Mark Johnson has the documents, the demand and the dirt to get moving on two new multifamily properties at Cambridge Crossing, an expansive mixed-use project directly across the Charles River from downtown Boston that is one of the city's largest developments under construction.
What Johnson's development firm, DivcoWest, lacks at the moment is outside financing needed to start construction on the properties. Lenders are being extra cautious, Johnson said, and tariffs have raised prices on the Canadian lumber that DivcoWest has used in other buildings at Cambridge Crossing, a project that's been in the works for years to transform a former railyard into an urban center connected by a revitalized transit station and 10 acres of green space with a large central park.
"It's been hard to convince investors" to provide loans for new construction, Johnson, DivcoWest's development head, said during a recent tour of the 43-acre development. The tour was conducted as part of the American Institute of Architects' yearly conference, held this year in Boston.
DivcoWest is one of a number of developers that have been forced to hit the pause button, or cancel projects entirely, because of lenders' reluctance to provide financing, according to ConstructConnect, a Cincinnati-based provider of U.S. construction industry data. Elevated interest rates and concerns about tariffs are taking a toll on the lending environment.
"More and more projects are being abandoned, or maybe just delayed," Michael Guckes, chief economist at ConstructConnect, told CoStar News. "Projects are becoming so much more expensive now."
Since the end of 2024, the number of commercial projects in the pre-construction phase that have been abandoned has risen 66.5%, with private sector abandonments reaching the highest level in recorded history in May, according to ConstructConnect.
DivcoWest has already made considerable progress at Cambridge Crossing. The tenants of the complex make up a who's who of pharmaceutical companies — AbbVie, Bristol Myers Squibb, Sanofi, the North American headquarters of Philips, and others — occupying offices and laboratory space. The company also recently completed work on 62,000 square feet of office and lab space at 441 Morgan Ave. at Cambridge Crossing that is leased to Astellas Pharma.
The multifamily developments at Cambridge Crossing include Park 151, a 20-story tower that DivcoWest completed in 2022 that is about 90% leased, according to CoStar data. Another residential property, Twenty20, opened in 2015 at Cambridge Crossing and is 98% leased.
Boston and Cambridge have pressing needs for more housing, and the additional multifamily projects proposed for Cambridge Crossing would be a great addition, Tim Love, founding principal at the Boston design firm Utile, told CoStar News. Utile is not involved in Cambridge Crossing.
DivcoWest acquired the property for Cambridge Crossing in 2015 for $291 million. The San Francisco-based company also has all the permits it needs from the cities of Cambridge, Boston and Somerville, as the project is located in all three municipalities.
While DivcoWest awaits the financing market to return, the developer is using one of the two parcels slated for an apartment building as a tree farm, at 330-360 Jacobs St. Trees grown there are planted at other places on the Cambridge Crossing campus.
Industrial past
Cambridge Crossing is located in a former industrial area that once included the largest glass factory in the United States and assorted railroad yards, said Kishore Varanasi, senior principal and director of urban design at CBT, one of the architecture firms behind the mixed-use project's master plan.
Now all that remains of the site's industrial past is Boston Sand & Gravel's concrete plant at 180 New Rutherford Ave. that opened during the Big Dig highway-reconstruction project in the 1990s and early 2000s. Boston Sand & Gravel has retained its prominent location and is the sole concrete supplier located in the Boston urban core, Suzannah Bigolin, urban design project planner for the city of Cambridge, told CoStar News.
The property was an obvious choice for redevelopment for housing and offices, considering its prime location between Boston's financial district and the Massachusetts Institute of Technology, CBT's Varanasi told CoStar News.
CBT designed several of the buildings at Cambridge Crossing. Companies from the life sciences, defense contracting and software industries, among other sectors, occupy office and lab space throughout Cambridge to take advantage of research projects at MIT and Harvard University, Varanasi said.
DivcoWest has shown that it can recruit those coveted high-tech and pharmaceutical tenants to Cambridge Crossing. Many of those employers' staff members want to live at Cambridge Crossing so they can walk to work, DivcoWest's Johnson said. But, for now, it's a waiting game before the company can start construction on those residential units.
"Interest rates [are] making it hard to get financing," Johnson said. "That's the biggest hole we have to fill right now."
For the record
Mark Roopenian at DivcoWest leads office and lab space leasing. Jesse Baerkahn and Dave Downing at Graffito SP represent DivcoWest on retail leasing. CBT, Jacobs, Perkins & Will, Ennead Architects, NBBJ and Prellwitz Chilinski Associates are the design architects. Michael Van Valkenburgh Architects is the landscape architect.