Boston Properties

The media empire of Mortimer B. Zuckerman, publisher of U.S. News & World Report, New York City's Daily News , and the Atlantic Monthly, was established from the fortune he amassed in commercial real-estate development. When Boston Properties, Inc. was reorganized in 1997 from a partnership of Zuckerman and Edward H. Linde to a publicly owned real-estate investment trust, it owned 63 office buildings, nine industrial properties, two hotels, and a parking garage. But it was a full-service real-estate company that also managed almost all its own properties, had put up buildings for other parties, and had substantial in-house expertise in acquisitions, development, financing, marketing, leasing, accounting, and legal services. The company's presence was chiefly in the Boston and Washington metropolitan areas. Shortly after founding Boston Properties, Zuckerman took Linde as a quarter-share partner. Linde had the job of constructing buildings and managing properties, while Zuckerman made deals and arranged the financing. At first Boston Properties was most active on the West Coast. As the controlling general partner, it constructed the nine-building Hilltop Business Center in South San Francisco during the early 1970s and also built two industrial properties in this community. By late 1985 Boston Properties owned and managed 53 buildings in Washington, Boston, and New York as well as California, with more than 9 million square feet of space. The market value of its portfolio was estimated at $1.3 billion, with 55 percent of the value borrowed, which was considered on the conservative side among developers. The company held its properties for the long term and had sold only two thus far. Boston Properties weathered the real estate recession of 1989--93 and claimed an average annual return of about 14.2 percent between 1992 and 1996. Between 1989 and 1996 it completed eight third-party development projects on a fee basis in the Baltimore, Boston, New York, and Washington metropolitan areas. Early in its career, Boston Properties was chosen by Boston Mayor Kevin White to build Park Plaza, a 10-acre, five-tower residential-retail-office complex overlooking the Public Gardens next to Boston Common, the city's downtown park. Opposition quickly arose from neighborhood groups objecting to the size and height of the development, especially because it would cast a shadow over the park. After seven years a scaled-down version was approved, but Boston Properties walked away from the project, "exhausted by the process," according to Zuckerman. Boston Properties lost this battle but essentially won the war, because Zuckerman and Linde were so busy pushing Park Plaza that they had no time for other ventures that might have collapsed in the 1974--75 crash of the Boston real-estate market. With cash on hand the company bought sites cheap from financially troubled developers. Mayor White approved Boston Properties' plan to build a Marriott hotel (completed in 1982) on public waterfront land even though a committee he had appointed ranked it dead last among eight proposals. The company also won a competition to develop a Cambridge 24-acre urban-renewal site adjacent to the Massachusetts Institute of Technology, on which it constructed 10 buildings, including another Marriott hotel. In the early 1970s Zuckerman and Linde identified the area of suburban Boston along Route 128 as ready for the development of modern office buildings, and they selected the quadrant west/northwest of Boston between the Massachusetts Turnpike and U.S. 93 as the most desirable area in which to concentrate their efforts. Between 1978 and 1988, Boston Properties acquired 13 key sites in that area and completed development of 17 office buildings on those sites, containing more than two million net rentable square feet. Boston Properties opened a Washington office in 1979 and completed Capital Gallery, an office building south of the Mall and southwest of the Capitol, in