Business Coalition Urges Governor and Legislature to Create World-Class Transit System

A broad coalition of 25 business associations representing large and small employers from a wide range of industries today issued the following statement urging the Governor and the Legislature to adopt the recent recommendations made by the Special Panel to Review the MBTA and to swiftly begin the task of fixing the state’s public transit system:

Business Coalition Statement in Support of a World-Class Transit System

The Challenge
The winter of 2015 highlighted the Commonwealth’s transportation vulnerabilities, particularly for the MBTA. While school and business cancellations, a dramatic drop in retail sales, and an increase in public safety risks result from many major winter storms, the complete shutdown of the MBTA followed by a prolonged reduction in services for the subways and commuter rails are not the norm.
The unreliability of our public transit system caused many businesses to lose substantial revenues from the loss of productivity due to delays and/or the inability of workers to get to work. Many hourly workers forfeited wages; many retailers forfeited sales; many restaurants forfeited patrons; and the Commonwealth forfeited the income, sales and meals tax associated therewith. A sub-optimal public transit system also caused roadways to be more congested than usual and commuting times to grow to unreasonable lengths for those who opted to drive or were transporting goods. The adverse financial impacts totaled in the billions of dollars. This is unacceptable and must not be repeated.

The Framework
Due to the urgency of fixing the MBTA and the need for the public transit system to be reliable and fully functional, the undersigned business organizations are requesting policy makers to address the following issues:
• Make the T a customer-focused organization that provides first-rate service and clear communication while instilling confidence in its ridership.
• Provide greater accountability and transparency for the T’s governance and management practices to ensure the entity is efficiently and effectively run while employing a productive workforce.
• Develop a long-term strategic and capital plan for the T that efficiently uses its resources to enhance the current capabilities and future needs of the T, businesses and workers, while providing sufficient funding to cover the costs.
• Overhaul the T’s procurement and maintenance practices so that the system is safe, reliable and in a state of good repair.
• Establish metrics, milestones and regular reporting to ensure proper implementation of the T reforms within a reasonable period of time.
• Ensure that the T balances its operating budget without the need for ever-increasing state assistance each year.

The Solution
The undersigned support this position and urge the Governor and the Legislature to act swiftly so we can begin the arduous task of fixing the state’s public transit system.

Following a thorough analysis of the various recommendations from the Governor’s Special Panel to Review the MBTA, and measured against the principles outlined above, we endorse the Panel’s proposal and urge the Legislature to adopt the plan immediately.

The following business organizations support this statement:
495/MetroWest Partnership
Affiliated Chambers of Commerce of Greater Springfield
American Council of Engineering Companies of Massachusetts
Associated Industries of Massachusetts
Associated Subcontractors of Massachusetts
Construction Industries of Massachusetts
Environmental Business Council
Greater Boston Chamber of Commerce
Greater Boston Real Estate Board
Massachusetts Biotechnology Council
Massachusetts Chemistry & Technology Alliance
Massachusetts High Tech Council
Massachusetts Lodging Association
Massachusetts Petroleum Council
Massachusetts Restaurant Association
Massachusetts Taxpayers Foundation
Massachusetts Technology Leadership Council
Massachusetts Business Roundtable
Metro South Chamber of Commerce
NAIOP Massachusetts, The Commercial Real Estate Development Association
National Federation of Independent Businesses
Neponset Valley Chamber of Commerce
North Shore Chamber of Commerce
Retailers Association of Massachusetts
South Shore Chamber of Commerce

Quotes from Business Coalition Members:
“The unreliability of the public transit system has caused many businesses to lose substantial revenues from the loss of productivity due to delays and the inability of workers to get to work,” said Richard Lord, President and Chief Executive Officer of Associated Industries of Massachusetts (AIM).

Eileen McAnneny, President of the Massachusetts Taxpayers Foundation, said, “Now that the breadth and severity of the problems confronting the MBTA have been revealed and the price of inaction is evident, we have a real opportunity to move forward with a plan for transforming the MBTA into a modern, world-class public transit system.”

“The transit system experienced a ‘stress test’ and failed. The time is right to not only fix today’s MBTA, but ensure that it will meet future demands,” said David Begelfer, CEO of NAIOP Massachusetts, The Commercial Real Estate Development Association.

“The MBTA is critical to Greater Boston’s economy. Workers, customers, patients, students and tourists depend on it every day. We need to take the T to the next level right away,” said Paul Guzzi, President and CEO of the Greater Boston Chamber of Commerce.

Thank You Governor Patrick

Deval_PatrickAfter eight years of leadership, later today Governor Patrick will take the Lone Walk and return to the private sector. In addition to the fact that during the past 100 years only one other governor of Massachusetts (Dukakis) has served the Commonwealth for eight uninterrupted years, Governor Patrick leaves behind a long list of accomplishments that have made Massachusetts a better place to live and work.

The Governor was one of the best salesmen/spokesmen for the Commonwealth that we have had in recent history. He traveled across the state and to numerous countries on trade missions. Having joined him on the mission to Israel, I can personally attest to the positive reactions he received from countless encounters with political leaders and business representatives. Many business partnerships have resulted from these missions and we have never seen such a spike in direct flights to and from Boston and many global markets.

The Patrick Administration supported business growth, with a particular focus on the life sciences and renewable energy sectors. This resulted in a substantial surge in employment growth, making Massachusetts a national leader in these emerging fields.

Governor Patrick also oversaw one of the first top-to-bottom regulatory reevaluations for all state agencies. Nearly 2,000 regulations were reviewed to determine which regulations should be rescinded or modified. In addition to this review, a system was put into place requiring that draft regulations go through an extensive vetting process and review by A&F, the Regulatory Ombudsman, and lastly, the Governor. As a result, MassDEP led the way on regulatory reform by establishing a target list of 21 different reforms within the Department. Most of these resulted in regulatory changes that will make a substantial improvement on the cost and time for the regulated community, without diminishing environmental protection.

While Governor Patrick worked to ensure government operated at “the speed of business,” he also never lost sight of the fact that he represented all of the citizens of the Commonwealth. People mattered to him and he learned from their stories. Their experiences shaped his leadership and policy priorities. Today’s column in The Boston Globe by Shirley Leung is a perfect example of this.

So, after eight years, we thank you Governor Patrick for your unwavering commitment to the people of Massachusetts and we wish you all the best in whatever the future may hold.

My Top Ten Predictions for 2015

2015It is that time of year when we try to look forward and plan accordingly. For the commercial real estate industry coming off a rather good year, we have to wonder if we are at the top or still growing?

Here are my predictions for the coming year:
1. Foreign buyers will outspend domestic investors for Boston and Cambridge properties and will make a dent in some communities along 128 (e.g. Burlington and Waltham). They will also be a major buyer of Boston condos.

2. Boston properties will be seeing a record number of office properties changing hands with some of those properties having already transferred ownership within the last 3 years.

3. No surprise that office rental rates in Boston and the surrounding areas will be increasing. I predict a minimum of 10% over this year. Apartment rents will continue to rise with some resistance in the newest buildings.

4. The Wynn Casino construction project will not be starting in 2015.

5. There will be one speculative office building announced in Cambridge, that’s it.

6. Design firms will have their busiest year renovating spaces and providing greater efficiency for existing tenants.

7. Construction costs are going to be up substantially, especially in downtown Boston, with greater difficulties getting multiple competitive subcontractor bids.

8. Boston will experience a major hurricane this coming Fall with substantial flooding due to storm surge.

9. The Federal Reserve will finally raise rates.

10. Boston will be selected by the US Olympic Committee to represent the US bid for the Summer Olympics.

Next governor needs transportation vision

This article originally appeared in the online CommonWealth Magazine.
The below version includes post-election updated information.

By most accounts, the Patrick transportationadministration and the Legislature have moved the needle forward on the issue of transportation. They know that investing in transportation infrastructure is critical to our state’s economy, quality of life and industrial competitiveness.

However, many aspects of the Commonwealth’s transportation system have already approached capacity constraints with increasing delays on congested highways and transit systems. At the same time, demand has increased and is predicted to continue over the coming years with no major increases in capacity coming soon. Without additional investments in our infrastructure, further declining services, increased travel times, and a degraded environment will be the future of the Massachusetts transportation system.

In 1970, Governor Frank Sargent created the Boston Transportation Planning Review that analyzed and redesigned the entire area-wide transit and highway system. It provided a blueprint for transportation policy and investment that we have been effectively following for the last 40 years.

In 2013, the Massachusetts Department of Transportation outlined the investments needed to stabilize today’s transportation system and proposed designing a system for the 21st century. Working together, the Massachusetts Legislature and the Patrick administration created and provided funding for a transportation plan that responded to years of deferred maintenance, underfunded transit operating costs, and delayed mass transit and regional transportation improvements. The funding focused primarily on bringing the Commonwealth’s existing transportation infrastructure into a state of good repair.

Unfortunately, the funding that was put in place fell short of what is needed to truly meet the existing and future transportation needs of the Commonwealth’s residents and businesses. What has been missing from the conversation of late is visionary thinking and a more expansive understanding of why investments in transportation are so important to the future of our state. With one of the highest housing costs in the nation, a solid transportation network that can expand access to a larger and more affordable housing market is critical to the success of our economic development centers.

Across the country – from the Research Triangle in North Carolina to the Texas Medical Center in Houston – state governments and private industry are investing in systems and incentives designed to replicate the Commonwealth’s innovation economy. Though Massachusetts has strengths in higher education, strong academic medical centers, and a historic commitment to innovative technologies, transit and access are weak links and a potential liability for recruiting and retaining a qualified workforce – and the companies that create those jobs.

As Governor-elect Baker begins to outline the issues that will be critical for the next four years, we assert that a top priority should be the establishment of a new long-range statewide visioning and planning effort for transportation. This will require strong leadership to take the bold steps necessary to establish a vision and make it a reality. To successfully implement such an initiative, we’d propose a few guidelines:

• Connectivity is key: With several strong innovation, life science, and health care clusters that are major economic engines for Massachusetts, creating a reliable network of roads and transit is necessary for improving the flow of ideas and people.

• Out-of-the-box thinking is vital: Aligning transportation programs with energy and environmental goals, focusing on seamless connections between air and rail, bus and subway, and making transportation information an integral part of our hand-held knowledge system are all planning efforts that can begin early in a governor’s term and be implemented over the next decades.

• Embracing multiple modes of transportation and access is essential: A 21st century statewide plan must include not only roads, bridges, and public transit, but also bicycle and pedestrian needs, as well as enhanced information sharing through technology.

• Public private partnerships can extend the reach: Innovative partnerships between the public and private sectors must be part of a long-term plan that addresses the needs of businesses and residents alike.

Long-term planning and continued investments in a modern, integrated, multi-modal network are critical to our global competitiveness. Massachusetts cannot lose out to those states that know that transportation investment equals economic growth.

David Begelfer is CEO of NAIOP, the commercial real estate development association, and Marilyn Swartz-Lloyd is CEO of MASCO.

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.

Boston’s Game-Changing CRE Developments on Display at 2014 NAIOP MA Bus Tour

The following blog post was submitted by David Fleming, Principal at PACE Communications Group, a marketing firm that works with CRE companies to promote properties and help lease space.

Elisif_20140514_6876The 2014 NAIOP Massachusetts Bus Tour,“Changing the Game in Boston Real Estate” lived up to its name as attendees got an up close look at game-changing development projects across the city. The tour covered dozens of new and redevelopment projects in Allston, Brighton, the Fenway, Back Bay, the South End, and the Seaport/Innovation District.

Here are just a few highlights:

Game-Changer in Brighton: NB Development’s Boston Landing

Elisif_20140514_6950The tour kicked off in Brighton as attendees watched a presentation on NB Development’s exciting new Boston Landing project. NB Development Group managing director Jim Halliday, HYM Investment Group founder Tom O’Brien, founding principal of Elkus Manfredi Architects, David Manfredi, and others provided an overview of the spectacular transit-oriented, mixed-use project.

When complete, Boston Landing will feature 650,000 square feet of office, 180 hotel rooms, 65,000 square feet of retail, a world-class indoor track facility, a dedicated MBTA commuter rail station, and significant public space. A game-changer in Brighton, for sure.

Skanska & WS Development Star at Seaport Square

Elisif_20140514_7068At the Boston Innovation/Seaport District, attendees visited another game-changer, Seaport Square. Here, Skanska USA is building three projects totaling close to 1.2 million square feet. Project partner WS Development is responsible for bringing the ground level retail to each building.

Brian Sciera of WS Development explained the company’s mission at Seaport Square is to create energy and excitement where buildings meet the street. To WS Development, energy means retail. And, fashion retail, in particular.

“The backbone of any good retail district is its fashion component,” said Sciera. “Fashion brings that energy to the street by driving interaction between people and buildings.”

Sciera said WS Development is in discussion with several well-known retailers, but was not at liberty to disclose names.

The Skanska USA buildings at Seaport Square are:

  • 101 Seaport: located on Parcel L1 across from the Boston Innovation Center, the office tower will be the new Boston headquarters for PwC
  • 121 Seaport: located onParcel L2,the 17-storybuilding willconsist of 400,000 RSF of office space and ground level retail
  • Watermark Seaport: located on Parcel K, the project will consist of a six-story building and 17-story residential tower, including 346 luxury rental units and 25,000 square feet of retail (Watermark Seaport is a JV with Twining Properties)

Fenway’s Other Big Papi: Samuels & Associates

Elisif_20140514_7119When you’re talking about development in the Fenway Triangle, you’re talking Samuels & Associates. With more than $1 billion invested in the neighborhood, Samuels is Fenway’s other Big Papi.

Just down Boylston Street from The Trilogy and 1330 Boylston, the NAIOP tour buses rolled by Samuels’ latest two projects: The Van Ness and The Verb. The Van Ness is a 22-story, 320-unit apartment building that’s under construction and will be home to downtown Boston’s first Target. And, recently underway, The Verb is a 43,000-square-foot boutique hotel project at the site of the former Howard Johnson’s.

At the Landmark Center, bus tour attendees were treated to lunch by area favorite Tasty Burger. Samuels’ Joel Sklar and Peter Sougarides were onhand to discuss the company’s Landmark Center expansion project, which they described as a complete “rethinking of the former Sears building.” In addition to renovating the interior, updating infrastructure, and removing the above ground parking garage, Samuels plans to create a “world class food market” anchored by Wegman’s.

By adding the Landmark Center expansion to development projects The Van Ness and The Verb, Fenway’s other Big Papi has struck again.

A Game-Changing Tour

Elisif_20140514_7224Highlighted by Boston Landing, Seaport Square, and the new Fenway Triangle projects, NAIOP Massachusetts’ “Changing the Game in Boston Real Estate” bus tour lived up to its name—and then some.

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