Landlord wants to add height to South End office building for apartment conversion plan

CIM Group says the additional space is needed at 95 Berkeley St. to accommodate 91 units

A South End landlord is seeking to convert a six-story office building into 91 apartments — but only if city officials will allow the owner to add height to accommodate the renovations.

The request was made in a proposal recently submitted to the Boston Planning & Development Agency by CIM Group, the Los Angeles-headquartered commercial real estate firm, for the property it owns at 95 Berkeley St., just south of the Mass. Pike corridor.

The ask to build-up an existing building marks a first for Boston’s Downtown Office to Residential Conversion Pilot Program — the initiative spurred by Mayor Michelle Wu that offers tax breaks to landlords who convert workspaces into housing.

“CIM Group intends to convert the entirety of the building outside of the ground floor into residential rental units,” the company wrote in its application, obtained by Boston.com.

“In order for the contemplated deal to work, CIM Group would need at least an additional ~20K [gross square footage] of massing to be added to the existing structure. We estimate this would yield an additional 20 rental units.”

According to CIM Group, the 107,128-square-foot building’s below-grade parking garage containing 36 spaces would remain and be made available for residents to rent.

The project, if approved, would be the second-largest of those included in the conversion program after the BPDA approved the creation of 95 apartments in three adjoining office buildings at 85 Devonshire St. and 258 and 262 Washington St. earlier this month.

The 91 units on Berkeley Street would include a mix of 26 studios and 41 one-bedroom, 17 two-bedroom, and seven three-bedroom apartments, with rents beginning at $3,800, the filing says. Twenty percent of the units would be made affordable in line with the city’s inclusionary zoning policies.

Currently, MASS Design Group, an architecture and design firm, occupies part of the ground floor and will remain there after the conversion, according to CIM Group.

An additional 6,000 square feet on the street level may be either leased to a retailer or turned into space for resident amenities, the company wrote.

The conversion is estimated to carry an estimated $75 million price tag — a figure indicative of “hard and soft costs, owner contingencies, retail tenant improvement allocations, and other fees,” CIM Group wrote in the application.

“We look to finance this project through a combination of equity, debt, and city/state/federal grants or subsidies,” the firm wrote. “Traditional financing sources would likely be too costly to use for this conversion and so we would seek alternative lower cost/federal sources of debt. We anticipate funding this with up to 65% of debt.”

CIM Group began investing in Boston real estate in 2016 and was also behind the 365-apartment building known as Idyl at 60 Kilmarnock St. in Fenway.

The firm boasts over $30 billion in assets it owns and operates across its portfolio, according to the application.

“Through its investments in Boston, CIM is very familiar with the city, the BPDA, and has developed strong relationships with local industry players,” the filing says.

Under the office conversion program, city officials are hoping to bring back some bustle to Boston’s downtown as the COVID-19 pandemic brought on a massive shift to remote work that has emptied the city’s offices and diminished foot traffic over the past four years.

Under the conversion program, developers enter PILOT, (payment in lieu of taxes) agreements and will be subjected to a charge of 2% of gross proceeds should the property be sold, according to the BPDA.

Developers are expected to see an average of 75% reduced property tax rates for up to 29 years under the PILOT agreements, officials said.

So far, two conversions have received approval from the BPDA since the program began last fall. BPDA officials have said the agency’s initial hope is to create 200 to 300 new housing units and that, as of late February, it was on track to at least meet, if not exceed, that number. Applications are being accepted through June.