"Even though the hotel market is freshening, as we spent more time understanding the market, what we saw was the tremendous increased value in residential, particularly in cities with a 24-7 component," Maryann Gilligan Suydam, senior vice president with developer Equity, tells GlobeSt.com. Suydam says the firm will submit changes to its original plan to the city within the next 10 days.

EOP plans to begin construction in September 2006. The project calls for the restoration of three historic Russia Wharf buildings along Congress Street and the creation of a jazz club, restaurant and public space along the waterfront. Thecompany also plans to include a "town square" for public gatherings in an atrium that will feature a multimedia show, similar to the "Where's Boston," a visitor attraction during the 1970s and 1980s.

Equity decided against building the large hotel because of both changing market conditions and certain site constraints, including different floor planes, Gilligan Suydam says. "The residential market has gone up exponentially," she says, noting that the increasing demand for residential prompted the developer to add 150 units to its original plans for 50 condominiums on the site. Plans for an office component and open space along the waterfront have not changed, she says.