Cambridge Committee Weighs Innovation Space Model to Subsidize Housing Along Corridors

CAMBRIDGE -- February 6, 2024, Cambridge committee hears that current zoning makes corridor housing financially impossible, considers innovation-space subsidy model. Real estate developer Patrick Barrett and Sharmiel Modi of the East Cambridge Company presented pro forma analysis to the Economic Development and University Relations Committee on February 6 showing that market-rate residential projects in the Business A corridor yield roughly 2 to 4 percent on cost, far below the 8 percent threshold lenders and developers require at today's 6 to 6.5 percent borrowing costs, while commercial development produces nearly three times the residential return. Their proposed fix: raise the floor-area ratio to 4, stack innovation space on lower floors and housing above, and use the commercial rents to cross-subsidize residential, with one scenario projecting 100 percent affordable housing deliverable to the city at roughly half its current acquisition cost. Assistant City Manager Aram Farouk and city planner Jeff Roberts cautioned against calibrating zoning to an anomalous high-cost moment, but acknowledged the need for a more flexible framework. The committee plans a follow-up session February 15 on lab-market vacancies and office conversions.