Construction workers in Boston are going back to work. After years in limbo, a massive building project broke ground this week on the city's waterfront.
The developer says it's the largest private sector construction project underway in the country. Many are seeing the Fan Pier development as a positive sign for the economy.
It was the sort of event that almost makes you forget the recession ever happened. Under a big white party tent with balloons and band lights, bankers and developers beamed proudly next to the mayor and governor, each holding a silver shovel.
As the row of white collars poised to dump their shovelfuls of sand, technicians readied confetti guns and smoke machines.
Purple and white streamers filled the tent like a snow globe, and you could practically feel years of frustration venting into the harbor air. Put on hold four years ago amid the worsening financial climate, this prime piece of commercial real estate is finally under development.
One tenant alone will occupy more than a million square feet of office space. Those modern glass buildings will anchor more structures — a hotel, retail stores, restaurants and condominiums.
Leaning against a backhoe in his brown hard hat and suspenders, Joe White watched the festivities from a distance. He'll be supervising some of the 1,000 new construction jobs here, and says it's a long time coming.
"Like the whole economy, everybody's been holding back on the building, and right now, this is opening up," he says.
White would know; he's an excavator. And new construction—putting holes in the ground—has been the hardest thing to finance lately.
"The key to this particular project was finding the right tenant that was going to have steady cash flows going forward," says Robert Marquez, a finance professor at Boston University. He says that tenant is Vertex Pharmaceuticals.
The biotech research company just got approval from the Food and Drug Administration to sell its first major commercial drug, a potential blockbuster. Marquez says that turned the light from red to green.
"For investors, financing a project is always about risk. Getting a tenant in that has FDA approval for a breakthrough drug dramatically reduces that risk," he says.
In this case, Boston's economy is being reward for companies here that have invested in R&D. Mayor Tom Menino hopes the area around the Fan Pier development will attract more research companies. He's branding the waterfront area the Innovation District.
"There are developers we've met with who are looking at the Innovation District much differently than they had six months ago. With Vertex making their investment in this waterfront, they know there's great possibilities," Menino says.
Those possibilities are finally becoming reality for the developer of Fan Pier. Even as Joe Fallon has been fighting the tight credit markets, he's been staging events on the waterfront.
Fallon told the audience at the groundbreaking that later this summer he's bringing in cliff divers, who will jump from a nearby building into the harbor.
"The reason I'm bringing cliff diving? If we weren't going to get going, I was gonna jump!" Fallon says.
But the development is getting going. In Boston, things are improving. The hard-hit commercial real estate and construction industries are stepping back from the cliff.