Author Archives: Tamara Small

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About Tamara Small

Tamara Small is the CEO of NAIOP Massachusetts.

Where Did All the Parking Go?

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The city-owned Winthrop Square Parking Garage, at 240 Devonshire Street, recently closed due to serious structural problems. Built in the 1960s, this Boston garage accommodated 550 cars at discounted rates from the much higher priced private facilities.

This now further exacerbates the commuter parking problem, already destabilized by the continuing loss of surface parking spaces due to the heated development activities in the Seaport area. Employers may soon start to hear the complaints, as workers begin to personally absorb these increased costs.

The “dirty secret” is that the only reason the Financial District’s parking freeze has worked for so long was that there was a large surplus of low-cost parking nearby.  The same goes for the Seaport’s parking freeze.  As more buildings eat up the surface lots, fewer spaces will remain – as demand increases substantially.

Commercial parking freezes are an ineffective means of providing cleaner air, especially when they are targeted exclusively at a particular municipality.  An unintentional result of a parking freeze is its negative effect on economic development, limiting the ability of new businesses to create jobs, existing businesses to expand, and leading, in many cases, to shifting growth to areas without such restrictions.

Maybe now is the time to rethink this outdated method of controlling auto emissions.

 

Support One Fund, Support Boston

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All of us at NAIOP Massachusetts are saddened by the tragic events that occurred at the Boston Marathon on April 15. Times like these make us realize that Boston is basically a small town – it seems like we are all either connected directly, or by one degree of separation, from someone hurt in Monday’s explosions.

Governor Patrick and Mayor Menino announced the creation of One Fund Boston, which was established to provide assistance to those who were directly impacted by the tragedy. The local business community, including several NAIOP members, immediately stepped up to support the fund. We encourage the commercial real estate industry to show its support. To learn more, or to make a contribution, visit http://onefundboston.org.

In addition, we’ve learned that Roseann Sdoia of National Development, a NAIOP Gavel Firm, was severely injured in the explosions. Her friend set up Roseann’s Recovery Fund, where you can donate towards her treatment and recovery expenses. Our thoughts are with Roseann and the many other victims hurt by this tragedy.

NAIOP Testifies on Energy Disclosure Ordinance

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On March 28th, I testified on Mayor Menino’s proposed Energy Disclosure Ordinance before Boston City Council’s Committee on Government Operations.  Neither of the two major real estate trade associations were asked to be involved in the development of this ordinance.  After it had been developed, NAIOP submitted detailed comments in October on a draft summary of the ordinance.  Unfortunately, none of our recommendations were incorporated in the final version that went out for public comment in February.

Brian Swett, Boston’s Chief of Environment & Energy, testified at the hearing in support of the ordinance along with representatives from other cities that have energy disclosure programs in place.  They agreed that because of these programs owners were better able to make investment decisions for their properties once they had information about their tenants’ energy use.  Interestingly, no one explained the value (if any) of publicly disclosing this information (as is required under the current draft ordinance).  While some property owners did testify in support of the program, many others expressed serious concerns with what was proposed.

During my testimony, I offered the following four critical changes to the ordinance:

 1.      Utility companies should be required to obtain tenant energy data and the reporting requirements should be delayed until such a system is in place.
In many buildings, owners do not have access to the energy data for separately metered tenants.  NAIOP believes that the utility companies should be responsible for submitting this data to building owners, and the reporting requirements should be postponed until such a system is in place.  Furthermore, utilities should provide such information to building owners no later than 4 months prior to the first reporting deadline to ensure adequate time for compliance.

 2.      Multifamily properties should not be included in the ordinance.
As currently drafted, this program would be very difficult to implement for multifamily property owners, due partly to the fact that the Energy Star Portfolio Manager tool is not designed to adequately measure multifamily properties.  Like many of the other cities that have adopted similar energy disclosure requirements, we believe that Boston should not include multifamily properties in the ordinance.  However, if the City chooses to require them to comply, the reporting dates should be delayed by two years.  Furthermore, owners should not be required to comply until a tested and proven tool for this product type is developed with input from an industry advisory committee.

 3.      Involve landlords & owners in determining the disclosure strategy and allow for changes to the program before publicizing data.
Given the significant impact such a rating could have on individual buildings, property managers and landlords must be involved in determining how such information would be made public.  Several other cities that have required energy disclosure allowed for a one year trial where the energy data was reported, but was not available to the public.

 4.     Involve NAIOP, other industry groups, and property managers & building owners in developing regulations and overseeing the program’s implementation.
Much of this program will be left to interpretation by those developing the regulations.  We urged the City to formally include representatives from multiple industry groups representing retail, residential, lab, and office space, as well as individual property managers and building owners on the regulatory task force.

A vote on the ordinance is required by April 25.  The Chair of the Committee, Councilor Matt O’Malley, has indicated that he will be scheduling a working session in the near future to discuss potential modifications to the ordinance.  NAIOP looks forward to participating in the working session. If the City Council votes favorably on this ordinance, we are hopeful that our comments and those of the vast majority that testified will be included in the final language.

Remembering Rodger Nordblom

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The real estate industry has lost another of its icons with the passing of Rodger Nordblom. Massachusetts has been blessed with a number of pioneers in the commercial real estate business who have had a major role in the sculpting of our cityscapes, creating workplaces for generations of innovative businesses that have grown here. Not only have these individuals been active participants in our economic development, but they have been civic and charitable leaders, giving of their time and resources to so many organizations that have impacted all of our lives.

Whenever you saw Rodger, he had a smile on his face and was always accessible.  We will all miss him.
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 Rodger Payson Nordblom

  • July 5, 1927 – February 10, 2013
  • Concord, Massachusetts

Rodger Payson Nordblom, 85, died peacefully while in Palm Desert, California on February 10, 2013. Born July 5, 1927, he was the son of Robert C. and Marjorie C. (Payson) Nordblom.

He graduated from Milton Academy, Milton MA in 1945, whereupon he served in the US Navy. Subsequently, he graduated from Harvard University in 1950, where he was captain of the ski team for 2 years. He married Mary Winder Crocker of Fitchburg, MA on September 9, 1949. Together they raised their five children in Concord MA, instilling in them their love of the outdoors, sports, and most importantly, family values. His beloved wife, Mary Winder, passed away on September 7, 2001 after 52 years of marriage. Traveling to California, he met Dawn Chandler whom he married on March 14, 2003. Together they traveled extensively to remote parts of the world and enjoyed 10 years of marriage.

Rodger was the third generation in Nordblom Company where he was President for twenty-five years. He was an outstanding leader in the Boston real estate industry as a pioneer in the development of commercial properties following the construction of Route 128 in the late 1950’s. Throughout the 1960’s and 70’s he developed millions of sq ft of commercial buildings in Greater Boston and was recognized by his peers as president of SIOR in 1977. Rod was always active in the Boston community, including his recent involvement with WGBH, Boys’ and Girls’ Club of Boston and the Museum of Science.

Whether parasailing on his 85th birthday or exploring remote villages in India, he embraced life with enthusiasm and an adventurous spirit. His positive outlook carried him graciously through life’s trials including his own health challenges. Rod was unfailingly fair and always was guided by what he believed to be right both in business as well as his personal life.

He was a mentor to many generously sharing his wisdom and experience therefore empowering those around him. As a result of his deep love for writing and photography, he also authored a number of books. Rod was a gentleman loved and respected by all and he will be best remembered for his kindness and generosity.

Rod is survived by his wife Dawn, her son Danny Chandler of Texas, her daughter Julie Chandler of Raleigh, NC and Rod’s five children, Anne Dodge of Manchester MA, Carolyn Los of Athens Greece, Win Nordblom of Ayer MA, Peter Nordblom of Cambridge MA and Lee Nordblom of Beverly MA and their spouses . He also leaves 19 grandchildren and 14 great-grandchildren as well as his sister June Robinson, her husband Dr. Jack Robinson and many nieces and nephews.

Gifts in his memory may be made to:
The Boys and Girls Club of Boston
115 Warren St.
Roxbury, MA 02119
www.bgcb.org

The Museum of Science
1 Science Park
Boston MA 02114
www.store.mos.org

Grim Optimism for Real Estate and the Economy

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Goodwin Procter’s Real Estate Capital Markets Conference was recently held in New York City in partnership with Columbia Business School.  GP-REConferenceAn exceptional group of speakers discussed the real estate markets, investments, and the economy.

The keynote presentation was delivered by Austan Goolsbee, former chairman of President Obama’s Council of Economic Advisers, and now a Professor of Economics at the University of Chicago’s Booth School of Business. Goolsbee spoke with “grim optimism” about the US economy.  The US has the most productive work force in the world and low energy and new-energy sources will benefit our growth.  Relative to the rest of the world, our fiscal imbalance is manageable. All in all, he believes that the next six to twelve months will be a bumpy ride, but prospects in the long-run look good.

The following are a few interesting observations made during the panel discussions:

  • Demographics are playing a key role internationally, especially in the US. Effects of this will be seen in an increased demand for apartments, senior housing, and retail.
  • With accounting standards likely to change in the future, as relating to corporate leasing and ownership, more businesses will likely choose owning large amounts of their space.
  • Retail sales continue to be impacted by online competition, but retail is still a growing market. The future may move towards more hybrids that have both online and storefront locations.
  • Office space needs are dropping in terms of space requirements per new job. However, there is a sense that over time businesses will start to swing back towards a need for greater space.
  • Multifamily housing rents are back to pre-recession highs and it is likely that rents will experience slower growth going forward.
  • Record amounts of capital were raised both in the public and private markets last year. With less growth worldwide, real estate is very attractive to investors.  Investor interest is focused on yields and risk management. Where in the past, “cash is king”, now, “cash flow is king”.
  • Rates should not be rising in the short term, but that is a big risk for all asset classes. The markets could wake up to a starting spike in rates that, in hindsight, will have seemed inevitable.

The Time is Now – Investments in Transportation Critical to Economic Growth

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Transportation Secretary Richard Davey and Governor Deval Patrick recently unveiled the Administration’s 21st Century Transportation Plan.  This statewide plan would add $10 billion over the next 10 years to the state’s investments in roads, bridges, and transit – including critical upgrades to the existing system and expansion through select, high priority projects.

The plan calls for:

  • $1.18 billion in bridge repairs
  • $1.25 billion in hundreds of local and regional highway projects;
  • $930 million for Interstate 91 in Springfield and the Interstate 93 and 95 interchanges in Woburn and Canton
  • $430 million for bicycle and pedestrian improvements
  • $1 billion for Chapter 90 municipal road maintenance projects
  • $2.4 billion to purchase new cars for the T’s Red, Orange and Green lines (replacing cars purchased in the 60’s and 70’s!)
  • $850 million to replace MBTA and RTA buses
  • $300 million for MBTA power and facilities upgrades
  • expansion of commuter rail options that includes the South Coast rail extension ($1.8 billion), the Green Line extension ($674 million), and rail service between Springfield and Boston ($362 million), Boston and Hyannis ($21 million) and a connection between Pittsfield and New York City rail ($114 million), and an $850 million expansion of South Station.

The cost for all of this is about $1 billion per year over 10 years to get a modern, convenient transportation network to enable sustained economic growth across the Commonwealth.

I just returned from a trip to Korea and saw a truly modern, extensive, and reliable transit system.  Like Korea, the Massachusetts economy is fueled by a highly skilled mobile workforce, but without a first class transportation system, businesses will not be able to continue to grow.

Now is the time for all of us to get together and support these necessary investments.  There will be much debate on how to pay for all of this and the Governor will soon propose a menu of revenue options tapping a multitude of taxes and fees.  While discussion of these revenue sources is needed, it is critical that we move forward to ensure continued economic growth.  The time is now. Inaction is not an option.

Hurricane Sandy’s Message for Boston

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A recent Boston Globe Editorial, “After a near-miss with Sandy, more preparations are needed,” advocated for policy makers to focus on climate adaptation measures to protect Boston from future storms and flooding.  NAIOP wholeheartedly supports convening public and private interests to discuss short-term and long-term solutions that are practical and feasible.

An important first step would be to create incentives for building owners and developers that would make climate change planning part of their design process.  Focusing on carrots instead of sticks will be an important first step in changing the way some in the industry view this issue.  As an example, we should be encouraging, not penalizing, the relocation of utility spaces to upper floors.  This relatively simple step would have preserved many of the systems that were destroyed in New York and New Jersey.  However, current codes do not exempt these areas from the allowable building envelope, causing landlords to worry about losing rentable space to mechanical equipment.  A change should be made that would provide additional square footage for those developers that commit to doing this.

The Globe editorial suggested that restrictions be put on ground-floor uses in areas that will be prone to flooding.  However, as with the scenario above, it is critical that the impact of decreased rental income and increased construction costs be mitigated.   Furthermore, some of our current laws would prevent such a policy.  As an example, our Chapter 91 statute mandates the use of the first floor space for public access.

Yes, we need to find ways to efficiently prepare our coastal cities for the increased frequency of powerful storms, but we should also be ready to adjust our policies to incentivize the public and private sectors to make appropriate infrastructure and building redesigns, not penalize them with red tape and unnecessary costs.

Will We See More Development Over the Pike?

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A recent editorial in The Boston Globe spoke about the successful conclusion of the permitting for Fenway Center, the $450 million mixed-use project over the Mass. Turnpike.   The gist of the piece was that developing air rights is no easy matter.  Besides the very high cost of developing over an eight lane highway, there are the inevitable lawsuits that can stretch an approval process out by 2-3 years.  The Fenway Center case was finally resolved in appeals court.

Columbus Center, another very worthwhile project involving air rights, was not so lucky.  While the financial crisis played a role in its demise, one of the real reasons that it did not move forward was due to the lengthy delays caused by well over 100 public meetings.  No one can deny the appropriateness of having community involvement, but there must be some limit on that process.  Are the city and neighborhood really better off with the scar of an urban highway canyon dividing the Back Bay and the South End than it would have been with a mixed-use project including affordable housing?

The Globe said that “These projects shouldn’t be the last along the Pike.”  However, predictability and transparency are necessary before any developer will be willing to risk capital on a speculative urban development involving air rights.  A few suggestions:

  1. Establish some clear guidelines for developers interested in responding to RFPs for future air rights parcels;
  2. Set a limit on the number of public hearings with the appropriate neighborhood groups within a limited time period;
  3. Allow the developer to opt in to the Permitting Session of the Land Court for any appeals;
  4. Require appellants to post a bond if they choose to appeal the decision of the court;
  5. Allow developers to count some portion of the cost of the infrastructure associated with the air rights project as part of their community betterment payments.

Governor Patrick signs Jobs Bill into law

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The “Jobs Bill” – An Act Relative to Infrastructure Investment, Enhanced Competitiveness & Economic Growth in the Commonwealth – was signed into law August 7, 2012 by Governor Patrick.

As I was quoted in the Governor’s press release: “This bill is the result of a close collaborative effort by the House, Senate, Governor’s economic team, and the business community. Although the Commonwealth has fared better than most of the country, this wide-ranging bill creates a welcoming environment for innovation and growth. Combined with the ongoing, system-wide regulatory review process, Massachusetts continues to be attractive for business expansion.”

A summary of the various sections of the bill is available for review.  NAIOP is most pleased with the extension of the Permit Extension Act (Section 173 of Chapter 240 of the Acts of 2010).  Permits in effect or existence at any time between August 15, 2008  and August 15, 2012 will be extended by a total of 4 years (an addition of two years to the previous extension and four years for permits issued during the past two years). The extension will preserve state and local permitting decisions, allowing permitted projects to move forward without costly and time consuming delays to reissue permits. This impacts  all properties: commercial, housing, business expansions, universities, hospitals, and infrastructure projects.

In addition, the bill creates a new Local Infrastructure Development Program (Chapter 23L) that gives municipalities another tool for leveraging private funding to finance infrastructure improvements that are needed to support economic growth. It would fund infrastructure for homeowners and commercial projects without using local or state funds.  This is strictly a local municipal option to assist property owners who desire to finance infrastructure (e.g. roads, water, sewer, alternative energy, etc.)  The MassDevelopment-issued bonds would be secured and paid back by betterment liens on the benefited real estate.

Another win is the expansion of the successful I-cubed (Infrastructure Investment Incentive) program, which increases the number of projects per community from two to three. It also increases the available funding for the program from $250 million to $325 million.  It will add parking garages to the definition of public infrastructure improvements, and will include the taxes generated from construction jobs and purchases as part of the calculation for new state tax revenues.  I-cubed, which originally passed in 2006, was designed to finance significant new public infrastructure improvements necessary to support major new private development.

The Act will also streamline the current District Improvement Financing (DIF) program, by eliminating the required EACC review of DIF districts and development plans, which will make the program more accessible to cities and towns.

Although the Governor did veto the Brownfields tax credit extension, we are confident that the internal review of this program will result in its extension prior to its expiration a year from now.

This fall, NAIOP will be presenting a special Governmental Affairs educational seminar on this important economic development bill, as well as an update on the many regulatory changes occurring throughout the Administration’s various Departments. Keep an eye out for details!

BIDS: Taxation Without Representation

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The new “Jobs bill” recently passed by the Massachusetts House and Senate, and now awaiting the Governor’s signature, has a lot of “goodies” for economic development. However, there is a little surprise for businesses who are in, or might be in, a Business Improvement District (BID).

Currently, the BID law does not require every business in the district to contribute to the BID. However, with the new law, if 60% of the businesses in the district vote to form a BID, every business will be required to pay.

What this might mean is that existing BIDs (e.g. Downtown Crossing in Boston) and future proposed BIDs (e.g. Rose Fitzgerald Kennedy Greenway) will be able to force commercial landlords to pay into these districts.  If the city can convince/coerce 60% of the owners of a district to accept this, the others will have no say.  This can also lead to some interesting “Gerrymandering”, creating boundaries to capture large properties. Owners that may be further away from the core area will be obligated to new property tax surcharges to fund maintenance, security, and marketing initiatives for areas not necessarily benefiting these outlier properties.

That sounds like the situation with the current Downtown Crossing BID, and is part of the impetus behind this legislative action.  Some property owners further away from Washington Street, decided not to participate, to the consternation of the city.

What we may now see is new taxation for new services benefiting some, but paid for by many more.