The Sox can't afford Fenway

The Red Sox say $90 million will pay for the land needed to build a new park. Trouble is, it's going to cost a lot more than that to acquire the space.

by Seth Gitell

Has the Fenway become too hot for the Red Sox to handle? The century-old neighborhood is experiencing a land and development boom that may price the baseball team out of its plans to build a new park. Commercial rents have more than doubled during the past five years. Rents for one-bedroom apartments in old residential buildings are now up over $1200. The Landmark Center -- an office complex with its shops and state-of-the art movie theater -- is opening in the site of the old Sears Building. Developers are planning a hotel and housing complex across Brookline Avenue from the Landmark Center, and a swanky European-style hotel is being constructed in Kenmore Square where one of Boston's name chefs will likely operate the restaurant.

Fenway's skyrocketing land value was driven home by a real-estate developer at a closed-door, off-the-record luncheon meeting held at the 101 Federal Street offices of Nixon Peabody May 15. The developer -- speaking at the meeting sponsored by the Boston Municipal Research Bureau and attended by leading real-estate attorney Lawrence DiCara, most members of the Boston City Council, and other business leaders -- actually asked why the city would squander one of its hottest areas on a new ballpark, an area that tax-paying real-estate developers are "salivating" over.

Sox CEO John Harrington announced last Friday he will seek $275 million in public financing to build a new park and pony up $352 of the team's money to fund the estimated $627 cost of a new stadium. But the plan doesn't take the Fenway's dramatically increasing land value into account. And while it doesn't call for an increase in the Sox' contribution to the plan -- as compared with the numbers that have been circulating in the press since the team announced plans to build a park -- the public portion has increased by the now-asked-for $82 million. But given all that is happening with the market, the $90 million the Red Sox have allocated for land acquisition is a paltry and inadequate figure -- a fact privately acknowledged by some of Boston's most experienced land assessors.

Experts say it may cost the Sox more than five times that amount -- around $450 million -- to acquire the needed land. That's just $177 million less than the $627 million budgeted for the entire project. Real-estate experts note the city paid the owners of land taken for the Massachusetts Convention Center four times the assessed values of their properties. But the market value for the properties the Red Sox hope to take may be seven to 10 times that of their assessed value. The Red Sox have said they need 15.5 acres to construct the ballpark. City assessors have valued the 26 property parcels on these acres -- some 459,765 square feet of land -- at $48.7 million. Going by the seven to 10 times the assessed value formula, the Red Sox would need between $341 million and $487 million just to purchase the land. (Even if costs are measured by what was done with the waterfront properties -- which were sold at four times their assessed values -- it brings the land acquisition costs to $195 million, an amount that would derail the Sox financing plan.) The money earmarked for purchasing land won't pay for the demolition of existing buildings and other site-preparation costs -- nor would it pay for the any legal fees associated with litigating the land-takings. The Red Sox have asked the city to contribute an additional $50 million for "site preparation" costs.

It's important to note that this is only an imprecise, back-of-the-envelope estimate, not the kind of parcel-by-parcel, building-by-building analysis a skilled appraiser could do. It should also be noted the offices of the Boston Phoenix, at 126 Brookline Avenue, would be demolished under the Sox' plan. (The Phoenix, which agrees that the players and their fans deserve a new park, has editorialized against the plan, arguing that the new park would be better situated in another location.) Also slated for demolition, among other properties, are the site of the Twins Enterprises souvenir shop and the Howard Johnson's Hotel on Boylston Street.

The high value of Fenway property is the result of several factors converging at the same time. First, property in Boston is scarce, and the real-estate boom is at its height. So all property is expensive right now. Second, the Fenway, in particular, has become a desirable neighborhood in recent years. With its central location, the addition of the Landmark Center and other developments, it's becoming a destination location in and of itself. Third, Boston Mayor Tom Menino -- by initiating a rezoning study of the area for the purposes of putting in a new ballpark -- has opened the door to the development of new kinds of properties on land now zoned for only minimal industrial uses. Developers believe they will soon be able to build high on Boylston Street, which is now restricted to two stories. Finally, the eminent domain process itself is elongated and costly. As seen with the waterfront takings, land costs much more than the government first estimates.

This unfolding business dynamic has profound political ramifications. It means the Red Sox are going to need even more money than the amounts they're asking Mayor Thomas Menino and the state lawmakers -- namely, House Speaker Thomas Finneran and Senate President Thomas Birmingham -- to hand over. As reported in the Phoenix two weeks ago (see "Fenway Funk," May 12), the Red Sox are already under severe financial strain to finance what they say is a $627 million ballpark project. Under the Red Sox plan the team would contribute $352 million of its own money toward the new stadium and call upon the city to purchase the land needed for it and then lease it back to the team. Boom economy realities only worsen the Red Sox position. Putting aside the millions of dollars of additional funding the team needs just as a result of Federal Bank Reserve Chairman Alan Greenspan's decision last Tuesday to raise interest rates a half point, the team, like an old Charlestown townie, is rapidly finding itself priced out of a rapidly improving neighborhood. But unlike the residents of South Boston and Charlestown and elsewhere who have been forced to move out to the I-495 belt, the Red Sox hope that a government subsidy will allow them to stay.

Unless the team can force landowners to voluntarily accept less for their properties than they are worth, the Red Sox will need the city to initiate land-taking proceedings. First the city, as part of a process known in legal parlance as eminent domain, must show that the taking achieves a "public purpose" -- a standard made much tougher under a recent case involving a minor-league baseball stadium in Springfield. The court rejected an attempt by the city of Springfield to take land for a minor league on the grounds that this did not constitute a public purpose and, accordingly, violated the state constitution. If the Red Sox can get through this stage successfully, a judge will eventually put the question of the market value of the property before a jury. To determine the market value, the jury will look to the rents at other projects in the area, and if those rents are going up, as they are in the Fenway, the ultimate finding must reflect that. Further, the valuation must be based upon the time the taking is attempted. If the city wants to take the property at the apex of the strongest land boom in more than a decade, too bad. The government -- or the Red Sox -- must pay top dollar. That still doesn't include all of the costs. As part of an eminent-domain proceeding, the taker must also compensate businesses and residential tenants who are forced to move, legal experts say. This can also be costly.

House Speaker Finneran raised some of these issues during a May 23 speech to the Greater Boston Chamber of Commerce. "I suggested to the members of the audience that they should read the Springfield case," Finneran recounted in an interview with the Phoenix -- adding the public-purpose question will be one for the courts to decide. "None of us should go into this thinking it's legal serendipity," Finneran says. "It isn't."

Ultimately, a jury will decide what the city will pay -- and it will likely be an amount far greater than $90 million. "The question is what a willing buyer would pay a willing seller," explains Herbert Gleason, a former corporation counsel for Boston and an attorney retained by the Fenway Action Coalition and Save Fenway Park!. "You pay market value. To force anyone to accept anything less than that is unconstitutional -- classic deprivation of private property without due process of law."

One case somewhat similar to what may happen in the Fenway is that of the South Boston waterfront, where the state plans to put the new convention center. According to the Boston Globe, the city has reached legal settlements with many of the land owners who have plots needed to build the state's convention center. Though last month developer Frank McCourt challenged the amount offered to him by the city for his waterfront parcel needed for the new convention center last April. As an indicator of what the city is paying, the Boston Herald reported that the city paid $43 million for a parcel of land owned by James Pappas -- an amount four times greater the assessed value of the property.

Given the Fenway neighborhood is so hot right now, the Red Sox may be forced into paying an even richer valuation than the convention center authority did. "You have an improving trend in the neighborhood. It's not stable. It's not declining," says one real-estate appraiser, who declined to be identified. (Appraisers must keep the details of their work for clients confidential. In addition, many may end up in court testifying for one side or another in disputes over what land is worth -- a likely scenario with some of the Fenway parcels. Hence, the need for anonymity.) The appraiser explained that the shortage of office and housing space in Boston coupled with the Fenway's convenient location make it a goldmine. To waste this land on a new ballpark would be a mistake, the appraiser said: "You're screwing properties that are improving very fast."

Nothing exemplifies the change in land value in the Fenway more than the Landmark Center in the site of what was once the Sears Building. What was for years an empty old building will soon boast a Bed, Bath & Beyond, a Staples -- which opened for business last week, a state-of-the-art General Cinema, thousands of square feet of office space, and, eventually, a Longhorn Steakhouse. Bob Epstein, the chairman of the Abbey Group, which is developing the project, confirms that rents have dramatically increased since the start of work. Abbey is also responsible for a large, luxury residential building, Landmark Square, across Boylston Street.

"There is no question that Landmark Square and Landmark Center have set a totally new standard for the value of space in the Fenway area," says Epstein. "The rents for the last pieces of remaining space are above $35 a foot -- anywhere from double to triple what Fenway rents were five years ago."

This figure is only likely to increase as Fenway commercial rents fall in line with the rest of the city. Rents in Back Bay, a close-by neighborhood whose residents are spilling into the Fenway, are between $50 and $70 per square foot. And in Brighton, a less-convenient area than the Fenway, commercial rents are at a comparable $35 per square foot.

If the Red Sox just had to contend with the Landmark project that would be one thing, but a series of pricey developments is encircling the area for the proposed ballpark. Announcements of new real-estate development projects take place almost monthly. The latest came just two weeks ago when developer John Rosenthal unveiled plans to construct a massive residential building over the Massachusetts Turnpike with hundreds of units on the site of a Landsdowne Street garage. Just weeks earlier Steve Samuels announced his plan to build a project with a 200-room hotel, 320 residential units, and 149,000 square feet of retail space on Brookline Avenue. And these are just some of the more significant changes happening in the Fenway neighborhood.

The Samuels project is already winning the support of the community. The development, like the Landmark and the others in the area, is sold around the idea that the Fenway can be a destination in and of itself. With residential neighborhoods nearby in every direction, the Samuels project also hopes to bridge the area between Kenmore Square and the Longwood Medical Area. While nothing has been finalized, the plans for the project include a Shaw's Supermarket on site. Because Shaw's owns Star Market, this would involve the closing of the Star Market on Boylston Street. Which would open up the Star Market site for a development of its own.

All this is going on at the same time Kenmore Square is experiencing a similarly dramatic transformation. Not only is there some kind of development in the works for the Howard Johnson's Hotel on Comm Ave, but also Great Bays Holdings is constructing a 150-room, European-style hotel in the space formerly occupied by the Rathskeller bar. The principal in the company constructing the project, Terrence Guiney, says the development will have commercial space and two restaurants, including one he hopes will be run in partnership with one of Boston's elite chefs. Of the prospective rents for the property, Guiney says "we're assuming we will be at $35-per-square-foot and above that."

Not only are the high rents the new project gets key to calculating land value in the neighborhood, but also they convinced Guiney that the area is trending up. "We sensed early on that this very important neighborhood in the city that had fallen into disrepair was about to undergo a turnaround," says Guiney, making the point that the Sears Tower/Landmark project helped convey the idea that the entire area is in an upswing. "It's a terrific location, sitting on the edge of the Boston University campus and near the Longwood Hospital complex and on a major transportation hub."

Without even any talk of infrastructure improvements for a new ballpark, plans to refurbish the MBTA hub at Kenmore Square are already under way. Developers, such as Guiney, believe the multi-million dollar investment at the T station will someday make the bus kiosk in Kenmore Square less of an eyesore. "It will no longer be just a bus queuing area. It will let that area become a part of the Commonwealth Avenue mall."

All these improvements are quietly being noted by Boston real-estate experts and appraisers. "This is absolutely a hotbed," says Robert Cleary, vice-president of Meredith and Grew, the real-estate broker handling the Landmark development. "You've got property values that are skyrocketing over there."

While some chalk up the increasing property values to speculation centered on the prospects of a new ballpark, real-estate experts say that the economics of a stadium make that the least valuable use for the land. The director of the real-estate program at the Massachusetts Institute of Technology, Bill Wheaton, says both Boston and the market would be well served with more housing in the Fenway. "It's a very attractive area. It's close to everything. There's been an improvement in crime. There's a shortage of housing in the city. There's a huge number of professionals in the city that want to live in the city," says Wheaton. "The next place to expand is that area."

That explains why the Red Sox need the city to purchase the land for them -- as their plan details. The Red Sox are asking Boston to buy up the land using the city's power of eminent domain. Under this plan, the Red Sox will lease the land from the city. Because the potential of the neighborhood is so high and there are projects already up and running, it is far from the "blighted" standard it would have to be to enable the city to allow the Red Sox to take the land themselves. Even so, the city will not have an easy time demonstrating that the ballbark furthers a "public purpose," necessary to allow the land-taking to go forward. As has been widely reported, a Hampden Superior Court Judge ruled that a proposed Springfield baseball stadium did not constitute a public purpose.

There could be many more worthy uses for the land from the public's perspective than a baseball stadium. Neighborhood advocates have their eye on the property for housing and mixed use development. The director of community organizing for the Fenway Community Development Corporation, Jethro Heiko, says the Fenway "has more potential for housing to be built in the Fenway than even in the waterfront."

One question-mark regarding development in the area where the Red Sox hope to build the new ballpark involves zoning. Mayor Menino has appointed a Fenway Planning Task Force to study the possibility of expanding the zoning of much of that area beyond two-story industrial uses. Menino needs the zoning changes to allow the new ballpark to come in. It's not clear whether the zoning changes will go through if a new ballpark isn't built. But, presumably, the mayor's willingness to change the zoning has set a precedent that may apply to other developers. A steering committee member of the Fenway Action Coalition, Peter Catalano, theorizes that the minute the mayor opened the door to new zoning for the area, property values escalated even higher. "Ironically, it's undermining the Red Sox," says Catalano. "Menino's shoddy scheme has backfired by making the project much more expensive." Menino, in effect, fast-tracked the zoning changes, by setting up the special committee and signaling to developers that the area's traditional zoning usages are not etched in stone.

There can be no question that the Red Sox have low-balled their estimate of land acquisition costs. Just a few years ago the Red Sox had the opportunity to buy at then-market value a large amount of the land they are now asking the city to take. Instead, Arthur D'Angelo and his family bought the property. Today, defenders of the Red Sox maintain that the team failed to step up to the plate then because they hoped to get a new stadium on the city's waterfront. It was only when the New England Patriots' effort to build there faced massive community resistance that the Sox realized these plans were futile. Still, even with the Red Sox lack of acumen -- failing to buy up near-by land quietly when they could -- much of the blame for the current difficulties lies with the city, which have jammed the Red Sox into such a tough position.

To understand the fix the Red Sox are in, consider what the chief executive officer of the Red Sox, John Harrington, told Boston Globe sports columnist, Will McDonough, two years ago about the costs of land acquisition. "It will probably cost between $80 million and $100 million," Harrington told McDonough. That was two years ago, before Landmark, before the Samuels project, before the biggest economic boom in anybody's memory had revved up. The Red Sox need to rethink their finance plan. How much is the land really worth? In the words of one real estate developer: "pure gold." Can anyone afford that?

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Seth Gitell can be reached at sgitell[a]phx.com

Has the Fenway become too hot for the Red Sox to handle? The century-old neighborhood is experiencing a land and development boom that may price the baseball team out of its plans to build a new park. Commercial rents have more than doubled during the past five years. Rents for one-bedroom apartments in old residential buildings are now up over $1200. The Landmark Center -- an office complex with its shops and state-of-the art movie theater -- is opening in the site of the old Sears Building. Developers are planning a hotel and housing complex across Brookline Avenue from the Landmark Center, and a swanky European-style hotel is being constructed in Kenmore Square where one of Boston's name chefs will likely operate the restaurant.

Fenway's skyrocketing land value was driven home by a real-estate developer at a closed-door, off-the-record luncheon meeting held at the 101 Federal Street offices of Nixon Peabody May 15. The developer -- speaking at the meeting sponsored by the Boston Municipal Research Bureau and attended by leading real-estate attorney Lawrence DiCara, most members of the Boston City Council, and other business leaders -- actually asked why the city would squander one of its hottest areas on a new ballpark, an area that tax-paying real-estate developers are "salivating" over.

Sox CEO John Harrington announced last Friday he will seek $275 million in public financing to build a new park and pony up $352 of the team's money to fund the estimated $627 cost of a new stadium. But the plan doesn't take the Fenway's dramatically increasing land value into account. And while it doesn't call for an increase in the Sox' contribution to the plan -- as compared with the numbers that have been circulating in the press since the team announced plans to build a park -- the public portion has increased by the now-asked-for $82 million. But given all that is happening with the market, the $90 million the Red Sox have allocated for land acquisition is a paltry and inadequate figure -- a fact privately acknowledged by some of Boston's most experienced land assessors.

Experts say it may cost the Sox more than five times that amount -- around $450 million -- to acquire the needed land. That's just $177 million less than the $627 million budgeted for the entire project. Real-estate experts note the city paid the owners of land taken for the Massachusetts Convention Center four times the assessed values of their properties. But the market value for the properties the Red Sox hope to take may be seven to 10 times that of their assessed value. The Red Sox have said they need 15.5 acres to construct the ballpark. City assessors have valued the 26 property parcels on these acres -- some 459,765 square feet of land -- at $48.7 million. Going by the seven to 10 times the assessed value formula, the Red Sox would need between $341 million and $487 million just to purchase the land. (Even if costs are measured by what was done with the waterfront properties -- which were sold at four times their assessed values -- it brings the land acquisition costs to $195 million, an amount that would derail the Sox financing plan.) The money earmarked for purchasing land won't pay for the demolition of existing buildings and other site-preparation costs -- nor would it pay for the any legal fees associated with litigating the land-takings. The Red Sox have asked the city to contribute an additional $50 million for "site preparation" costs.

It's important to note that this is only an imprecise, back-of-the-envelope estimate, not the kind of parcel-by-parcel, building-by-building analysis a skilled appraiser could do. It should also be noted the offices of the Boston Phoenix, at 126 Brookline Avenue, would be demolished under the Sox' plan. (The Phoenix, which agrees that the players and their fans deserve a new park, has editorialized against the plan, arguing that the new park would be better situated in another location.) Also slated for demolition, among other properties, are the site of the Twins Enterprises souvenir shop and the Howard Johnson's Hotel on Boylston Street.

The high value of Fenway property is the result of several factors converging at the same time. First, property in Boston is scarce, and the real-estate boom is at its height. So all property is expensive right now. Second, the Fenway, in particular, has become a desirable neighborhood in recent years. With its central location, the addition of the Landmark Center and other developments, it's becoming a destination location in and of itself. Third, Boston Mayor Tom Menino -- by initiating a rezoning study of the area for the purposes of putting in a new ballpark -- has opened the door to the development of new kinds of properties on land now zoned for only minimal industrial uses. Developers believe they will soon be able to build high on Boylston Street, which is now restricted to two stories. Finally, the eminent domain process itself is elongated and costly. As seen with the waterfront takings, land costs much more than the government first estimates.

This unfolding business dynamic has profound political ramifications. It means the Red Sox are going to need even more money than the amounts they're asking Mayor Thomas Menino and the state lawmakers -- namely, House Speaker Thomas Finneran and Senate President Thomas Birmingham -- to hand over. As reported in the Phoenix two weeks ago (see "Fenway Funk," May 12), the Red Sox are already under severe financial strain to finance what they say is a $627 million ballpark project. Under the Red Sox plan the team would contribute $352 million of its own money toward the new stadium and call upon the city to purchase the land needed for it and then lease it back to the team. Boom economy realities only worsen the Red Sox position. Putting aside the millions of dollars of additional funding the team needs just as a result of Federal Bank Reserve Chairman Alan Greenspan's decision last Tuesday to raise interest rates a half point, the team, like an old Charlestown townie, is rapidly finding itself priced out of a rapidly improving neighborhood. But unlike the residents of South Boston and Charlestown and elsewhere who have been forced to move out to the I-495 belt, the Red Sox hope that a government subsidy will allow them to stay.

Unless the team can force landowners to voluntarily accept less for their properties than they are worth, the Red Sox will need the city to initiate land-taking proceedings. First the city, as part of a process known in legal parlance as eminent domain, must show that the taking achieves a "public purpose" -- a standard made much tougher under a recent case involving a minor-league baseball stadium in Springfield. The court rejected an attempt by the city of Springfield to take land for a minor league on the grounds that this did not constitute a public purpose and, accordingly, violated the state constitution. If the Red Sox can get through this stage successfully, a judge will eventually put the question of the market value of the property before a jury. To determine the market value, the jury will look to the rents at other projects in the area, and if those rents are going up, as they are in the Fenway, the ultimate finding must reflect that. Further, the valuation must be based upon the time the taking is attempted. If the city wants to take the property at the apex of the strongest land boom in more than a decade, too bad. The government -- or the Red Sox -- must pay top dollar. That still doesn't include all of the costs. As part of an eminent-domain proceeding, the taker must also compensate businesses and residential tenants who are forced to move, legal experts say. This can also be costly.

House Speaker Finneran raised some of these issues during a May 23 speech to the Greater Boston Chamber of Commerce. "I suggested to the members of the audience that they should read the Springfield case," Finneran recounted in an interview with the Phoenix -- adding the public-purpose question will be one for the courts to decide. "None of us should go into this thinking it's legal serendipity," Finneran says. "It isn't."

Ultimately, a jury will decide what the city will pay -- and it will likely be an amount far greater than $90 million. "The question is what a willing buyer would pay a willing seller," explains Herbert Gleason, a former corporation counsel for Boston and an attorney retained by the Fenway Action Coalition and Save Fenway Park!. "You pay market value. To force anyone to accept anything less than that is unconstitutional -- classic deprivation of private property without due process of law."

One case somewhat similar to what may happen in the Fenway is that of the South Boston waterfront, where the state plans to put the new convention center. According to the Boston Globe, the city has reached legal settlements with many of the land owners who have plots needed to build the state's convention center. Though last month developer Frank McCourt challenged the amount offered to him by the city for his waterfront parcel needed for the new convention center last April. As an indicator of what the city is paying, the Boston Herald reported that the city paid $43 million for a parcel of land owned by James Pappas -- an amount four times greater the assessed value of the property.

Given the Fenway neighborhood is so hot right now, the Red Sox may be forced into paying an even richer valuation than the convention center authority did. "You have an improving trend in the neighborhood. It's not stable. It's not declining," says one real-estate appraiser, who declined to be identified. (Appraisers must keep the details of their work for clients confidential. In addition, many may end up in court testifying for one side or another in disputes over what land is worth -- a likely scenario with some of the Fenway parcels. Hence, the need for anonymity.) The appraiser explained that the shortage of office and housing space in Boston coupled with the Fenway's convenient location make it a goldmine. To waste this land on a new ballpark would be a mistake, the appraiser said: "You're screwing properties that are improving very fast."

Nothing exemplifies the change in land value in the Fenway more than the Landmark Center in the site of what was once the Sears Building. What was for years an empty old building will soon boast a Bed, Bath & Beyond, a Staples -- which opened for business last week, a state-of-the-art General Cinema, thousands of square feet of office space, and, eventually, a Longhorn Steakhouse. Bob Epstein, the chairman of the Abbey Group, which is developing the project, confirms that rents have dramatically increased since the start of work. Abbey is also responsible for a large, luxury residential building, Landmark Square, across Boylston Street.

"There is no question that Landmark Square and Landmark Center have set a totally new standard for the value of space in the Fenway area," says Epstein. "The rents for the last pieces of remaining space are above $35 a foot -- anywhere from double to triple what Fenway rents were five years ago."

This figure is only likely to increase as Fenway commercial rents fall in line with the rest of the city. Rents in Back Bay, a close-by neighborhood whose residents are spilling into the Fenway, are between $50 and $70 per square foot. And in Brighton, a less-convenient area than the Fenway, commercial rents are at a comparable $35 per square foot.

If the Red Sox just had to contend with the Landmark project that would be one thing, but a series of pricey developments is encircling the area for the proposed ballpark. Announcements of new real-estate development projects take place almost monthly. The latest came just two weeks ago when developer John Rosenthal unveiled plans to construct a massive residential building over the Massachusetts Turnpike with hundreds of units on the site of a Landsdowne Street garage. Just weeks earlier Steve Samuels announced his plan to build a project with a 200-room hotel, 320 residential units, and 149,000 square feet of retail space on Brookline Avenue. And these are just some of the more significant changes happening in the Fenway neighborhood.

The Samuels project is already winning the support of the community. The development, like the Landmark and the others in the area, is sold around the idea that the Fenway can be a destination in and of itself. With residential neighborhoods nearby in every direction, the Samuels project also hopes to bridge the area between Kenmore Square and the Longwood Medical Area. While nothing has been finalized, the plans for the project include a Shaw's Supermarket on site. Because Shaw's owns Star Market, this would involve the closing of the Star Market on Boylston Street. Which would open up the Star Market site for a development of its own.

All this is going on at the same time Kenmore Square is experiencing a similarly dramatic transformation. Not only is there some kind of development in the works for the Howard Johnson's Hotel on Comm Ave, but also Great Bays Holdings is constructing a 150-room, European-style hotel in the space formerly occupied by the Rathskeller bar. The principal in the company constructing the project, Terrence Guiney, says the development will have commercial space and two restaurants, including one he hopes will be run in partnership with one of Boston's elite chefs. Of the prospective rents for the property, Guiney says "we're assuming we will be at $35-per-square-foot and above that."

Not only are the high rents the new project gets key to calculating land value in the neighborhood, but also they convinced Guiney that the area is trending up. "We sensed early on that this very important neighborhood in the city that had fallen into disrepair was about to undergo a turnaround," says Guiney, making the point that the Sears Tower/Landmark project helped convey the idea that the entire area is in an upswing. "It's a terrific location, sitting on the edge of the Boston University campus and near the Longwood Hospital complex and on a major transportation hub."

Without even any talk of infrastructure improvements for a new ballpark, plans to refurbish the MBTA hub at Kenmore Square are already under way. Developers, such as Guiney, believe the multi-million dollar investment at the T station will someday make the bus kiosk in Kenmore Square less of an eyesore. "It will no longer be just a bus queuing area. It will let that area become a part of the Commonwealth Avenue mall."

All these improvements are quietly being noted by Boston real-estate experts and appraisers. "This is absolutely a hotbed," says Robert Cleary, vice-president of Meredith and Grew, the real-estate broker handling the Landmark development. "You've got property values that are skyrocketing over there."

While some chalk up the increasing property values to speculation centered on the prospects of a new ballpark, real-estate experts say that the economics of a stadium make that the least valuable use for the land. The director of the real-estate program at the Massachusetts Institute of Technology, Bill Wheaton, says both Boston and the market would be well served with more housing in the Fenway. "It's a very attractive area. It's close to everything. There's been an improvement in crime. There's a shortage of housing in the city. There's a huge number of professionals in the city that want to live in the city," says Wheaton. "The next place to expand is that area."

That explains why the Red Sox need the city to purchase the land for them -- as their plan details. The Red Sox are asking Boston to buy up the land using the city's power of eminent domain. Under this plan, the Red Sox will lease the land from the city. Because the potential of the neighborhood is so high and there are projects already up and running, it is far from the "blighted" standard it would have to be to enable the city to allow the Red Sox to take the land themselves. Even so, the city will not have an easy time demonstrating that the ballbark furthers a "public purpose," necessary to allow the land-taking to go forward. As has been widely reported, a Hampden Superior Court Judge ruled that a proposed Springfield baseball stadium did not constitute a public purpose.

There could be many more worthy uses for the land from the public's perspective than a baseball stadium. Neighborhood advocates have their eye on the property for housing and mixed use development. The director of community organizing for the Fenway Community Development Corporation, Jethro Heiko, says the Fenway "has more potential for housing to be built in the Fenway than even in the waterfront."

One question-mark regarding development in the area where the Red Sox hope to build the new ballpark involves zoning. Mayor Menino has appointed a Fenway Planning Task Force to study the possibility of expanding the zoning of much of that area beyond two-story industrial uses. Menino needs the zoning changes to allow the new ballpark to come in. It's not clear whether the zoning changes will go through if a new ballpark isn't built. But, presumably, the mayor's willingness to change the zoning has set a precedent that may apply to other developers. A steering committee member of the Fenway Action Coalition, Peter Catalano, theorizes that the minute the mayor opened the door to new zoning for the area, property values escalated even higher. "Ironically, it's undermining the Red Sox," says Catalano. "Menino's shoddy scheme has backfired by making the project much more expensive." Menino, in effect, fast-tracked the zoning changes, by setting up the special committee and signaling to developers that the area's traditional zoning usages are not etched in stone.

There can be no question that the Red Sox have low-balled their estimate of land acquisition costs. Just a few years ago the Red Sox had the opportunity to buy at then-market value a large amount of the land they are now asking the city to take. Instead, Arthur D'Angelo and his family bought the property. Today, defenders of the Red Sox maintain that the team failed to step up to the plate then because they hoped to get a new stadium on the city's waterfront. It was only when the New England Patriots' effort to build there faced massive community resistance that the Sox realized these plans were futile. Still, even with the Red Sox lack of acumen -- failing to buy up near-by land quietly when they could -- much of the blame for the current difficulties lies with the city, which have jammed the Red Sox into such a tough position.

To understand the fix the Red Sox are in, consider what the chief executive officer of the Red Sox, John Harrington, told Boston Globe sports columnist, Will McDonough, two years ago about the costs of land acquisition. "It will probably cost between $80 million and $100 million," Harrington told McDonough. That was two years ago, before Landmark, before the Samuels project, before the biggest economic boom in anybody's memory had revved up. The Red Sox need to rethink their finance plan. How much is the land really worth? In the words of one real estate developer: "pure gold." Can anyone afford that?

Seth Gitell can be reached at sgitell[a]phx.com.