BOSTON-The human mannequins posing as prospective future occupants proved that no expense was spared for yesterday's Fan Pier complex groundbreaking here on the city's waterfront, and few of the dozen or so speakers held back, either. Mayor Thomas Menino declared the three-million-sf project “the most exciting thing that will happen in Boston in our lifetime,” as he joined others lionizing veteran developer Joseph Fallon for getting the mixed-use venture under way after two decades of frustrating setbacks.

Indeed, while the hyperbole flowed freely throughout the mid-morning event, it might be difficult to underestimate the significance of the ceremony, one marking the start of a 500,000-sf speculative office building that will kick off the commercial portion of Fan Pier's ambitious platform. The site does have one building open, with the Institute for Contemporary Art a beneficiary of the master-planned development's civic benefits package. Now, however, Fallon is moving ahead on such elements as 1.5 million sf of office space; a five-star, 175-room hotel; high-end retail and luxury condominiums that some observers predict will set new pricing records for the market.

Offering such an outlook was groundbreaking attendee David Begelfer, executive director of the Naiop Massachusetts chapter. The views of Boston Harbor and mix of amenities to be provided throughout the complex will ensure such an outcome, Begelfer told GlobeSt.com, “It is a triple-A location,” he said. “I think they are going to do extremely well on that.” Ditto for the office building, added Begelfer, who supports Fallon's decision to move forward on a speculative basis. “Once people see the steel going up, they know its real, and they will react,” said Begelfer. Leasing agent Steven Lynch of CB Richard Ellis agreed with that assessment, and said the long-held mindset of Boston tenants fits into that approach.

“Boston is still very much a 'show-me' kind of town,” said Lynch. “They are really accustomed to having a project under construction before they commit.” Fallon, who through past ventures such as the nearby Park Lane Condominiums and Boston Westin Hotel has proven he can meet the “show-me” challenge, responded accordingly with the office building, one which is slated for completion in the third quarter of 2009. Lynch, who is handling the leasing assignment with CBRE/New England president Andrew Hoar, would not discuss rental projections, but observers have been placing it in the $70-per-sf range. Industry icon William McCall Jr., also in attendance yesterday, told GlobeSt.com that he believes the rent level seems “reasonable,” especially given the time frame for delivery. McCall was among those lauding Fallon for moving the plan along, and said he believes the location could prove popular.

If nothing else, McCall agreed that the decision to move Fan Pier along is generating buzz. “It's very exciting,” he said. Lynch said CBRE has met with about 30 prospective tenants, and indicates “positive” feedback towards the building. The efficient floor plates of about 30,000 sf should meet the needs of the current crop of prospects, he says, and the amount of tenant turnover between 2009 and 2011 also bodes well for the leasing campaign of the 18-story structure, which was designed by Elkus/Manfredi Architects of Boston.

As with the other structures, the inaugural office building known as One Fan Pier Blvd. will have new millennium technology and other forward-thinking features, said Lynch, while the entire development aims to gain LEED certification. That, according to Fallon, will make Fan Pier the largest mixed-use development in the country seeking such a distinction. “Fan Pier will truly have something for everyone,” Fallon told the audience in his speech, with four acres of open space and a 96-slip marina that will be able to accommodate mega-yachts.

Besides Fallon, the ceremony also included speeches from several Boston City Councilors and State Sen. Jack Hart from the South Boston district, whose neighborhood abuts Fan Pier. Fallon's equity partner, Cornerstone Real Estate Advisors, was represented by VP Thomas Dudeck, who was among those citing Fallon for his leadership. “This is an exciting day,” he said. “But it was not without its challenges, and Joe Fallon was able to overcome them all.”

Besides a labyrinth of regulatory approvals mandated as part of the state's Chapter 91 law regarding waterfront development, Fallon also had to steer through neighborhood and environmental concerns, plus the expensive prospect of developing a site that has been in disrepair for decades. While the first effort in the mid-1980s to create Fan Pier fell apart as a result of lawsuits between the original partners, the costly renovation and a series of regional economic downturns have subsequently kept the likes of Pritzker Corp. from pulling off Fallon's feat. “The dreams of many others is finally being realized,” Menino said in his remarks.