NAIOP Joins Mass. Municipal Association, Housing Advocates and Business Leaders in Support of Housing Choice Legislation

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On May 14, NAIOP’s CEO Tamara Small testified before the Joint Committee on Housing in support of H.3507, An Act to Promote Housing Choices. If passed, the bill would enable cities and towns to adopt certain zoning best practices related to housing development by a simple majority vote, rather than the current two-thirds supermajority.

Small testified on a panel with representatives from a coalition of groups responsible for permitting and building housing throughout the Commonwealth including Jon Robertson, Legislative Director at the Mass Municipal Association; Benjamin Fierro III, Counsel to the Home Builders and Remodelers Association of MA; Greg Vasil, CEO of the Greater Boston Real Estate Board; Robert Brennan, President of CapeBuilt Development; and Kathleen Franco, CEO of Trinity Management. The group expressed their strong support for the bill, which would make it easier for communities to enact local zoning changes that encourage housing development.

In her testimony, Small underscored the importance of partnerships between developers and the communities. “Any successful housing development requires a partnership between the developer and the community to ensure that the project addresses local needs,” said Small. “The legislation preserves that partnership by requiring a majority vote, while making it easier for communities to rezone property to encourage more housing production.”

Throughout the hearing, mayors, housing advocates, and business leaders, including Mayor Kim Driscoll of Salem, Mayor Joseph Curtatone of Somerville, the Metropolitan Area Planning Council, the Smart Growth Alliance, CHAPA, and the Massachusetts Business Roundtable testified in support of the bill and called on the Joint Committee to report H. 3507 out favorably.  

NAIOP will continue to advocate for passage of the bill as soon as possible. Because communities enact zoning changes at annual Town Meetings, quick passage of this bill is needed to ensure that implementation of these important reforms is not delayed another cycle.

NAIOP Files Amicus Brief in Marchese v. BRA: Brief Urges SJC to Uphold Superior Court’s Decision in Favor of BPDA

Law firm WilmerHale recently filed an amicus brief on behalf of NAIOP Massachusetts, The Commercial Real Estate Development Association, in the case of Joseph Marchese vs. BRA.  The amicus brief urged the Supreme Judicial Court to affirm the Superior Court’s decision in favor of the Boston Planning and Development Agency (BPDA), formerly known as the Boston Redevelopment Authority (BRA).

NAIOP chose to pursue this opportunity because the case addresses the “demonstrations clause” of the urban renewal statute, a critical economic development tool, which is often used for artistic, cultural and historical preservation in the City of Boston.  NAIOP believes that if the BPDA and similar agencies cannot use their statutorily granted powers of eminent domain to carry out demonstration projects and plans, it could chill development throughout the Commonwealth.

“We are grateful to the incredible team at WilmerHale for their work,” said Tamara Small, CEO of NAIOP Massachusetts. “Joseph Marchese vs. BRA has wide reaching implications for our industry and all of Boston. The BPDA’s success in this matter will benefit Boston’s continued economic development, as well as positively impact the City’s communities and public spaces alike.”

The WilmerHale team involved in the matter was led by Partners Keith Barnett and Michael Bongiorno and included Senior Associate Arjun Jaikumar and Associates Matthew Costello and Julia Harvey.

Oral arguments began on Thursday, May 9.

BPDA Director Brian Golden Speaks on Boston’s Development Climate at NAIOP’s Government Affairs Luncheon

This guest blog post was written by Meghan Doherty of BLDUP.

At a recent NAIOP Government Affairs program, hosted at the office of Nutter McClennen & Fish, Boston Planning and Development Authority (BPDA) Director Brian Golden discussed Boston’s current development climate and the upcoming planning initiatives his office is pursuing.

Director Golden opened with a brief history of the BPDA crediting Mayor John B. Hynes for starting the office in the late 1950s. During that time, as the middle class was moving away from cities into the suburbs, Boston saw its population drastically declining, which led to the creation of the Boston Redevelopment Authority. The newly created entity was tasked with promoting development in order to attract economic investment in Boston. It worked. Between 1980 and 2010, Boston’s population grew at a rate of around 1,500 people each year. Since 2010, Boston’s population growth has skyrocketed gaining around 8,000 additional residents each year.

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In fact, Boston’s rapid growth in the past 10 years has led to the BPDA adjusting its population projections. In 2014, just over 709,000 citizens were projected in the City of Boston by 2030. Revised projections have increased that number to 759,000. This population growth is driving development and planning throughout the city. Since Mayor Walsh has taken office, around $50M new square feet of development have been approved. Mayor Walsh’s administration has also increased the city’s housing goals from 53,000 to 69,000 new units of housing. Currently, Boston is ahead of pace for this goal since much of the development in the past few years has been residential.

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Director Golden also discussed the importance of the IDP requirements currently in place to bring middle income and affordable housing to the city. Since the IDP program began in 2000, nearly 2,600 income-restricted housing units have been built and over $137M has been raised in the Inclusionary Housing Fund. When asked about the possibility of increasing the IDP requirement from the existing 13%, Director Golden cited two examples from recent trips to Seattle and San Francisco. In San Francisco, IDP requirements are high, around 20%, and this burden has halted many projects. This policy, Director Golden believes, is an overreach. As he said, “20% of nothing is nothing.”  In Seattle, however, the IDP requirement is 11% and working well. His goal for Boston is to ensure that projects can move forward while also providing for the maximum amount of housing the market will allow.

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Other highlights from Director Golden’s presentation included:

  • New projects are increasing property tax revenue for the city at a record pace, and these are benefits that flow to all Bostonians. For 2019, the BPDA estimates an additional $77M in tax revenue from new projects alone. These funds are crucial to the city budget to maintain the high quality of life Boston residents expect.
  • Diversity is top of mind for the BPDA’s actions in the city. All RFPs for public land will include criteria to promote diversity and inclusion. The BPDA expects to see a robust plan for diversity and inclusion through all phases of the development including the development/design team through the workforce building the project.
  • The BDPA’s  Resilient Boston Harbor initiative, which will kick off public engagement this month, will focus on how all different types of existing and new projects can deal with rising sea levels. The BPDA’s goal is to use this opportunity to elevate the public realm. Golden cited Moakley Park as an example. Plans here will rework Columbia Road and Day Boulevard to build a natural barrier to deal with the predicted sea level rise while also creating a world-class park. 10% of the city’s capital budget will be devoted to building out pieces of elevated public infrastructure like this project.
  • The BPDA currently is working on 16 major planning initiatives across the city. A full list can be found here http://www.bostonplans.org/planning/planning-initiatives

During the Q+A, when asked what the biggest hurdles are for Boson to reach its 2030 goals, Director Golden cited transportation and affordability. Currently, his office is working on the Go Boston mobility study and stressed that ensuring quality public transit will be key to ensuring continued growth.

Director Golden’s presentation was a thorough overview of the state of development in Boston. It gave a positive view of the future of Boston’s economic and community-oriented future, and his comments gave attendees important insight into the goals of the BPDA over the next few years. It is clear that Director Golden has a holistic understanding of the landscape in Boston, and will continue to work with NAIOP members and other key stakeholders to plan for Boston’s future, while respecting its past.

The Time to Act on the Housing Crisis is Now

This post was originally published as an op-ed in Banker & Tradesman on 3/17/19.

Apartment-InteriorSometimes data can simplify even the most emotionally charged and complicated policy debates. Housing policy is no exception to this rule. Recent data may provide some clarity on how we got to where we are today, as well as how we can begin to address the current housing crisis 

Today there are more people working in Massachusetts than at any other time in the commonwealth’s history. According to the University of Massachusetts’ Donahue Instituteby the year 2040 the Massachusetts population is projected to increase by 600,000, with the fastest increase projected in Greater Boston’s inner core. Boston’s population is growing more quickly than previously expected, with 759,000 residents expected to live in Boston by 2030.  

As a result, the Metropolitan Area Planning Council (MAPC) projects Eastern Massachusetts will need 435,000 new units of housing by 2040However, according to the Massachusetts Housing Partnership’s Center for Housing Data, annual housing production is only about half of what it was in the 1960s, 70s and 80s. Massachusetts permitting is 36 percent less housing than the national average (based on new housing per capita), ranking us 38th in the nation 

Words Not Enough to Address Crisis 

At the current pace of housing construction, the commonwealth will be more than 90,000 units short of demand by 2030  

At the same time, permitting requirements have become more onerous with local rules and special bylaws, making the development process longer and more unpredictable. Appeals frequently delay the start of a project by one to two years or often kill the project altogether. To complicate matters, construction inflation is at 6.5 percent in the Boston market – higher than the rest of the nation.  

The lack of housing is now approaching crisis level. The number of communities with median prices above $1 million has doubled in the past decade. As a result, the shortage of workforce housing is now significant threat to our economic growth. Business leaders frequently struggle to attract the best talent when competing with other states that provide more affordable housing opportunities.   

While tackling this issue will require a multi-pronged approach, the data show that this is, in large part, a supply and demand issue. Without more housing production it is becoming very clear that the state’s potential to grow its skilled workforce will be at risk.  

Many Massachusetts communities are now recognizing, some for the first time, they need to do more to encourage growth. The 15 members of the Metro Mayors Coalition late last year announced a target to create 185,000 new housing units across the region by the year 2030. It is a laudable goal and these communities should be applauded for their leadership. However, simply saying you want housing does not create itActionable steps are needed to achieve this goal.   

Fortunately, An Act to Promote Housing Choices (House Bill 3507), recently filed by Gov. Charlie Baker, provides a clear framework for cities and town to encourage new housing production.   

 Bill Helps Communities That Want to Change 

The legislation, which is supported by a broad coalition including the Massachusetts Municipal Association, NAIOP – The Commercial Real Estate Development Association and the Smart Growth Alliance, among others, makes it easier for communities to work with developers to encourage sustainable growth.   

The legislation allows cities and towns to adopt certain zoning best practices by a simple majority vote, rather than the current two-thirds supermajority. This would be allowed in situations where the zoning change will encourage more concentrated development including the adoption of 40R “Smart Growth” districts or starter homes, reduced parking requirements, accessory dwelling units and/or reduced minimum lot sizes.  

This legislation also includes a provision, added during the last legislative session by the Joint Committee on Housing, that would reduce the voting threshold for a local special permit to a simple majority. This would apply to multifamily or mixed-use projects with at least 10 percent affordable units that are near transit or in commercial centers.  

While there is no one silver bullet to solving the housing crisis, the supermajority threshold has long been a barrier for needed housing developments throughout the commonwealthThis legislation would make it easier for communities to rezone property to encourage more housing production  

During the legislative session that concluded in July 2018, the bill came close, but did not pass.  Since then, housing advocates, planners, developers and municipal officials have come together to support the passage of this legislation. On behalf of this remarkable coalition, we urge the legislature to pass this bill as quickly as possible. The time for action is now.  

CoWorking: Collaboration, Configuration and Considerations

This guest blog post was written by Meghan Doherty of BLDUP.

Elisif_20190130_3367The Coworking industry grew 50% between 2016 and 2018 and the variety of options within this market segment is staggering. Boston is no exception, currently, there are around 2.3 million square feet of coworking space in Boston and Cambridge. Last week NAIOP Massachusetts hosted a lively panel discussion covering all things coworking. The panel was moderated by Kristin Blount of Colliers with guests Jessica Hughes of Tishman Speyer, Bryan Koop of Boston Properties, Karina Silvester of Gensler, and Craig Robinson of WeWork.

Aaron Jodka, Chief Economist/Director of Research at Colliers International set the stage for the panel by providing some stats on coworking in Boston and around the globe. While Boston has one of the fastest coworking markets in the country, London and NYC have the largest total markets with WeWork as the single largest tenant in each market. Jodka and his research team certainly expect coworking to continue to grow while lenders in capital markets determine how best to handle deals involving coworking spaces.

As the market grows, traditional office landlords are finding ways to get into the coworking game. Jessica Hughes & Brian Koop discussed how their companies are moving into the coworking space by transforming some of their limited vacant space into a coworking option. Tishman Speyer’s coworking product, Studio, will focus on hospitality and tenant service. Their first foray into this space just opened at Rockefeller Center in NYC with the next location coming to 125 High Street in Boston. Tishman Speyer is working with Gensler on the fitouts for these spaces to ensure a high quality of design.

Boston Properties has transformed a floor of the Prudential Center into Flex – their version of coworking, which is less about shared space and more about more flexible lease terms and ready-to-occupy space. Koop told the crowd the new space has been very popular, being fully leased in its first 1-2 months. As Koop mentioned, the average lifespan of a company is getting shorter and the market is moving away from the “long and strong” leases of old. The goal of Flex is to cater to clients looking for leases in the 1-5 year range.

WeWork, now the We Companies, has been the leader in the space and continues to grow their brand across the globe with locations now in 100 cities. Craig Robinson, WeWork’s new Global Head of Powered by We Services, discussed some of the stats behind the company’s mission to “Create a world where people work to make a life, not just a living”. Generally, 85% of employees are not engaged and around 51% are on the lookout for another job. Employers are finally beginning to realize that the future of work is going to be measured by how people feel and not by the old standards of productivity. Many Fortune 500 companies are already getting ahead of this trend with over 150 of them signed on as WeWork Enterprise members. Enterprise services allow these large companies the ability to offer more creative environments, the flexibility to have offices in multiple cities and the freedom to grow to new markets.

From a design point of view, Karina Silvester of Gensler discussed the broad variations of coworking space. Within this spectrum, there are a few common factors including the need for lots of flexibility along with varied activity-based workstations.  Gensler has designed numerous coworking spaces both large and small including the new Reebok headquarters in Boston. For their new space, Reebok wanted a more open plan/flexible space instead of the numerous small offices they had in the past. As Karina also pointed out “the desire to cowork will extend to digital realms as people are working all the time.”

The panelists agreed the coworking model is here to stay and even in the event of a downturn flexibility will prove important. WeWork continues to diversify its portfolio and offerings and other commercial landlords are following suit as the market shifts. Employee expectations are changing and to attract and retain top talent, employers and in turn, landlords are moving to this flexible, community space.Podcast_Ep1

Can’t get enough coworking? Craig, Karina, and Kristin continue their discussion on The Big Dig, BLDUP & NAIOP’s new CRE podcast. Listen now!

It Has Been An Enjoyable and Satisfying Career Advocating for the CRE Industry!

The following is an excerpt from the acceptance speech I gave for the Edward H. Linde Public Service Award at the recent NAIOP Distinguished Real Estate Awards event. It summarizes the feelings I have about leaving NAIOP after 28 years as its CEO.

A way to judge any organization is to contemplate whether it would be missed.  When I consider what we have accomplished over these past 28 years, I know that all of you in the commercial real estate industry would agree that what we have done on your behalf, and for the Commonwealth, is remarkable.  Please note that I say “we” for very important reasons.

It certainly starts with a top professional staff, with Debbie Osheroff, Rachel Meyer and Taylor Pederson. In addition, there are two exceptional professionals who are now stepping into new leadership roles, Tamara Small & Reesa Fischer. I have tremendous confidence in both of them and I know they will take this organization onto even greater successes. They are all-stars who have earned the respect of their peers, the industry’s leaders, and the greater community.

But our success goes beyond our excellent staff. NAIOP’s unique entrepreneurial DNA has driven its Advocacy, Education, and Networking. And that is a direct result of our engagement with an extensive network of exceptional volunteers, what I call NAIOP’s very “special sauce”. We have been fortunate to have some of the best and brightest professionals in our industry giving their time, knowledge and experience. That includes all of our past Presidents, Board members, executive committee members, and numerous volunteers on our operating committees.

In particular, I would be remiss if I did not call out the Governmental Affairs Committee. Our influence in the legislature, regulatory agencies, policy centers and the courts has been achieved directly through the active commitment of so many members over the past 30 years. They have helped draft bills that became law, offered comments on regulations that were then revised, produced position papers that helped direct policies, and presented amicus briefs that helped guide court decisions.

I am so proud to have worked with these professionals to impact major legislative initiatives, including drafting the District Improvement Financing statute, initiating the effort for the Permit Extension Act, partnering in the passage of the Brownfields Act, and influencing so many areas of regulatory oversight. Currently, and for the foreseeable future, we have also committed to continue focusing on three important issues: Transportation, Housing, & Climate Change.

I also want to thank and recognize the many business association leaders that we have worked with over these many years. To have the kind of successes we have enjoyed only comes with active collaborative partnerships. No one organization can succeed without the give and take of working together with a common agenda – a better Commonwealth.

It has been a true labor of love to lead this organization. I have enjoyed the challenges, the successes, and the many close friendships I have made along the way. I am also very proud of the impacts we have had over the years.

Back in 1991, as I transitioned to the advocacy role from being a developer, I anticipated a relatively short interlude in my career. It clearly was not short. Developers have a vision and an optimism that is critical to producing a successful project. I always tried to maintain both as I led this organization over the years.

As I now turn to my next chapter professionally, I know that I will remain active in advocating for the same big issues that continue to challenge our Commonwealth. However, whatever direction I do go, I will look forward to enjoying all the close relationships I have developed through the years and the knowledge that the future for our industry and NAIOP will be bright.

Once again, thank you so much for the privilege of serving this industry.

My Top Ten Predictions for 2019

2019Here are my last predictions as CEO of NAIOP (but not my last predictions)!

  1. Wayfair will double their occupancy in Boston.
  2. Boston and Cambridge Office rental rates will rise to record levels for new space surpassing $120 psf.
  3. Apartment rental rates will be flat.
  4. WeWork will make a move to the suburbs.
  5. Electric bikes & scooters will be allowed in Boston (and then regretted).
  6. Bitcoin value will fall, other Cryptocurrencies will rise.
  7. Foreign investment in commercial real estate will drop.
  8. The stock market will hit an all time low and an all time high.
  9. The Fed will raise rates ¼% only once during the next year.
  10. Tiger Woods will win a major.

Below were my predictions for 2018. Not too bad!
1. Amazon will pass on Boston for a campus, but leave us with a great consolation prize. [Yes and 1mm sq. ft coming to the Seaport]
2. No Turnpike air rights project will start construction (ditto for 2019). [None, so far]
3. Fed. interest rates will be up 75 basis points by end of year. [50 basis points]
4. In Boston, more condos will be permitted than rental apartments (other than the neighborhoods). [Rental approved by BPDA: 33%/Condo: 67%]
5. An office or lab lease will hit $100 per square foot in Cambridge. [Boeing office, 314 Main St.: $106.63 Net effective rent]
6. Construction costs, on average, will be up 7%. [ to date, 6-7%]
7. More than one million SF of commercial space will commence on spec. [Office: Boston & Cambridge: 1,008,000 SF; Lab: Boston & Cambridge: 1,226,000 SF]
8. The 128 office market will show more transactions (both numbers and SF) than the downtown market. [Downtown wins]
9. Foreign buyers will begin to acquire major CRE property outside of Boston/Cambridge. [No]
10. And, yes, the Patriots will do it again. [Almost!]