What Does 2020 Hold for CRE in Massachusetts? Companies Incorporate Real Estate as Recruitment Tool

By: Tamara Small, CEO of NAIOP Massachusetts

The following first appeared in Banker & Tradesman on December 29, 2019.

The end of 2019 marks more than 10 years in the current real estate cycle. As we enter a new decade, now is a good time to take stock of current market conditions and make predictions for 2020. 

Experts are predicting continued, moderate, growth for 2020. Nationally, investor appetite for real estate remains strong and active in all sectors – retail, industrial, lab, office and housing. National vacancy rates are not showing signs of oversupply, and banks are remaining disciplined and conservative in their lending practices.  

While slow and steady job growth is expected, trade wars, political uncertainty and a labor shortage pose the biggest threats to continued economic growth. Market fundamentals remain strong, but such threats should be monitored closely given their potential to dramatically impact the market. 

Access to Talent Drives Market  

The Greater Boston market had an exceptionally strong year in 2019 with record rent growth and tenant demand. Boston remains one of the top markets for foreign investment. However, while continued growth in 2020 is expected, threats exist.   

Construction and land costs continue to soar, weakening returns and potentially threatening the feasibility of new projects. In the third quarter of 2019, Massachusetts real gross domestic product declined 0.2 percent according to MassBenchmarks, while U.S. real gross domestic product grew by 1.9 percent. A labor shortage, which is only expected to continue, is viewed as the single largest threat to the Massachusetts economy.  

At the recent NAIOP/SIOR Annual Market Forecast, which featured leading real estate experts who provided an analysis of the 2019 statistics and predictions for 2020, the need for access to a talented workforce – and what this means for real estate – was a major theme.   

Historically, tenant space was viewed as a cost center by employers, but it is now being used to attract and retain talent. While WeWork’s business model may have been flawed, it did have a dramatic impact on tenant expectations. Whether it’s beer on tap, game rooms or state-of-the-art fitness centers, employers are now using their space to gain a competitive edge when it comes to getting the best talent. This can be seen in the suburbs as well as Cambridge, Boston and surrounding markets, and it will continue in 2020. This all translates into a rising need for new or renovated space and an average tenant improvement allowance average of $5 per square foot. 

Looking Ahead to 2020  

As we enter a new decade, the Boston market remains strong with opportunities opening up beyond the urban core. Limited supply and high demand for lab space are fueling growth. With East Cambridge lab vacancy rates now at 0.8 percent, life science projects are moving forward in Watertown, Alewife, Allston/Brighton and Somerville, as well as Dorchester, the Seaport and South Boston. Cambridge’s success will also create opportunities for well-located suburban assets, particularly transit oriented development projects with the right amenity base.   

Unprecedented growth is expected to continue in the industrial sector. According to Rick Schuhwerk, executive managing director at Newmark Knight Frank, every $1 billion in online sales translates to 1.25 million square feet of new warehouse demand. The demand for “last-mile” facilities near high-density urban centers is driving up values. In the last five years, rents in core urban industrial space have more than doubled. In 2020, with online sales only expected to increase, vacancies will drop and rents will continue to rise. Spec developments are expected as well as a western migration of industrial space.  

On the housing front, according to Kelly Whitman, vice president of investment research at PGIM Real Estate, opportunities exist to upgrade and develop larger suburban apartments. Suburban apartment annual rent growth continues to outperform the urban, and, given changing demographics, a shift away from small units in the suburbs is expected. As the housing crunch continues, these areas outside of Boston’s core are vital to easing the pressure and providing middle income housing.  

On Tap on Beacon Hill 

Finally, while national economic and market indicators tell us that continued growth is expected next year, legislative and regulatory proposals at the state and local levels have the potential to significantly impact the market and should be watched closely. 

Housing: More housing production is needed to keep up with increased population growth. H.3507, An Act to Promote Housing Choices, is targeted at lowering voting thresholds in key zoning votes, allowing for increased production of housing. If it is not passed before the end of the legislative session, anticipate a continued tightening of the housing market, statewide. 

Transportation: NAIOP believes that a functional, accessible transportation system is key to continued development and investment. As area residents and business owners know, congestion has gotten worse in Greater Boston. The Baker-Polito Administration recently filed the Transportation Bond Bill, (H.4002), outlining a capital plan for addressing gaps in transportation infrastructure statewide. Other legislative proposals to address transportation are expected in 2020.  

Fossil Fuel Bans: A number of communities are considering bans on natural gas connections in all new construction, which will likely halt development entirely. While addressing climate change must be a priority, it is critical that policymakers employ achievable measures that are grounded in the reality of today’s technologies, without blocking housing production.  

Tackling Congestion: Lessons Learned from London and Stockholm

Other Cities Show Greater Boston Needs Both Carrots and Sticks

The below column, written by NAIOP CEO Tamara Small, first appeared in Banker and Tradesman on December 15, 2019.

Whether it’s in a board room, on a soccer field, or at the doctor’s office, the conversation invariably touches on traffic. Our daily commutes have become personal battles and the details are shared like war stories.  

As area residents know, and as multiple reports have confirmed, congestion has gotten worse in Greater Boston. Boston’s economy is booming – with nearly 100,000 new jobs created in the last year alone. There are 300,000 more vehicles on the road than five years ago, which is only projected to grow with the on-demand economy. The result? Bottlenecks on highways and local roads throughout the region. It’s clear that creative solutions, big and small, are needed to address congestion.  

Boston is not alone. Other cities across the nation are struggling to address traffic, air pollution, unsafe roads and emissions. Recognizing that the U.S. benefits by learning how other nations have tackled this issue the Bloomberg American Cities Climate Challenge, along with the Barr Foundation, brought a study group to London and Stockholm to see firsthand how these cities have used one specific tool: congestion pricing.  

How Other Cities Tackle Traffic 

The group, of which I was a part, included elected officials, environmental advocates, and business representatives from San Francisco, Seattle, Portland, Washington, D.C., Honolulu, Boston and Philadelphia. We met with government officials, transit industry experts, and local community members who shared how London and Stockholm implemented congestion pricing and how it has evolved over the years.  

London launched congestion pricing in 2003 after Ken Livingstone’s mayoral campaign included a pledge to reduce the number of vehicles entering the city. In advance of the launch of the program, London focused on making public transit and other alternatives to car travel easier, cheaper, faster and more reliable. It expanded its already robust public transit options by adding 300 buses, froze fare increases, created discounts for residents in the district and upgraded trains and subways heading into the zone.  

Within the first year of the program, the number of cars in the congestion pricing zone dropped, eventually creeping back up somewhat as the population increased and road capacity was reduced by allocating space to cyclists, pedestrians, and buses. Today, the number of people riding buses is up 40 percent and twice as many people commute by bicycle than in the year 2000. Overall, traffic in London has decreased by 20 percent.  

In Stockholm, congestion pricing was implemented in 2007 after a six-month pilot program. Again, in preparation for the program, major investments in public transit were made, including 14 new bus lines, more high frequency trains, and 2,500 new park and ride spots. People experienced a decrease in traffic congestion starting on day one of the program, which has continued with a permanent reduction of 20 percent less traffic.  

Four Key Takeaways 

In some ways, comparing Boston to Stockholm or London is not an apples–to–apples comparison. These cities have very different public transit systems. However, as the Greater Boston area attempts to address congestion through a variety of mechanisms, the following are the key takeaways from the study trip:  

  1. Pilot programs work. In Stockholm, public support for congestion pricing was extremely low until a pilot program allowed people to experience it firsthand. It demonstrated the significant impact congestion pricing could have on traffic. A pilot program also provides critical data that could shape and fine–tune a more comprehensive program.
  2. People will not get out of their cars if alternative mobility options do not exist. Whether it’s new protected bike lanes, expanded bus routes or increased frequency of commuter rail and subways, investments and expansion must be made before a comprehensive congestion pricing program can succeed. Importantly, the revenue generated by congestion pricing in Stockholm and London was used to further expand these options. In addition, riders must be confident that the public transit system is reliable.
  3. A successful congestion pricing program must consider equity – whether it is the impact on certain populations or regions. Outreach to key community stakeholders along with data collection on exactly who would be impacted and in what ways are critical in the development of congestion pricing programs. 
  4. Congestion pricing is an effective tool. Cordon and area pricing have generally reduced driving by 15-20 percent and congestion by 30 percent or more. Importantly, in Stockholm, even after investments were made to expand public transit options, ridership did not increase until after congestion pricing was implemented. This is proof that a carrot and stick approach is needed to effectively reduce congestion.  

One thing is clear, there is no one silver bullet that will reduce congestion throughout Greater Boston. A wide range of investments and actions is needed. MassDOT recently issued recommendations on how they plan to tackle congestion including, among other things, addressing local and regional bottlenecks where feasible; reinventing bus transit at both the MBTA and at regional transit authorities; increasing MBTA ridership and capacity; and creating infrastructure to support shared travel modes.  

Changes of all sizes will make a difference and NAIOP looks forward to working with MassDOT and key stakeholders as discussions around addressing congestion continue.  

Cracking the Climate Code: Battle Raging Over Building Energy Standards

NAIOP Massachusetts remains committed to addressing the serious ramifications of climate change, and we look forward to working with policy makers to move forward practical, feasible initiatives. However NAIOP continues to oppose technologically unattainable and impracticable proposals. The below article, written by Andy Metzger, originally appeared in the online edition of CommonWealth Magazine on December 8, 2019.

An arcane state board, known to few outside the world of design and construction, is the setting of a furious clash the outcome of which could influence the amount of climate-curdling emissions that pour out of chimneys, as well as the future supply of housing in Massachusetts, where affordable homes are already scarce.

The Board of Building Regulation and Standards might seem an odd venue for the drama that has unfolded there. The BBRS adopts and administers the statewide building code and the building energy code, sets of rules that are important but would bore the average reader to tears. It is the domain of professionals who think in cubic feet, seismic loads, and kilowatt hours. Now, the problems of the world are before it.

While much attention has been focused on reducing emissions from power plants and cars, commercial, residential, and industrial buildings in Massachusetts collectively spew more greenhouse gases into the atmosphere than either the power or transportation sectors. Commercial and residential buildings in Massachusetts emit about as much harmful gas into the air as the entire transportation sector.

That’s leading activists like Dr. Gaurab Basu, a Somerville physician who says the climate crisis will ultimately produce a public health crisis of increased deaths and hospitalizations, to insert themselves into the byzantine world of building codes. “As a parent of two young children and as a physician, I’m deeply concerned about this. I realize that the crisis forces us to do things that feel uncomfortable, to be pushing at a scale that feels like it’s untenable, but that’s the situation we’re in,” Basu told the board at its November meeting.

Climate activists like Basu, who have paid careful heed to the dire warnings of the world’s scientists, have pressed the BBRS to put out a net-zero energy code. The idea is that under a more stringent code newly constructed and newly renovated buildings would produce virtually no greenhouse gases, notching a small but meaningful victory in the worldwide campaign to avoid a climate catastrophe. That could be accomplished with tighter construction, energy efficient appliances, on-site renewable energy generation such as solar roofs, or under certain circumstances, a financial arrangement to procure renewable power from off-site.

Real estate agents and some builders are strongly opposed to the net-zero campaign, arguing that piling new requirements on top of existing construction costs would grind development to a halt, squeezing home prices, and exacerbating the region’s affordable housing crisis.

“We encourage an energy-efficient code, but we need to go where it makes sense from a cost standpoint and a technology standpoint,” said Tamara Small, CEO of NAIOP Massachusetts, which represents commercial developers. “We may get there, but we’re not there yet.”

Because of the schedule for adopting new building codes in Massachusetts, which statutorily follows the issuance of the International Energy Conservation Code, the big decision over whether to include a net zero code in that update won’t come to a head for another couple years – probably 2021 at the earliest. But environmentalists and business interests have already begun to skirmish and jockey for position.

Click here to read the sidebar.

Meanwhile, activists are making other plays at the local level to try to cut down on climate pollutants. In late November, Brookline’s town meeting adopted a bylaw to prohibit the installation of oil and gas pipes in new construction and renovations, which would give the market a big shove toward electrical appliances and home-heating systems. It was the first municipality to take that step. All town bylaws must undergo a review by the attorney general’s office to see whether they align with state laws and the constitution, so opponents still have a chance to kill the policy. Arlington town manager Adam Chapdelaine said on Twitter that depending on how the attorney general rules, he would be interested in trying the same sort of thing in his town.

From a global perspective, environmental initiatives undertaken so far have failed to slow – much less reverse – the output of greenhouse gas emissions into earth’s atmosphere. For the past decade, emissions have grown 1.5 percent annually, and emissions must drop sharply over the next decade to avoid the worst ravages of climate change, according to the latest United Nations report. The blight, disease and flooding that unchecked climate change will unleash is all the more reason, according to advocates, to take the necessary steps in Massachusetts to significantly reduce the amount of greenhouse gas that seeps out of our homes and workplaces.

BOARD MEETING SHOWDOWN

The Board of Building Regulation and Standards is nestled under several layers of government bureaucracy. It is contained within the Division of Professional Licensure, which is an agency of the Office of Consumer Affairs and Business Regulation, which is itself a component of the Executive Office of Housing and Economic Development, whose secretary, Mike Kennealy, serves at the pleasure of Gov. Charlie Baker.

The 11-member board is presided over by John Couture, who doubles as the town of Sutton’s building inspector. Couture, who decline an interview and said he doesn’t talk to any news reporters, will see his term come to an end December 31. Couture will remain on the board, which will elect its next chairperson, according to a spokesperson.

The BBRS holds its monthly meetings all over the state. When in Boston, it generally uses a conference room in a non-descript state office building across the Massachusetts Turnpike from Chinatown. That is where the board convened on a Tuesday in early November for a session where net-zero proponents and opponents each warned of a calamitous future.

Over the course of several hours, members of the public alternately pressed the board for stricter environmental standards to avoid a complete environmental collapse, or cautioned against rash action that could further balloon housing costs or threaten the chimney and fireplace industry. Couture and other board members listened respectfully to some of the testimony, but they were at times dismissive or skeptical of environmentalists pitching the net-zero idea.

Jacob Knowles, director of sustainable design at BR+A, a national engineering firm, told the board that net-zero building makes for cheaper and healthier living spaces, and his firm found that making buildings net-zero adds less than 1 percent to the construction costs. To buttress his case, Knowles unfurled a letter signed by roughly 1,500 people and 80 companies, including prominent architecture firms, calling for the development and adoption of a net-zero code.

“Take that with you,” Couture replied curtly, after Knowles displayed the letter on the table. “We don’t want your prop.”

Board members also occasionally debated with commenters, questioning the philosophical underpinnings of their advocacy.

“There are a lot of developers that will do the code minimum, period. Period. So we need to raise all boats,” argued Jim Stanislaski, an architect for the international firm Gensler, who supports creating a net-zero code. “And incentives are great; carrots are great. But we need to move out of the voluntary into the compulsory.”

To Michael McDowell, a board member and homebuilder, that sounded like an indictment of people’s intelligence.

“The more we regulate, the less we give citizens of Massachusetts an opportunity to make a choice,” McDowell said. “In other words, you’re almost saying to the citizens, ‘You’re too stupid to make the right choice so we’re going to make it for you. Congratulations.’”

Stanislaski protested that he wasn’t calling people stupid. Then Couture jumped in to question what would happen if the highest standards were used for structural integrity and fire protection requirements – as opposed to energy efficiency.

“If we started saying, you know what, ‘We think that we should have 200-pound roof-loads, just because it’s good,’” said Couture. “There are ramifications for that.”

To deal with these knotty issues, the board had tasked its Energy Advisory Committee – which is made up of other building professionals and engineers – to “show us what net-zero looks like,” according to Couture. But around the same time, the board changed the composition of that committee so that it tilts more toward the views of the construction industry. In October, the board decided to add three contractors to the advisory committee and remove spots designated for a utility representative, an indoor air quality expert, and an appliance expert.

To those hoping to push the state towards a net-zero code, the committee shakeup seemed part of a strategy to thwart that effort.

“It seems like a big shift to say, ‘Take off some of the energy experts and put on contractors,’” said Knowles in an interview. “At face value, that screams to me of trying to shift the whole dialogue towards a more conservative solution.”

A discussion about the shakeup raised hackles among board members during their November meeting when member Richard Crowley suggested that “people on the ground know more about what’s going on” than architects or engineers who rely on books.

“Just stop. Really stop,” board member Kerry Dietz, an architect, interjected. “It is insulting to those of us who are professionals.”

According to Couture, the shakeup was based on a directive from Division of Professional Licensure commissioner Diane Symonds, who wanted more input from “stakeholders.”

“Just because we added three contractors doesn’t mean we added three villains,” said Couture. “We added people that are actually building this stuff.”

Couture also expressed his irritation at an email circulated about the advisory committee issue that he said was “mean” and attacked the board’s integrity. Couture appeared to have been talking about a missive from the Massachusetts Climate Action Network encouraging people to attend the November meeting. While that email criticized the board’s changes to the advisory committee as a “big step backwards,” it did not suggest ulterior motives or make any overt attacks on the board’s integrity.

Advocates on both sides of the issue will have plenty of time to hone their arguments. Under a 2008 state law dubbed the Green Communities Act – which was one of Deval Patrick’s signature environmental accomplishments as governor – the state must meet or exceed the standards of the International Energy Conservation Code, which is developing an update for 2021. That would present the next obvious opportunity to push for a net-zero code.

WHAT WOULD NET-ZERO MEAN?

Net-zero construction is already happening in Massachusetts, and the principle of a net-zero code is pretty straightforward: eliminate the carbon footprint of buildings by enhancing their efficiency and using renewable energy sources for all power. But advocates are fuzzy on the details. As of November, only the American Institute of Architects had submitted a fleshed out proposal to the BBRS.

The AIA plan would give builders a couple of options to determine a building’s energy needs either through a formula or by measuring the building’s actual energy performance. Then the AIA plan would require a corresponding amount of renewable energy generation either installed on-site or procured off-site. The AIA net-zero plan would apply to new commercial, institutional, and mid-level or high-rise residential buildings.

There is one big complication with applying a net-zero standard to urban development. Residential towers and commercial skyscrapers don’t have enough space on their roofs to provide solar power to all the floors below.

“High rise is extremely challenging,” said Stanislaski, the architect who supports shifting to net-zero.

One irony is that high rise developments can help reduce carbon emissions in the transportation sector, especially if they are near transit, because they tend to make neighborhoods denser and more walkable.

It’s not impossible to build a net-zero skyscraper. Solar power and wind energy can be procured off-site, and under the current mix of government incentives, it can even be cheaper than using fossil fuels, according to Knowles, who acknowledged that a renewable energy requirement presents new risks for developers.

“They want to minimize risk, so if there is any potential volatility, they want to avoid that, but I don’t see how that supersedes the need to address climate change and minimize our carbon footprint,” Knowles said.

Small, the NAIOP Massachusetts CEO who represents commercial real estate developers, has a bleaker view on what sort of effects a net-zero standard could exert on the marketplace.

“When you then talk about adding on something that makes a building zero net-energy, it’s going to be cost-prohibitive, so nothing’s going to be built. The numbers simply don’t work. And I don’t think when we have a housing crisis that really is necessarily the best approach,” Small said. “I think we have to proceed with caution because the unintended consequences could literally be no new commercial office space, lab space, retail, multi-family, mixed-use, you name it.”

Other areas with high housing costs have pushed the construction industry towards net-zero standards. California has instituted new requirements and set goals to phase-in net-zero construction for new and existing buildings over the next decade. New York is taking a number of steps to encourage net-zero developments and retrofit existing buildings to make them more energy efficient.

Massachusetts has made significant strides in energy efficiency. For nearly a decade, the Bay State has earned top marks from the American Council for an Energy Efficient Economy for its policies, including the relatively stringent measures adopted by the BBRS.

But given the scale of threat posed by global warming, many believe more should be done, and Knowles said the changes needed in construction are well within reach.

“This is not pie-in-the-sky. This is not some sort of dream fantasy idea. This is something that we’re doing consistently now on large, complex urban and non-urban projects,” Knowles said. “I have not come across a project that cannot achieve these goals, and in every single case we’ve been able to prove it’s cost-effective.”

NAIOP Massachusetts Installs 2020 Leadership Team: Leslie Cohen to Serve as 2020 Chapter President, Sara Cassidy Moves to Board Chair; Special Awards Given

At its Annual Meeting on November 20, NAIOP Massachusetts, The Commercial Real Estate Development Association, elected a new President and Board members, along with a new Leadership Council. The Board includes the principals of many of the region’s leading commercial real estate firms.

Leslie Cohen, Chief Operating Officer and Head of Asset Management at Samuels & Associates, was elected President of NAIOP Massachusetts for 2020.  In this capacity, she will work closely with NAIOP staff and Chapter leadership to guide the organization. Sara Cassidy of AEW, who served as the 2019 President, will serve as Board Chair; Tom Andrews of Alexandria Real Estate Equites becomes President-Elect; Jessica Hughes of Tishman Speyer will serve as Treasurer; and Patrick McMahon of Federal Realty Investment Trust becomes Secretary.

“NAIOP is the voice for an industry that plays a critical role in the region’s economy and competitiveness. Our members are innovative, engaged in their communities and focused on ensuring that Massachusetts is a great place to work and live,” said Cohen.  “At the same time, we have a great opportunity to foster diversity across the field.  I look forward to collaborating with other senior NAIOP leaders to implement new initiatives that will cultivate a broader pipeline of talent interested in all aspects of the commercial real estate industry.”

Cohen has been part of the Samuels team for more than 17 years. She previously served as the President of CREW Boston (formerly NEWiRE) and has served on the Board of Trustees and the Building Committee at the West End House in Allston, on the Building and Grounds Committee at Tufts University, and, for the second time, will co-chair Heading Home’s Housewarming event. In 2013, Cohen was selected as a Boston Business Journal’s 40 under 40 honoree. In 2014 and 2018 she was honored as one of Bisnow’s Power Women in Commercial Real Estate.

“NAIOP’s volunteer leaders represent the best of this industry. NAIOP’s Executive Director Reesa Fischer and I are honored to work with professionals like Leslie in our efforts to advance and grow the industry,” said Tamara Small, CEO of NAIOP. “Their creativity and energy will allow our organization to address the needs of commercial real estate professionals while focusing on advocacy, education and professional development.”

The 2020 Leadership Council members include:

Chapter Affairs Chair: Michael Wilcox, The Bulfinch Companies, Inc.

Developing Leaders Chair: Alex Schultz, Davis Companies

Developing Leaders Vice Chair: Sam Campbell, JLL

Diversity Equity & Inclusion Chair: Taidgh McClory, TH McClory, LLP

Diversity Equity & Inclusion Vice Chair: Amanda Strong, MITIMCo

Government Affairs Chair: Carolyn Desmond, Skanska Commercial Development

Government Affairs Vice Chair: Matthew Snell, Nutter McClennen & Fish

Membership& Marketing Chair: Tina Snyder, DivcoWest

Membership& Marketing Vice Chair: Katherine Shoss, The Bulfinch Companies, Inc.

Program & Education Chair: Robert Borden, CBRE

Program& Education Vice Chair: Michael Buckley, Avison Young

Awards Chair: Allen Breed, MITIMCo

Golf Tournament Co-Chairs: Andrew Gallinaro, National Development and Sarah Lagosh, Eastdil Secured

Developing Leaders Board Liaison: Abby Mondani, Oxford Properties

Communications Chair: Wendy Pierce, Goldstein Pierce PR

Strategic Development Co-Chairs: Kerry Hawkins, JLL; Derrick Goodwin, Lee Kennedy Company; Dan McGrath, Berkeley Investments; Kathy McMahon, National Development and Adam Weisenberg, Sullivan & Worcester LLP

In addition, the following industry leaders joined the NAIOP Board for three-year terms:

Katharine Bachman, Gravestar

Marcella Barriere, Google

Kevin Benedix, Boston Global Investors

Lawrence Curtis, WinnDevelopment
Russell DiMartino, Skanska Commercial Development

Todd Fremont-Smith, Nordblom Company

Richard Galvin, CV Properties

David Goodhue, Colliers International

Taran Grigsby, Fidelity Real Estate

Timothy Guy, Clarion Partners

Andrew Hoar, CBRE

Shawn Hurley, Marcus Partners

Gary Kerr, Greystar

Sarah Lagosh, Eastdil

Charles Leatherbee, Trammel Crow Company

Douglas Manz, HYM Investments

Steve Marsh, MITIMCo

John Myers, Redgate

Tinchuck Ng, Cottonwood Management

Alex Schultz, The Davis Companies

Kirk Sykes, Accordia Partners

Joseph Zink, Atlantic Management

NAIOP Massachusetts also presented several special awards to select members who have made significant contributions to benefit the industry.  Sara Cassidy presented the 2020 President’s Award to Rob Borden of JLL in recognition of his exceptional leadership, strategic direction and vision as Vice-Chair of NAIOP’s Program Committee.  Larry Feldman of GZA was presented with the 2020 NAIOP Government Affairs Champion Award in recognition of his years of work on NAIOP’s Brownfields Redevelopment Committee.  His advocacy has resulted in countless laws and policies that encourage the cleanup and redevelopment of contaminated sites in Massachusetts.

The Annual Meeting was held prior to the start of the NAIOP/SIOR Annual Market Forecast, which included an economic overview by Kelly Whitman, Vice President of Investment Research at PGIM Real Estate, and market updates from Kristin Blount (Downtown), Executive Vice President, Colliers International; Robert Byrne (Suburbs), Managing Director, Cushman & Wakefield; Ben Coffin (Cambridge), Managing Director, JLL; Rick Schuhwerk (Industrial), Executive Managing Director, Newmark Knight Frank; and Chris Skeffington (Capital Markets), Senior Vice President, CBRE.

About NAIOP

NAIOP Massachusetts, which represents 1,650 members, is the leading organization for developers, owners, and investors of office, research & development, industrial, mixed use, multifamily, retail and institutional real estate in the Commonwealth.  NAIOP advocates for policies that advance commercial real estate while providing outstanding education and networking opportunities.

NAIOP Coastal Resiliency Legislation Heard Before Joint Committee on Environment: NAIOP CEO Joined by Climate Resiliency Expert

Last week, NAIOP CEO Tamara Small and NAIOP Climate Change Resiliency Committee Co-Chair, Stephanie Kruel of VHB, testified in support of NAIOP’s coastal resiliency legislation, S. 430, An Act Relative to Coastal Resiliency Projects.

NAIOP CEO Tamara Small and NAIOP Climate Change Resiliency Committee Co-Chair, Stephanie Kruel of VHB testifying before the Joint Committee on Environment, Natural Resources and Agriculture.

As climate change continues to threaten homes, businesses, and infrastructure, Massachusetts’ coastal communities will need flexibility to properly implement their coastal resiliency plans. Many of these plans, including the Climate Ready Boston initiative, will require the use of fill to protect the City against the impacts of rising sea levels and climate change. Such projects could include berms, waterfront parks, and seawalls. S.430 provides a framework for these critically important projects to be reviewed and approved.

“Many laws and regulations, including the Wetlands Protection Act, were written decades ago and did not anticipate the potential impacts of sea level rise, nor the range of solutions that might be required to reduce flood risk,” testified Kruel. “As noted in the October 2018 Coastal Resilience Solutions for South Boston report, to be able to implement proposed resiliency measures, some existing regulations and permitting requirements may need modification to consider the impacts of sea level rise and flood protection projects. In the same vein, Bill S.430 is intended to prevent provisions of the WPA and 310 CMR 10 from inhibiting the construction of coastal resiliency projects.”

“Coastal municipalities in the Commonwealth must be given the tools and resources they need to implement their coastal resiliency plans,” said Small. “We believe that the flexibility this bill provides allows for the public and private sectors to work together to protect communities from the impacts of climate change.”

NAIOP believes that S. 430 is a critical component to the Commonwealth’s climate resiliency efforts and will continue to advocate for the passage of this legislation.

Changing the Game for Women in Commercial Real Estate

This post was written by Mike Hoban of Hoban Communications.

Ten years ago, when NAIOP Massachusetts launched its first ‘Women of Influence Luncheon’, the commercial real estate industry in Boston  (and NAIOP) looked pretty much like the floor of the U.S. Senate – approximately 10 percent women with few people of color. Today, the Boston CRE industry still very much resembles the Senate, but given that the number of women in that chamber has grown to 25 percent and people of color now constitute 10 percent of Senators, it is clearly a step in the right direction for both constituencies. For NAIOP (whose membership is now 27 percent women), that change has been reflected in leadership as well, with 20 of the 49 (40 percent) members on the board of directors for the 1,650 member organization are either women or people of color.

Last week, NAIOP again held its annual Women of Influence luncheon, hosted at the home office of Nutter McClennen & Fish, LLP in the Seaport. The sold out event attracted nearly 200 (mostly women) participants, and its theme, “Changing the Game for Women in Commercial Real Estate,” reflected just how much the conversation around women in the industry has changed in the last decade. “This is our tenth anniversary and we wanted to change things up,” said Reesa Fischer, executive director of NAIOP Massachusetts. “This is no longer about seeing what your career path is and how you get there. It’s about women providing opportunities for other women and strategies for achieving equitable workplaces.”

The panel discussion was moderated by Dr. Patti Fletcher, CEO of PSD Network LLC (which advises corporations and female executives), and author of “Disrupters: Success Strategies from Women Who Break the Mold”. The panel included Marcella Barrière, LEED AP, project executive for real estate & workplace services for Google; Leslie Cohen, COO and head of asset management for Samuels & Associates; Tinchuck Ng, managing director and co-head of investments at the Cottonwood Group; and Lauren Vecchione, senior VP for Colliers International.

Fletcher told the gathering that changing the workplace dynamic is not about just working harder or “leaning in more” – which has long been the go-to strategy for professional women in the workplace. Instead, she says, “We have to get real about what we’re facing, and we also have get real that blaming and shaming of men and trying to ‘fix’ them does not work. What does work is understanding where that systemic bias is and creating a new, more efficient and equitable status quo where everyone can thrive.”

Cohen emphasized the importance of mentorship and sponsorship for women, particularly those just entering the field. She joined CREW Boston (then NEWiRE) nearly two decades ago, and participated in a program that paired her with a female mentor in Dallas. The two worked together for a year on a development plan that was practical and “intentional about where I was going to go and how I was going to get there,” said Cohen. The mentor also stressed the importance of overcoming fears around networking, a skill which eventually led to her assuming the role of president of both CREW and NAIOP at different points in her career. And she still talks to her mentor on a monthly basis. “It’s been hugely beneficial to get advice and an outside opinion to help me not only to navigate, but to keep me challenging myself to keep growing,” said Cohen.

In addition to mentors, panelists discussed the importance of having advocates within the industry – both male and female – to support and champion them as difference makers. Barrière, who is African-American, said that due to the lack of black women in senior leadership positions in commercial real estate, there is a shortage of available mentors for her, so she seeks out advocates instead. “And the difference for me is, ‘Who is going to walk into the room when I’m not there and talk about what great work I did?’ A mentor is going to talk to me about how to overcome situations, and that’s a private conversation. That is coaching and that is guidance. An advocate is going to walk into the room when I’m not there and say, ‘This person has earned a shot. Their work is great and they need to be promoted or they need to be put on this project’.”

Vecchione added that women can become advocates for other women by practicing “echoing” during meetings. “One thing I was taught by Kristin (Blount, Collier executive VP/partner) was that we need to echo for one another,” she said. “When you’re not the only woman in the room, and you do have a good idea, it’s not always acknowledged, unfortunately. So what is helpful to your other female colleagues is just echoing what they’ve said if you do think it’s a good idea. And the more that we can do that, the more we have each other’s backs, and it can go a long way towards helping all of us.”

One of the difficulties for many professional women in the workplace, said Fletcher, is overcoming “imposter syndrome” – the belief that one is inadequate despite ample evidence to the contrary. Often fueled by perfectionism, Fletcher’s research indicates that imposter syndrome is three times more likely to be experienced by women than men, and seven times more likely by women of color. Multiple panelists shared that despite their track records of success (including being included on the prestigious NAIOP panel) they can still experience those feelings of inadequacy in the workplace.

Barrière suggested that the best way to overcome imposter syndrome is by “silencing it, calling it out, and just saying to (oneself), ‘If I was invited into this room, then I belong here,’ and leave it at that. Move forward from there without questioning that fact. On a level playing field, mindset and tenacity will win the day.”

Ng said the key to succeeding in the environment from an external standpoint is focusing on what really matters to the task at hand – and always bringing the conversation back to the deal. “You’ll get looked at differently. Trust me,” said Ng. “As someone who’s trained as an architect, is a woman and Chinese, I bring diversity to that room no matter what, and that’s my value-add. Call it out. Humor helps enormously, at least in my case, but at the end of the day, what’s going to get you the level of respect is going back to the point of, ‘this is a better solution because it generates ‘X’ return’.”

Vecchione and Ng both emphasized that while there are disadvantages to being a women or person of color in the industry, there are also a number of positives. Vecchione said that she focuses a lot more on the advantages because it’s what she can control, and reminded the audience that “we all have the ability to stand out in a crowd and create a brand for ourselves.” Ng suggested that one way to distinguish yourself from the pack was to carve out a niche. In her case, it was to become expert in cross-border tax implications for real estate acquisitions and dispositions. She told the audience that it was easier for her establish a level of confidence regarding expertise about cross border transactions, “because I look different, even though I’ve lived here for 25 years,” she joked, and encouraged the audience to “take what is sometime perceived as differences – I wouldn’t call them disadvantages – and ask yourself if that can become your niche.”

While the CRE industry and society as a whole has a long way to go in terms of equity along race and gender lines, Cohen sees a good deal of “forward progress” in commercial real estate. When she began her career with Samuels 17 years ago, she was often the only women in the room. Currently she is working on a development project with Harvard University where nearly all of the people in leadership positions are women. “If I can think of the future work that we have in front of us, it’s getting more women in the room, into that very close circle, who are making decisions, particularly hiring decisions – and I think that’s the important one that still needs to happen – but I think there’s been a lot of progress,” said Cohen.

Sudbury Power Line Fight Could Affect Development Deals Statewide

The following article, written by Jon Chesto, was first published in the October 2 online edition of The Boston Globe

At first glance, it might seem like a simple courtroom showdown between the MBTA and the Town of Sudbury over an underground power line.

But to the state’s major commercial real estate trade group, the fight that played out at the Supreme Judicial Court on Tuesday is about much more.

NAIOP Massachusetts isn’t a party to the case. But it did weigh in — on the side of the Massachusetts Bay Transportation Authority and utility company Eversource — through a friend-of-the-court brief.

The reason? Should the state’s highest court side with the town, NAOIP worries that transfers of publicly owned properties across the state could grind to a halt.

To get this far in its appeal, the town homed in on the state’s “prior public use doctrine” — a common-law understanding that land already devoted to one public use can’t be changed to a different one without state legislation. A Land Court judge ruled in 2018 that the doctrine didn’t apply in the Sudbury case, because the land would be leased for a private use. The town appealed, and the SJC decided to take up the issue.

George Pucci, a lawyer for Sudbury, argued Tuesday that this is an unusual case, one that would not open the floodgates. He noted that much of the right-of-way had once been acquired by eminent domain for transportation purposes.

But the potential broader impact was on the minds of the justices, as their line of questioning made evident.

NAIOP got involved after the SJC put out a call for input in May. Of particular concern to the trade group: The judges said they wanted to review whether the public-use doctrine should be in effect for transfers of property that would lead to private uses.

That request  didn’t come out of left field. Pucci, in his initial appeals brief, argued it wouldn’t make sense to prohibit the transfer to an inconsistent public use while allowing the sale for an inconsistent private use. This, he wrote, would defeat the purpose of the doctrine: to protect public land from being converted to a different use without legislative approval.

Words like those can strike fear in the heart of any developer. Tamara Small, NAIOP’s chief executive, says a mandatory trip to the Legislature would open up a whole new layer of uncertainty and expense for public-private partnerships. Begging on Beacon Hill would bog down the development process, the mere prospect preventing many deals from happening in the first place.

In its brief, NAIOP offered a smattering of examples to emphasize some of these partnerships’ public benefits: an apartment complex in Chinatown with more than two dozen affordable units, clean energy from solar panels that dot state land along the Massachusetts Turnpike and other highways, the pending Polar Park stadium that will be built on city-owned property for the soon-to-be Worcester Red Sox.

What about Eversource? What public benefits would the electric utility offer with its deal? The company says its 9-mile Sudbury-to-Hudson line, mostly in a rail corridor, would bring nearly $9.4 million in lease payments to the T over 20 years. The line would help improve grid reliability in Greater Boston, with a side benefit of allowing a rail trail to be built along the stretch.

To the Sudbury town officials who authorized the litigation, these benefits don’t seem worth the adverse environmental impacts, such as damage to wetlands and wildlife habitats along the corridor.

Jessica Gray Kelly, NAIOP’s lawyer, says her client is agnostic on the fate of that project. But the association’s members do worry that the effects could ripple far and wide if the court decides legislative approval is needed for any change of use in a public property deal, not just for those in which control would be transferred to another public agency.

It would be a new world for real estate development in the state. Kelly demurs when asked how she thinks the court will react. But NAIOP’s insertion into this seemingly local fight shows the trade group is not taking any chances.

You can find NAIOP’s Amicus Brief and more information about the case by clicking here.