Basement likely to survive change
By Thomas C. Palmer Jr. and Andrea Estes, Boston Globe Staff
BOSTON -- Seven companies have put bids in to buy and most likely redevelop the landmark Filene's building at Downtown Crossing, which is being sold by Macy's owner Federated Department Stores Inc., according to City Hall officials monitoring the sale.
It is almost certain that Filene's Basement -- which holds a long and low-rent lease -- will stay in place. But the upper floors could house additional retail space, and developers are contemplating constructing one or more towers on top of the building for luxury residences, offices, or some combination, real estate executives said yesterday.
''We're interested," said Robert Epstein, chief executive of the Abbey Group, the Boston firm that redeveloped an old Sears warehouse into the Landmark Center near Fenway Park and recently submitted a proposal for Filene's. ''I'd love to tell you we got the deal."
Newton-based developer Stephen R. Karp, who built the Atrium Mall in Chestnut Hill, also bid on the site, according to a real estate executive who asked not to be identified.
The Filene's building on Washington Street is in a prominent location, with an MBTA stop underneath that brings in throngs of people. But the 656,000-square-foot complex is a complicated site because of the presence of Filene's Basement and the building's designation on the National Register of Historic Places. Both factors could constrain redevelopment.
Bids were due for the 83-year-old building early this month, and it is unclear when Federated will choose a buyer. Filene's is slated to vacate the space next year. A Federated spokesman confirmed that ''there has been interest in the store" but wouldn't say who had bid.
''There are a lot of negotiations going on around the country, and it's not in our best interest to comment until we have a final determination," said Jim Sluzewski, the spokesman.
But who will move into the high-profile space is being closely watched.
The tenant ''is going to have a huge effect on Downtown Crossing's future and its ability to remake itself as one of the city's most vital retail districts," said Steven B. Samuels, chief executive of Samuels & Associates. Samuels, who is developing the large apartment complex Trilogy in the Fenway, did not bid on Filene's but said he might be interested if no deal is sealed immediately.
Federated put the Filene's building up for sale after it purchased Filene's's parent, May Department Stores Co., earlier this year. Federated will close several Filene's stores in Massachusetts next year, as well as other regional stores elsewhere, and sell their spaces. The remaining Filene's stores will be renamed Macy's.
Macy's department store in Downtown Crossing will remain across Summer Street from the Filene's building. Mayor Thomas M. Menino has promoted the idea of the popular discount store Target moving into Downtown Crossing, but Target was not among the bidders disclosed by the officials from the mayor's office, who asked not to be identified. Target Corp. could not be reached for comment.
Several developers expressed interest in the potential for renovation and adding at least one tower to the building. A partner of Stephen Weiner, who developed the Mall at Chestnut Hill,said Weiner is interested in the Filene's building and is in the running. The partner spoke on the condition that he not be identified.
According to City Hall, a team including Viking Asset Management and Aurora Capital Associates also bid. Officials at neither Viking nor Aurora could be reached for comment late yesterday.
None of the bid amounts were available. But real estate analysts have estimated the building could bring $130 million or more.
Despite the number of bids, developers yesterday said the site is not an easy one to redevelop because of the difficulties the Downtown Crossing retail district has experienced, the intense level of interest by City Hall officials, and uncertainty over how high the city might allow a new tower or towers to rise over the building.
Perhaps the most vexing factor is the presence of Filene's Basement, a favorite of City Hall that will apparently have to coexist with any new retailer, and whose presence also could make construction on the site difficult.
Filene's Basement, operated by a different company than Filene's, has a lease that runs through about 2025, at rent that industry executives said was low -- and one potential buyer characterized as ''essentially nothing." Potential bidders signed an agreement not to disclose details pertaining to the transaction.
A Filene's Basement spokeswoman, Patricia Boudrot, said the company does not know who the bidders are, but believes the store's future is secure. ''Lawyers have reviewed the lease and believe it is airtight," she said. Boudrot said about 10,000 shoppers visit the downtown store each day.
For Epstein of the Abbey Group, the off-price store is not an obstacle.
"It's Filene's Basement -- it's part of the allure," said Epstein.
Epstein said the Abbey Group had bid one amount on the building as is, and offered ''bonuses" for Federated that would be triggered later if the city approved expanded development such as a new tower. ''The city probably doesn't know yet what they want to see on that site," said Epstein. He said any buyer would probably go through a planning and designing process of a couple of years.
What is built would depend heavily on market conditions -- whether there's demand for condominiums or office space. New towers, if approved, could house a combination of uses.
''We're thinking: Keep exploring all options with the city," said Epstein. ''Residential, commercial, maybe some of each."
Menino said he will do whatever he can to ensure Filene's Basement stays in business at that site. As he collected money for the Salvation Army at Downtown Crossing yesterday, shoppers asked him to make sure the store remains open, he said.
"It's a fixture in our city," said Menino. ''It's a landmark and should be treated as a landmark."
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