By Adam Swift
Tom O’Brien of HYM Development gave an update on the Suffolk Downs development project during a special city council committee of the whole meeting on Monday night.
Councillors Joanne McKenna and Michelle Kelley introduced the motion, both to address rumors about the progress of development of the site at the former Suffolk Downs racetrack property, and to help understand how new growth revenue from the project will help with the funding of a new Revere High School.
In April, the HYM Investment Group, in partnership with Cathexis and National Real Estate Advisors, announced that pre-leasing has begun at Amaya, a 475-unit project that will include over 34,000 square feet of amenities and 24,000 square feet of ground-level retail space in Revere.
The building will be the first to open as part of the massive redevelopment of the site in Revere and East Boston.
“We acquired the site in 2017 and in the time since we, together with a group of investors, have raised and spent over $550 million in capital on the site,” said O’Brien. “The first new building on the site is being completed as we speak, and the first units will be delivered in the month of June. That building was a $250 million building.”
The other $300 million has been spent on a combination of site acquisition and infrastructure investments, including roads, water and sewer, and parks, O’Brien said.
In addition, the 8,500-seat Stage at Suffolk Downs is set to open for the second year with a concert on Saturday.
“We feel good about where we are,” said O’Brien. “It’s no secret that there have been challenges in the economy this year. Interest rates went up significantly since the beginning of 2023, which has affected everybody.”
However, O’Brien said HYM has the next building on the property designed and ready to go later this year.
McKenna noted that she requested that O’Brien appear before the council to clarify some of the rumors the council was hearing that the site was not doing well.
Kelley said that in addition to the rumors about the site, the council is slated to vote on funding for the new high school project at its May 20 meeting. Much of the proposed funding for the debt for the new school is predicated upon new growth figures in the city over the next decade, predominantly from the Suffolk Downs project.
The overall plan for the 161-acre Suffolk Downs site in Revere and East Boston calls for 5.2 million square feet of life science and office space, 10.15 million square feet of residential space, 450,000 square feet of retail space, 400,000 square feet of hotel space, and over 40 acres of open space.
“In a presentation made by city CFO Richard Viscay in January of 2023, we were told that over the course of a 20-year span, we could expect $40 million in revenue from the project at Suffolk Downs,” said Kelley. “Most importantly, how rapidly this development progresses would be the key factor in the city’s ability to finance the new high school. My biggest concern before we take a vote for the bonding for the new high school on May 20 is whether the project is still progressing at the original projections that were proposed.”
O’Brien said that over the course of a 20-year pace, the developers did anticipate that there would be occasional recessions during the period.
“From a commercial real estate perspective, commercial real estate is in a recession right now,” said O’Brien. “If you look at the city of Boston and other cities, there are very few new starts of commercial buildings or large residential buildings. But we have a building that we are delivering right now … and we have the next building in which we have spent $10 million to design and prepare and get that building in the ground.”
O’Brien said the objective is to build the site as fast as possible to bring people to the site. He added that the first building has nine retail slots, and there are already seven letters of intent from businesses looking to occupy those spots.
“I can assure you, councilor, we acquired the site together with a very stable group of investors,” said O’Brien. “Having spent $550 million so far on the site, nobody is walking away from this and nobody wants to slow it down. But we do exist in a capital environment where interest rates have gone up by a hundred basis points, 200 basis points … and it has made things more difficult, more challenging, but we feel like things are improving.”
O’Brien said he believed the project remains on track. He estimated that 50 percent of the first phase of the four-phase overall development is either under construction or designed.
Kelley asked if there was a timeline in place for phases two through four.
“We would try to begin those as quickly as we could after phase one,” said O’Brien. “If we could, we would build it all as fast as we possibly can. The problem is the absorption of the residential buildings and the absorption of the commercial buildings.”
O’Brien said the developers are spending the money on the site on infrastructure and parks with the intent of building as fast as they can.
“This is a huge investment for everybody, and our intention is to build this out,” he said.
Councillor-at-Large Anthony Zambuto praised O’Brien for his honesty and commitment to the project, and said that he believed that any rumors about the project are due to some people being disgruntled about changes in the development plans.
“I’m thrilled that you are the developer at Suffolk Downs, but I am not thrilled that they are going to put the burden of paying for this high school on your back,” said Zambuto. “When I first voted for your project, it was to give a tax cut to my citizens, not to help fund a half-a-billion-dollar high school, but that’s neither here nor there.”
O’Brien stated that when HYM completes all phases of the development within the next decades, they will have raised and spent over $10 billion in capital.
“If we do that, and you think about the value that creates for this city, $10 billion in capital hopefully creates value that is in excess of that,” said O’Brien. “That is really what the objective is here to do this.”
Councillor-at-Large Juan Pablo Jaramillo asked if the developer had done any studies on what the overall economic effect of the project would be on the city as a whole.
“During the permitting process, we hired an outside third party to do an economic analysis … as we build these buildings, what will it produce in terms of tax revenue,” said O’Brien.
He added that he believes the city’s tax projections are based on information that has been provided by the development team.
