Massachusetts has embarked on a major upgrade to its roadside plazas by contracting with an Irish management company, but a homegrown fuel-supply firm may try to set up a roadblock to the commonwealth's plans.
The Massachusetts Department of Transportation last month awarded a contract to Dublin-based Applegreen to renovate, rebuild and manage 18 service plazas located throughout the state. Applegreen's 35-year lease agreement is set to take effect Jan. 1, with the company planning to spend $750 million on renovations in exchange for a share of revenue generated at the travel plazas.
Applegreen, a manager of about 80 roadside travel plazas on freeways in the Northeast and Midwest, plans to give the Massachusetts plazas what it said is a much-needed modernization.
"Driven by a hospitality mindset, we've created future-focused designs in support of customer-focused operations," Applegreen said in a statement.
In addition to new construction, Applegreen will try to lure new food and beverage providers like Shake Shack, Pret A Manger and Popeyes, the statement said. Applegreen also said it will install about 780 new electric vehicle charging stations.
A company that submitted a competing bid, however, may attempt to block Applegreen's plans. Global Partners said it should have been awarded the contract because its bid provided more value to the state. The Waltham, Massachusetts-based firm said it would invest $650 million in upgrading the travel plazas and provide $1.5 billion in guaranteed rent payments to the state from the plazas' tenants.
"This fight for Massachusetts is not over," Global Partners said in the statement. "As MassDOT enters the next phase of the bid process, we hope they will truly consider what they're giving up for the Commonwealth and weigh the risks before signing a lease."
The MassDOT board chose the Applegreen bid because the company offered "the best experience, will start faster and finish faster" and had the "only plan to transform all 18 plazas to better serve customers for the next 35 years," Monica Tibbits-Nutt, Massachusetts' secretary of transportation, said in an emailed statement to CoStar News.
A MassDOT spokesperson declined to comment on Global Partners' objection and whether the agency would reconsider the contract. Global Partners did not respond to an email request for comment.
Documents issued by MassDOT on the bidding process do not disclose the state's rules for bid protests.
Applegreen, majority-owned by Blackstone Infrastructure Partners, benefits from long-term contracts and stable cash flow, S&P Global Ratings said in a report in January.
The company "enters long lease and concession contracts with local authorities and private landlords, allowing it to benefit from a stronghold on the sites where it operates," S&P said. "Moreover, regulatory restrictions limit new sites opening prospects in Applegreen's markets and contracted routes. This acts as a large barrier to entry to other players and reduces the risk of escalating price competition from new entrants and existing players."
Applegreen's proposal calls for the demolition and rebuilding of nine of the 18 service plazas in Massachusetts and the renovation of the remaining properties. The project will be completed within three years of the start of construction, according to an Applegreen spokeswoman. The company has not yet determined when construction will start.
The Massachusetts Turnpike, also designated as Interstate 90, has 11 service plazas, the most of any interstate freeway in the state. The remainder of the plazas are located on Interstate 95 and state highways. Some locations originally opened in the 1950s.
Many service plazas in Massachusetts currently include a McDonald's and other fast-food restaurants, a Starbucks, gas pumps, restrooms and dog walking areas. Some also include kiosks where motorists can purchase an E-ZPass for Massachusetts toll roads.
For the record
Upland Architects is the design architect, and Suffolk Construction is the general contractor.