A Mayor for All

menino_409Today is a sad day for the City of Boston. Mayor Menino cared passionately about his city and his 20 years as Mayor were proof of his determination to make Boston and its residents better. He was known for his involvement in the numerous large developments constructed during his tenure in the Back Bay, Financial District, and, more recently, the Seaport.  He took a “hands-on” approach to the permitting and, many times, the actual design of the high-rises (remember 101 Huntington?). But, he was also knowledgeable about the smallest projects that were proposed in the neighborhoods, from Brighton to Dudley Square. It seemed that no project was too small for him because he viewed development as an integral part of the local economy and community.

However, it was not only the built environment that caught the Mayor’s sharp focus.  He was, after all, the Urban Mechanic. There wasn’t a major business that did not know of his commitment to finding summer jobs for the kids of Boston. Reducing crime, improving education and, above all, making personal connections with so many of the City’s residents are what made him a Mayor we will never forget. We are so lucky to have benefited from his leadership, dedication and love for the City of Boston.

Trends + Technology Marketing Conference: “It’s not the what, it’s the why”

The following blog post was written by Danielle Simbliaris, Marketing Manager at Campanelli.

Elisif_20141022_5979Strap a GoPro to your dog to show perspective apartment tenants what a “day-in-the-life” of your pet is like, test out a virtual space via Oculus Rift, turn flat floor plans into a 3D interactive experience, drive tech-tenants to Fenway by bringing the sausage man to Kendall Square. These ideas and more were discussed during Wednesday’s Trends & Technology Marketing Conference as we dove below the surface level to discuss how marketing is driving transactions nationally and in the Boston market.

Andi Simpson, Director of Marketing & Corporate Communications for Federal Realty Investment Trust as well as Stephanie Williams, Senior Vice President of Planning & Advisory Services of Bozzuto Management Company presented a resonating quote, “It’s not the what, it’s the why”. Whether you are talking about retail, multi-family or office space, tenants are driven to make decisions based on why it will benefit them, not by what is being sold. As commercial real estate sales people, marketing professionals and owners, we are not selling a building of concrete and glass – we are selling a way it makes a tenant feel when they are there, a commute that may be convenient or not, an amenity package that can retain employees and keep apartment renters happy, a dog park that will make pet owners content. Michelle Mastrobattista, Director of Digital Communications at Solomon McCown demonstrated a recent social media campaign launched by her team for 101 Tremont (Paradigm Properties) where the account is written from the perspective of “Boston’s smartest entrepreneur”. She explained, “People use social media to communicate with other people, not buildings.”

So then the question becomes: what new, great, amazing tools do we have to sell that “why” to tenants? Rob MacLeod, Founder & President of Neoscape showed us ways we can bring a building to life via video using a combination of photography, 3D visualization, music and incredible editing that creates a visceral reaction from viewers. Moderator, Krista Bourque, Senior Associate for ADD Inc Branding Iron as well as Deniz Ferendeci, Senior Manager of Building Services at Dyer Brown Architects showed us many ways we can bring our buildings, fit plans, stacking plans and neighborhood to life with 3D, interactive imagery. Barbara Hicks, Senior Associate and Director of Marketing & Media at Margulies Perruzzi Architects as well as Tina Snyder, Director of Marketing at The Bulfinch Companies, Inc. both use video in e-blasts and marketing materials to retain the attention of clients and tenants. A recent video e-blast sent by Hicks helped Margulies Perruzzi land a meeting with a new perspective client that ultimately led to a $40M+ project partner.

Now we have some great new tools, and we are implementing fresh new ideas, but what does the future of real estate marketing hold? Moderator Linda Swain, SVP of Marketing for JLL showed a video of the professional in 2020 filled with Google Glass providing constant data, computers reminiscent of those in Avatar and iPad tours for constant connectivity. During the RE:Tech Demo Day, founder Ash Zandieh discussed the recently huge influx of real estate start-ups and introduced us to companies that will advance the way we access buildings, organize leasing and deal data for analysis, communicate with the community before developments begin and help us to go green.

View event photos

A Parking Spot in Boston – The New Endangered Species

The Boston Globe recently ran an article, Spaced Out Downtown: Quest for parking in Boston worse than ever (October 4, 2014), observing that parking is becoming an endangered species in Boston, particularly in the Seaport.

It is very clear that the Seaport area is in the process of transitioning from servicing commuter parking for downtown Boston, to providing parking for its new residents and businesses. One of the culprits is the city’s parking freeze. With a parking inventory freeze in the Seaport, long-term availability of satellite surface parking is at odds with the construction of high-rise apartments and offices. As the amount of commuter parking diminishes, the stress on businesses in the downtown business district may get to the breaking point if employees find it difficult to find reasonably priced parking.

The most common reaction is that limiting parking will just accelerate the move to mass transit. If we had an effective, efficient transit system, that might be a reasonable answer. Unfortunately, the MBTA is operating at capacity during rush hours, satellite parking at transit stops is limited, and the condition of our trains and buses is questionable.

If we want to increase ridership and decrease vehicular commutes, let’s go “all in” and invest in a mass transit system that will be the envy of the rest of the country. However, in the meantime, let’s reevaluate the city’s parking freeze policy (one of the very few left in this country.)

Boston May Be Hurt By Its Development Successes

construction-tools

Construction costs have been increasing steadily over the last four years, up 8% from 2011 to 2013 and they are on track for, at least, another 4% this year. That is good news for labor, but it may not be so good for future development. Material costs are also climbing with structural steel and reinforcing bars up double digits over the last 12 months. There are substantial increases projected for other building materials like gypsum, cement and lumber.

The explosion of construction has left some developers finding it more difficult to even attract bids from some subcontractors. After being burnt in the last downturn, many subcontracting companies scaled back and have chosen not to take the risks of accelerated expansions of their companies.

With new developments projected to start this year and next, and additional large scale projects on the drawing boards or in permitting, the demand for labor and materials will only increase, pushing costs up even higher.

What many developers are nervous about down the road is the start of the mega projects. The convention center expansion and the Winn casino in Everett are sure to “suck the oxygen” out of the construction environment.

Unfortunately, at some point the construction costs are going to make a number of commercial and/or multi-family developments infeasible. In a free market, one would expect labor to move into the area when demand is strong and supply limited. Unfortunately, our high cost of living (especially housing) will severely limit that correction in the market. The last recession brought down construction costs. Let’s hope we can find a different solution this time around.

NAIOP Remembers Ted Oatis

Ted_OatisOur industry has lost another icon. Ted Oatis just passed away and leaves behind many friends and professionals who worked with him over the past decades. Ted was a creative, intelligent, and well liked developer, who partnered with Don Chiofaro since leaving CC&F with him in 1980. We will all miss him. Read more about Ted in this Boston Globe article.

A funeral Mass will be said at 2 p.m. Sept. 4 in St. Cecilia Church in Back Bay.

Where is Housing for the Middle Income Family?

Thomas Grillo did an excellent job on BBJ’s recent article, “The story behind Greater Boston’s housing bottleneck”.

As rightly pointed out, communities have tightened permitting, making it harder to build and meet the demand for housing in general, and moderately priced and affordable units in particular. Zoning requirements have become more onerous with local rules and special by-laws, making the development process longer and more unpredictable. Interestingly, the municipalities and planners are crying out that they do not have enough control and want new land use reforms. However, there is currently a serious lack of permits issued for housing for families and these changes would actually hinder the production of reasonably priced housing.

Many communities have some of the strictest zoning in the region, with large minimum lot sizes, restrictions limiting multi-family housing, and unworkable cluster zoning ordinances. Opportunities for young families to rent a moderately price apartment or find a reasonably priced starter home is virtually impossible. The Massachusetts economy cannot fully expand without the support of its highly talented college graduates. Unfortunately, as the recovery continues nationally, local business leaders are finding it more difficult to attract the best talent when competing with other states. Economic development professionals across the country are already starting to attract young families out of our region and into areas that are more affordable, leaving us, yet again, with the risk of a declining skilled workforce.

The strangest trend to occur in housing production is that children have become society’s “toxic waste”! Many housing proposals that would attract families with school age kids are denied at the local level. More and more municipalities are fighting the permitting of three or four bedroom apartment units, or even requiring 55 and older residency age restrictions. If it appears that developments will bring children into the community, they are fought aggressively by the local boards. Even towns where the school populations are predicted to decline are reluctant to allow apartments that accommodate two or more children.

We are losing our 25 to 34 year olds at a faster clip than we are growing our total population. Our future is our young families and their children. Once and for all, we need to develop a serious policy that allows for the construction of family-friendly apartment housing and of smaller, denser, affordable, single family starter homes.

The future of our economy and our workforce depends on it.

Developers take steps to reinvent suburban office parks

The following article was written by Jay Fitzgerald and appeared in the July 27, 2014 edition of The Boston Globe:

When the exodus to the suburbs got underway more than a half-century ago, employers followed, and the office park was born. But today, as younger workers return to the city, and employers again follow the labor, these isolated campuses of low-slung buildings, parking lots, and company cafeterias face challenges, from new competitors to aging facilities to high vacancy rates.

As a result, owners and developers across Eastern Massachusetts are seeking to reinvent the suburban office park, taking a page from urban revitalization that transformed old mill and factory buildings into mixed-use developments of housing, retail, and office spaces. In communities such as Burlington and Marlborough, developers are adding restaurants, hotels, and other amenities, as well as housing, to compete with the “live, work, play” attraction of the city.

In Marlborough, for example, Atlantic Management Inc. of Framingham purchased the former Hewlett-Packard campus three years ago to launch a more than $200 million rehab of the 110-acre site, which dates back to the 1960s. The project is well underway, with Atlantic refurbishing the two office buildings, while AvalonBay Communities of Virginia, which purchased 26 acres at the site, builds 350 luxury apartments.

Atlantic Management also plans to develop a 153-room hotel and 50,000 square feet of retail and restaurant space that may one day include a farmers market. Already, this redevelopment of the Marlborough Hills office park has attracted a major corporate tenant, Quest Diagnostics of New Jersey, which plans to locate more than 1,000 lab workers there later this year.w

“The number-one challenge for many companies is how to attract talent,” said Joseph Zink, chief executive of Atlantic Management.“Companies need to attract talent and this is one way to do it. I think we’re going to see more of this in Massachusetts.”

Suburban office parks across the nation are trying to respond to tenants insisting on more amenities, said David Begelfer, chief executive of NAIOP Massachusetts, a real estate trade group. In Massachusetts, there’s no precise figure on how many office parks are undertaking renovations large and small, Begelfer said, but “it’s dozens of them and they’re easily spending billions of dollars.”

“The market is demanding it,” he said.

Commercial real estate specialists say the trend in office park redevelopment is driven by two forces. First, property owners need to renovate aging, outdated buildings, some of which are a half-century old. Second, they must meet increasing competition from Boston, Cambridge, and other nearby urban communities.

Along Interstate 495, the vacancy rate for Class A offices is hovering at nearly 18 percent, compared with 11.5 percent in Boston and less than 6 percent in Cambridge. Commercial rents are depressed. Offices lease for only $20 per square foot in the region, less than half of what similar space fetches in Boston and Cambridge, according to Jones Lang LaSalle, a commercial real estate firm.

The site of the former headquarters of data storage giant EMC Corp. in Hopkinton is an extreme case of a struggling suburban property. The 160,000-square-foot building, just off I-495, has sat empty for 13 years, ever since EMC moved to newer offices elsewhere in town, said Steven Zieff, a partner with Hopkinton’s Crossroads Redevelopment LLC.

Crossroads has an option to buy the 38-acre property, which also includes four one-story buildings, and hopes to redevelop the site into a mixed-use complex of housing, retail stores, restaurants, and office space.

“People are looking for something different,” said Zieff. “It’s the entire ‘live, work, play’ environment that people want. They don’t want to go to just an office park with a cafeteria and parking lots.”

Along Route 128, the situation is not nearly as dire, with the office vacancy rate between Woburn and Needham running at 6.4 percent, below Boston’s. Rents near that stretch of the highway are rising as the economy continues to improve, averaging about $34 per square foot, about $20 less than office space in Boston and Cambridge.

But office park owners still feel pressure from intensifying competition with cities. In recent years, a number of suburban companies have moved to Boston or Cambridge, including ad firm Allen & Gerritsen, which moved to the Seaport District from Watertown. Biogen Idec soon will move from a Weston office campus to a new headquarters under construction in Kendall Square.

At the 13-building New England Executive Park in Burlington, the vacancy rate is 10 percent, with tenants that include tech firms BAE Systems, Charles River Systems, and Black Duck Software. Still, National Development, the park’s owner, is convinced it needs improvements to stay competitive.

Later this year the firm plans to start a major overhaul that includes demolishing an office building — all 13 buildings were built between 1969 and 1986 — and constructing 300,000 square feet of new development. The new additions will include a 170-room hotel, three full-service restaurants, and new retail and office space.

“We’re seeing this great rush to the city [by tenants],” said Ted Tye, managing partner at the Newton-based National Development. “What that’s doing is forcing suburban properties to stay on their toes. And we’re responding to that.”

National Development, however, won’t add housing to its New England Executive Park mix. Tye said he’s not convinced that housing within office parks is a smart idea. Some towns might end up getting financially hurt because commercial and industrial properties are usually taxed at higher levels than residential properties, he said.

He added that it’s also hard to duplicate urban settings within suburban parks if they’re not near public transit and don’t have easy pedestrian access to offices. “This is a source of some disagreement within the industry,” he said of housing’s role in office park redevelopment.

In contrast, Nordblom Co., owner of Northwest Park in Burlington, is a firm believer in “live, work, play.” Three years ago, it launched a massive $500 million project to redevelop about half the 285-acre office park to include 600,000 square feet of retail space, 300 new apartments, a 225-room hotel, and 3.5 million square feet of new or refurbished offices.

Todd Fremont-Smith, senior vice president of Nordblom, said the redevelopment, which could take another 10 years to complete, has already attracted new office tenants, a steakhouse restaurant called The Bancroft, and a new Wegman’s supermarket, which opens in October.

“By mixing the uses, you have a more dynamic environment — and it’s more rentable,” Fremont-Smith said. “People are seeking urban-like amenities where they work. I think we’re going to see more of this at both office and industrial parks. People want it.”

View the original article here.