Raising the alarm on housing
O’Brien: Boston rental housing doesn’t pencil out
Tom O’Brien, one of the Boston-area’s leading developers, is raising the alarm about the region’s housing crisis.
“One of the most important statistics that I’ve focused on in the last six months is that over the last five years we’ve created 300,000 jobs inside Route 128,” he says. “During that same period of time, we only created 110,000 new units of housing.”
O’Brien said the imbalance between jobs and housing has been growing year after year for a long time. Now, he says, the situation is reaching dangerous levels.
“We’re building a building in downtown Boston right now and the cost of that is $675,000 per unit to build that tower,” he says of Bulfinch Crossing, the mixed-used project arising from the Government Center Garage. And O’Brien points out that the $675,000 price was locked in about two years ago, so the cost today would be even more.
“It’s a big issue for us in the city right now. I know that people are anxious because housing costs so much,” he said on the CommonWealth Codcast. ”If you’re a renter, you’re being asked to pay more and more of your income to pay rent. The problem right now is it’s very expensive to build these units. Right now, and this may be a little bit shocking to you guys, from our company’s perspective new high-rise rental housing in Boston does not pencil out. It does not underwrite because it’s so expensive. It’s really hard to see where the housing production process is going to go from here.”
“The broader public really needs to understand that we need to build more housing and we need to build it at all levels, a lot of it,” O’Brien says.
O’Brien’s HYM Investment Group is trying to produce more housing at Suffolk Downs, a 161-acre site that straddles East Boston and Revere and is bracketed by two Blue Line stations. HYM bought the property in May 2017 and plans to build 10,000 units of housing there (almost two-thirds apartments), plus 5.2 million square feet of office space, 900,000 square feet of retail and hotel space, and 40 acres, or a quarter of the site, of open space. He says some of the profit margin from the office space will be used to keep housing costs in the reasonable range.
HYM hopes to begin construction this year, near the Beachmont T Station, and complete the entire project over 15 to 20 years. O’Brien thinks the area will eventually break into three neighborhoods – Beachmont; Bell Isle Square, near the Suffolk Downs T station; and the rest of the property, which he is calling Suffolk Downs at least for now.
O’Brien says he has gone to great lengths to create a neighborhood that will fit into the surrounding community. He and his staff have sounded out the community in Spanish and English and promised local-area companies will fill at least 10 percent of the retail space. Unlike the Seaport District, where nearly all of the affordable units were built off-site, all of the affordable units at Suffolk Downs (the most created by any single Boston project) will be built on-site. Ten percent of all the housing would be set aside for the elderly.“We really want this to be a community,” O’Brien said. “We’re starting from the get-go to take this in a different direction.”
O’Brien’s personal background is an interesting part of his story. He and his wife Patricia adopted five children from Colombia, Guatemala, Ecuador, and Ethiopia. His parents are retired and live on the Cape. And he has two brothers who have both been successful in their fields – older brother John, a former state senator from Andover who now works for Washington Gas in the District of Columbia, and younger brother Bill, the head coach of the Houston Texans.