a unique challenge and it has to be taken very seriously.”

The developers of Bulfinch Crossing — a partnership of veteran Boston developer The HYM Investment Group and Washington, D.C.-based National Real Estate Advisors — said they’re cooperating fully with investigators.

”The deconstruction of the Government Center Garage was engineered by leading industry experts and executed by some of the premier contractors in the region,” they said in a statement. (Both HYM and general contractor John Moriarty & Associates declined to comment in more detail). “All applicable permits were obtained and the overarching lens is that of safety. Safety for all who work on the project daily or simply walk or drive by it.”

Bulfinch Crossing is just one of several complex megaprojects underway right now in Boston, where the rapidly dwindling bank of buildable sites has prompted real estate developers to pursue ever-more-complicated projects. There’s a tower rising from South Station, and two huge new developments on decks atop the Massachusetts Turnpike. Sites locked among highway off-ramps and other knotty infrastructure are no longer off-limits.

The economic impact of those real estate developments are enormous, and often touted by politicians and developers alike. When Bulfinch Crossing was approved in 2016, the city estimated the first two phases — a 480-foot residential tower called The Sudbury and the 43-story, 600-foot One Congress office tower — would create 1,500 construction jobs and up to 5,000 office jobs, along with nearly $28 million in new taxes and other fees.

But an even bigger benefit could come with the project’s third phase — a lab building along the Rose Fitzgerald Kennedy Greenway that’ll eventually hold 3,000 more jobs. This requires taking down the portion of the garage that looms over Congress Street, eliminating “a barrier,” as developers put it, that divides several neighborhoods in the heart of downtown.

Building collapse of Government Center garage where a construction worker died in late March. David L. Ryan/Globe Staff

It’s hugely complicated work. Not only are parts of the garage — and Congress Street below it — still open, but the portion of the garage that was being demolished is located directly above Haymarket Station and two active MBTA lines — lines and a station that shuttered immediately following the accident. The Orange Line has reopened, but Green Line service remains suspended between North Station and Government Center.

“It’s very complicated — not only the activity above ground, but the activity below ground,” Bhatti said. “You have to have a plan that is very meticulous in detail, that takes into account every possibility.”

Delay could prove costly. Though it could have cost even more, if not for a small but crucial tweak to the project’s city approvals earlier this year.

When the Boston Planning & Development Agency first approved the project in 2016, their OK came with an important condition. HYM would need to finish demolition of the garage before tenants could occupy the One Congress office tower.

At the time, city officials were wary of leaving the project half-done, as the demolition and subsequent stoppage of work at the former Filene’s Basement in Downtown Crossing had done years before.

Bulfinch Crossing met with quick success. The Sudbury opened to residents last summer. State Street signed a lease to fill half of One Congress before construction began, and now law firm K&L Gates and Cambridge medical software company InterSystems are expected to round out the 1 million-square-foot tower.

Then last summer, HYM asked the city to revise their plan to allow lab space atop the Haymarket MBTA station instead of the hotel, office, and residential complex initially planned there. When the city approved the change in January, HYM was well ahead of schedule on the garage demolition, and the BPDA removed the requirement the garage must come down before tenants could occupy One Congress.

That was fortuitous for HYM, as it means State Street and the other tenants can move into the office tower as scheduled next year, not wait for a garage demolition that will likely be delayed by the investigation into last month’s tragedy.

“State Street plans to begin taking occupancy at One Congress in the first half of 2023,” the company said in a statement.

Despite that dodged bullet, the cost of delays on the demolition and HYM’s planned 410,000-square-foot lab building could be significant. Interest rates and materials costs are both rising steadily, and in Boston’s white-hot market for life sciences real estate, speed to market — in other words, the ability to build and lease as quickly as possible — is a major competitive advantage.

And there’s big money at stake. One industry source indicated it costs at least $1,500 per square foot to develop a lab in Boston now, separate from land costs — putting a lab the size of the planned Government Center facility in the range of $615 million to develop. Pharma giant Eli Lilly plans to invest $700 million to build and lease a comparably sized life sciences building along Fort Point Channel. Boston life sciences investor Beacon Capital — which industry sources said is financing the lab building — declined to comment.

An aerial photo taken last year of The Sudbury and One Congress office towers, the first two phases of Bulfinch Crossing, with the to-be-demolished Government Center Garage below. David L. Ryan/Globe Staff

Beyond delays, there could be other costs, from potential lawsuits to fixing any damage to the MBTA. They’re still unknown, but they could be significant.

The MBTA and the development team have an agreement that “includes mechanisms to address reimbursements for costs associated with development above the tunnels,” agency spokesman Joe Pesaturo said in an e-mail.

“The MBTA will address those issues at the appropriate time,” he said.

One Boston developer who spoke on condition of anonymity told The Boston Globe that costs for a repair could be substantial.

“There could be so much expense with that repair — with the state, with the MBTA. It could impact other projects that are being built in and around subway tunnels, if there becomes fear about building around those things,” the developer said. “But people do complicated things all the time. When you’re building in New York City, you’re always building over a subway tunnel . . . All of Chicago is built on a deck. There’s plenty of other cities where there’s more complicated substructure.”

An investigation into the tragedy will likely provide answers in the weeks and months ahead. But, of course, nothing can overshadow the Monsini family’s loss.

“It’s a horrible tragedy, it really is,” said Bhatti, of Wentworth. “Everybody is horrified as to why it happened, how could it have happened.”

Catherine Carlock can be reached at [email protected]. Follow her on Twitter @bycathcarlock.