Beginning in January 2021, the NAIOP Policy & Trends Blog has moved to our website. Visit us there for the most up-to-date posts on our advocacy work, news coverage, event recaps and more.
As of January 11, 2021 this page is an archive that allows you to search past blog posts from NAIOP.
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On November 2, NAIOP joined leading business groups and chambers of commerce in presenting a framework to legislative leaders on how to approach the state’s fiscal challenges in order to position the state for long-term growth. The pandemic caused an unprecedented economic decline in terms of its scope and sudden onslaught. The uniqueness of this crisis requires a cautionary approach to policymaking to ensure there are no unintended consequences or long-term impediments to growth. The only path to a sustainable recovery is to create a climate for job creation and economic opportunity for all. NAIOP will continue to work closely with other business groups and legislative leaders to advance economic development in Massachusetts. Below, please see accompanying media coverage.
Coverage Written By: Colin A. Young | This article was originally published in the State House News on November 5, 2020.
It has never been easier for businesses and jobs to flee Massachusetts in droves and the House and Senate should think long and hard about that possibility before considering new or higher taxes on companies, some of the most influential industry groups this week warned Democratic leaders.
A giant chunk of the Massachusetts business community sent a letter Monday to House Speaker Robert DeLeo and Senate President Karen Spilka reminding them that “barriers to exit for Massachusetts employers and employees has never been lower” given the way the COVID-19 pandemic has fundamentally changed work for millions of people, and that the fragile economy “requires a go-slow approach to new taxes on business.”
The letter was sent as the House was preparing to release its fiscal year 2021 budget for debate next week. The House budget does not call for higher taxes.
Raise Up Massachusetts and other advocates have called on the Legislature to address looming budget wounds by increasing taxes levied against corporations, annual household income over $1 million and investment profits — a plan Raise Up said has “overwhelming support” among Massachusetts voters but that the business groups said could imperil the tenuous recovery from the spring’s COVID-19 shockwave.
“Employers of all sizes, across the Commonwealth, are wary of the fragile economy, growing and crippling cost pressures, and the very real impacts of remote work on both employee and employer behavior. In this environment of great uncertainty, significant changes to tax policy will exacerbate these considerations and slow the recovery that we are collectively working so hard to achieve,” the groups, including Associated Industries of Massachusetts, Mass. Taxpayers Foundation, Mass. Retailers Association, Mass. High Technology Council, Worcester Regional Chamber of Commerce and more than a dozen others, wrote.
The group’s letter does not explicitly say the organizations strictly oppose any and all tax increases, but calls raising taxes at this point “akin to shooting at a moving target with the potential for dramatic long term impacts for the Massachusetts economy.” The groups have a powerful ally in Gov. Charlie Baker, who has said raising taxes doesn’t “seem like the right thing to do.” And while some lawmakers back higher taxes, the Democrats who run both chambers have not been vocally advocating this year for tax increases.
House Ways and Means Chairman Aaron Michlewitz said Thursday that the House budget does not include any “broad-based” or “targeted” tax increase to balance out spending.
“We didn’t have any broad-based tax increases in this budget,” Michlewitz told reporters. “I think we tried to create a budget that addressed the immediate needs that we see are important during this COVID world that we’re living in, but also didn’t burden forever our constituents in this difficult time.”
Michlewitz, however, did not rule out revisiting tax increases in fiscal year 2022, planning for which will begin as soon as the budget for fiscal year 2021 is complete.
“It was something that we obviously considered but being able to do these one-time revenue fixes allowed us to get through this fiscal year. We’ll have to see where we go in FY 22 because we’re not out of the woods just by getting through FY21, that’s for sure,” Michlewitz said.
While tax receipts have yet to falter, the Baker administration and House leaders are budgeting for fiscal 2021 with the expectation that state tax revenues will fall by about $2 billion compared to fiscal 2020, due to impacts of the COVID-19 pandemic. The governor and House leaders are planning to increase spending in fiscal 2021 largely by relying heavily on one-time revenue sources like federal aid and state reserves.
The governor and House leaders are budgeting based on the expectation that fiscal 2021 tax collections will total $27.592 billion, a 6.8 percent reduction from fiscal year 2020. Senate leaders have yet to outline their budget plans.
Asked whether he would veto tax hikes should be they be embraced by the Legislature, Baker said last month, “I would, yeah.”
In the letter, the business organizations said the Massachusetts Competitive Partnership surveyed 100 employers and found that 60 are “considering moving or allowing for more work to be done remotely out-of-state” and 54 are “considering reducing their overall office footprint in Massachusetts” as a result of the pandemic.
“The ability of employers and employees to locate anywhere makes them more sensitive to costs of living and doing business. Remote working could lead to greater job loss, and a slower recovery with implications for the state’s future competitiveness,” the groups wrote. “The barriers to exit for Massachusetts employers and employees has never been lower.”
Lawmakers should also keep in mind the increasing costs that many business owners face, the groups wrote in the letter, like an impending spike in unemployment insurance costs, rising health care premiums, the new state paid family and medical leave benefit program, costs related to the pandemic and protective equipment, and a rising minimum wage. Some of the business groups that signed onto the letter supported the so-called Grand Bargain, a multi-faceted 2018 law that set a schedule for increases in the minimum wage and the establishment of a paid leave program as part of a broader compromise.
A business with 50 full-time workers earning minimum wage — $12.75 an hour now, but rising to $13.50 as of Jan. 1, 2021 — can expect to see its operating costs increase by $142,670 in 2021 as a result of the minimum wage hike, and projected UI and health care costs, the groups said.
As the Baker administration and Legislature were working to get a handle on the budget picture last month, a handful of advocates called for the state to increase certain taxes to raise additional revenue that will help sustain state programs and services through the pandemic and recession.
“When private spending falls during a recession … cutting public spending only prolongs and deepens the recession,” Marie-Frances Rivera, president of the Massachusetts Budget and Policy Center, said. She argued that Massachusetts should instead raise taxes on “people who have benefited from the economic growth that we’ve seen, wealthy individuals, [and] corporations” as a way to raise money for state programs or services that “really get money flowing through our local economies.”
Raise Up said in September that the results of a survey showed that most people in Massachusetts want the state to maintain or increase spending on public education and health care, and they want businesses and the wealthy to chip in more to offset the devastating financial impact of the COVID-19 pandemic.
[Matt Murphy contributed reporting]
-END-
Today, NAIOP Massachusetts made the decision to cancel this afternoon’s State of the Market program. We made this decision because we believe that now is a pivotal moment in history where attention should be focused on what has been ignored for far too long – hundreds of years of brutality, racism and inequity throughout the United States of America.
NAIOP applauds the peaceful protests that have occurred around the country and here in the Commonwealth. While COVID-19 has pushed us into unusual and unprecedented times, the systemic issues being protested in recent days were with us long before the pandemic.
NAIOP is about more than just buildings, which can be repaired. We are about strengthening our communities. Our collective voice is strong – and must be used to amplify those voices that are not heard. It is incumbent upon all of us to bring attention to these injustices now, and always. While NAIOP does not have all of the answers, we are committed to learning and working with all of you to advance much needed change.
Today, we urge you to take time to look within and support programs and organizations like YWBoston that work each and every day to fight racial injustice. Change is needed and the time is now.
Tamara Small, CEO
Reesa Fischer, Executive Director
Boston Issues Construction Site Safety
Due to the public health emergency caused by the spread of COVID-19 (coronavirus) the City of Boston will be implementing new protocols for essential construction work in the City of Boston. All essential construction sites must now submit a COVID-19 Safety Plan and a COVID-19 Safety Affidavit. These policies go into effect on April 27th for all essential construction. Nothing in these new protocols changes what construction is currently allowable in the City of Boston right now, but when construction resumes at some point, compliance with this policy will be required.
COVID-19 Safety Plan
This document will detail the job site practices that the contractor will follow to protect worker safety. Every contractor will be required to provide the City with this document when applying for a permit. If a job is already permitted, contractors must provide this document by April 27 or before work starts.
There are six key elements the City will be looking for in each plan: 1.) steps taken before shifts start to ensure workers are healthy; 2.) practices to ensure social distancing that can be achieved on the job site; 3.) materials provided to ensure job site hygiene; 4.) protocols for the use of personal protective equipment; 5.) communications and training practices to ensure everyone is informed; and 6.) procedures in case there is COVID-19 exposure on the job site.
To help with this, the City has provided a Safety Plan Worksheet (available here) for guidance.
COVID-19 Safety Affidavit
This affidavit (available here) attests that the contractor has created, provided to the City, and will implement its COVID-19 Safety Plan. It follows the same requirements as the Safety Plan. Failure to adhere to the policy may result in approval to work being revoked.
Questions about the updated policies are due by April 22, and can be submitted by email to construction@boston.gov.
Governor Signs Eviction Moratorium Into Law
Today Governor Baker signed H. 4647 An Act providing for a moratorium on evictions and foreclosures during the COVID-19 Emergency, which institutes moratoriums on non-emergency evictions of residents and small businesses in the Commonwealth.
NAIOP recognizes the importance of helping small businesses who have been impacted by this crisis and we are happy to see that, in these uncertain times, the final bill includes language that serves small businesses and commercial landlords across the Commonwealth. While the bill provides protection from evictions, it does not relieve a tenant from the obligation to pay rent or restrict a landlord’s ability to recover rent. In addition, in contrast to the original bill that passed in the House, the language does not apply to all commercial tenants, but rather focuses on those that need help now – small businesses. It also allows for commercial landlords to exercise contractual remedies.
The protections extend for 120 days from the date it is signed by Governor Baker or 45 days after the emergency declaration has been lifted, whichever is sooner. If the State of Emergency is extended beyond May 4, the Governor may not extend this emergency legislation for more than 45 days after the emergency declaration is lifted.
NAIOP is grateful to the many members who provided technical expertise on this issue and worked diligently to ensure the concerns of our industry were reflected in the final language.
On September 21 and 28, NAIOP Massachusetts University presented Navigating the Permitting Maze: A Crash Course in Environmental Permitting to 40+ students from a range of backgrounds looking to master real estate permitting fundamentals in Massachusetts. This course, led by VHB instructors and complemented by several industry experts and panelists, centered on introducing permitting basics, including development of an early permitting strategy and timeline with colleagues and state and local regulators, as well as more complex issues, such as transportation analyses, historical property concerns, climate resiliency, appeals, and much more.
Not only did this course provide valuable education for new and continuing real estate professionals, it made connections to NAIOP members’ experience with advocacy at the legislative, regulatory, and judicial level.
Basics of Environmental Permitting, and Trends from State and Local Directors
During the first day, students started the morning with sessions led by Kyle Greaves and Lauren DeVoe of VHB, on the Massachusetts Environmental Permitting Act office (MEPA) review process which coordinates public review of a development’s environmental impacts. Next, students received instruction on the Boston Planning & Development Agency (BPDA) Article 80 regulations and process. Over the last five years, MEPA has analyzed about 1,300 large developments, with the majority (60%) culminating the review process with an Environmental Notification Form, and the remainder split between needing an Environmental Impact Report or a more in-depth process. For developments in Boston, Jonathan Greeley, Director at BPDA, which has approved over 11 million square feet for development in 2018 alone, emphasized that successful projects start with community outreach early in the process. Jonathan served on a trends in development panel with MEPA Director Deidre Buckley and moderator Greg Peterson of Casner & Edwards LLP during day one of the course.
Jonathan Greeley, Director at Boston Planning & Development Agency
Permit Extension Act Protects Developments During Great Recession
Mary Marshall, Partner at Nutter McClennen & Fish, presented the final session on Day 1 on the Post Entitlement Permitting Stage. Mary made a connection between NAIOP’s legislative advocacy and environmental permitting, stating that during the recession, when many developments stalled due to the economy and financing, NAIOP formulated the Permit Extension Act, which was signed in 2010 by Governor Patrick (and expanded in 2012) to allow projects to maintain permits so that they could be “shovel-ready” when the market improved – avoiding several years spent reapplying for permits. Tamara Small, Senior Vice President of Government Affairs, added that a more recent advocacy connection with permitting is that NAIOP successfully changed the railroad-right-of-way statute in the 2018 economic development bill signed by Governor Baker this August. This means that developers will have more clarity about whether and when they must coordinate with MassDOT on building on former railroad rights of way.
Commercial Real Estate Professionals Advocating for Industry
On the second day of the course, individual sessions were designed for “deep-dives” into more technical areas. Jamie Fay, a waterfront planning expert at Fort Point Associates, a TetraTech company, led a session on the Massachusetts waterfront planning Act (Chapter 91) and how it affects development. Jamie is an active member of NAIOP’s government affairs committee and served as an advocate for reasonable regulation of the waterfront when the legislature worked on the issue and passed legislation in 2007 — and in the years following, as the Department of Environmental Protection promulgated regulations. New developments like Clippership Wharf and Encore Boston Harbor are subject to Chapter 91 rules. Stephanie Kruel, a climate resiliency planning expert at VHB, walked through climate resiliency checklists and analysis during the project planning phases. Stephanie serves as co-chair of NAIOP’s climate resiliency committee – a subcommittee of the government affairs committee.
To bring the areas of waterfront issues, historic resources issues, climate resiliency and environmental permitting together in a real-life example, the course ended with a project spotlight and panel presentation by four individuals from the General Electric Innovation Point team: Elizabeth Grob, VHB, Jeff Porter, Mintz Levin, Peter Cavanaugh, GE and Todd Dundon, Gensler.
Jeff Porter (Mintz Levin) moderates Project Spotlight Panel on GE Innovation Point joined by Peter Cavanaugh (GE), Elizabeth Grob (VHB) and Todd Dundon (Gensler)
NAIOP would like to thank all of the many experts whose time and energy made this course such a success. Due to popular demand, the permitting course will return in 2019.
Make sure to check out all of the NAIOP Massachusetts University offerings including the upcoming Real Estate Finance Fundamentals course on October 26, 2018. Have ideas on other courses NAIOP could offer? Let us know!
A report was recently issued from the Institute for Policy Studies that has attracted significant media coverage and editorials from virtually all of the local print and broadcast outlets.
Credit: Elisif Brandon
It’s a great story: the ultra-rich, international money launderers have descended on the Boston real estate scene, crowding out poor and middle-class residents.
However, when you go beyond the buzz and dig into the content of the report, there is much to question. The report implies that owning condos through a trust or LLC is done to hide the owner’s identity. This form of ownership is actually a very common practice for tax, estate, and transactional reasons. Furthermore, while some buyers may choose to remain anonymous, it’s rather uncommon and to imply that anyone who does this is somehow laundering money is factually incorrect.
If these higher priced apartments or condos were not built, middle income apartments would not be replacing them — the economics just do not work with the current high construction costs. Furthermore, these buildings are already paying a tax devoted to the production of affordable housing, with a requirement to provide for at least 15 percent of the units built on site as affordable or a fee to produce those units off site. In addition, the city’s office buildings must also pay a “linkage fee” for affordable housing and workforce training.
Virtually all of these new developments are built on vacant land or in commercial areas where there had not been any housing, so they have not displaced existing residents. In fact, many of these developments have been the catalyst to creating new 24/7 neighborhoods.
If these condo owners are not here full-time to justify a residential tax break, so what? Do we want to discourage retirees living in Florida from living here for six months? Do we want to tell the penthouse owner, Michael Dell, to take a hike and take his jobs with him? I don’t think so.
The real issue is that it will take federal and state resources, communities working with developers, and overcoming NIMBY-ism and fear of affordable housing at the local level to truly address this housing crisis. Rather than drawing false conclusions and creating easy scapegoats, it’s time we all come together to find economically feasible solutions.
This letter to the editor originally appeared in the Boston Business Journal on September 20, 2018, as written by NAIOP Massachusetts CEO David Begelfer.
Courtesy of the MIT Center for Real Estate and Real Estate Innovation Lab – Get Smart, Connected & Green
Arguably, the premier commercial office space market in the U.S. – New York City – is showing signs that office tenants will pay a significant premium on rent for space in a ‘smart’ building.
Compared to office leases in the city for non-smart buildings, MIT Center for Real Estate researcher Alfredo Keitaro Bando Hano (2018) found that office properties with smart building attributes attracted rents that commanded a 37 percent premium on effective rent per net square feet. The sample included 454 non-smart building properties and 223 smart office leases using the Compstak transaction database for Manhattan for 2013 and onwards. The MIT Real Estate Innovation Lab continues to research and report on smart, connected and green buildings.
Thanks to new technologies and devices, occupiers now have the possibility to measure and analyze the activity that occurs inside their structures. Companies are not focused on location only anymore; they now they look for more productive and efficient areas, and smart buildings rise as a possible answer to this new requirement.
In search of flexibility and agility, users have pushed changes in architectural and interior design to improve employee satisfaction, health, and engagement, hence better productivity.
Smart buildings are self-sensing. For the purposes of Keitaro’s study, a smart building must have installed one or more smart amenities that go beyond sustainability and aim to improve the occupier experience. Smart amenities include occupancy sensors, automatic windows, cameras with emotion recognition algorithms, and other technologies that capture and provide information to tenants and landlords. Ultimately, a smart building is one that adapts to the needs and preferences of the building’s occupants. And, in the office environment, responding to workers’ needs and preferences stand to significantly increase employee productivity and well-being.
We can predict that in the future, new smart amenities will come to market and offer commercial real estate developers, owners, and investors opportunities to incorporate smart technology in the building’s plans and reap the financial benefits.
That being said, the New York City sample did not delve into the cost of constructing and operating a smart building compared to a non-smart facility. It is not yet clear whether the rent premiums offset the costs to construct, renovate, and operate smart buildings. Further, due to other factors (like location) not all the projects will immediately obtain these premiums just by embracing a smart strategy. Nevertheless, it is worth emphasizing that smart buildings have value.
NAIOP Massachusetts is an industry partner to the MIT Center for Real Estate. Alfredo Keitaro Bando Hano wrote The Incremental Value of Smart Buildings Upon Effective Rents and Transaction Prices (2018) as a master’s thesis.
For more information about the MIT Center for Real Estate’s research, please go to: https://mitcre.mit.edu/ or to the MIT REILab: http://realestateinnovationlab.mit.edu/
This post comes from BLDUP (bldup.com) reporting on the NAIOP Massachusetts event on September 13, 2018: Development Unicorns: Neighborhood Game Changers.
See photos from Development Unicorns: Neighborhood Game Changers. Credit: Elisif Brandon
The developers of three of Boston’s most changed neighborhoods, Fenway, Assembly Row, and Seaport Square came together last week for NAIOP’s panel discussion, Development Unicorns. If the catchy title didn’t grab your attention the insight provided by these forward-thinking developers certainly will. The event opened with a keynote from David P. Manfredi, Elkus Manfredi Architects, that highlighted the 8 Place Making Principles these neighborhoods have in common. Mr. Manfredi also spoke about the important changes at work in each of these neighborhoods; public investment in infrastructure, skillful placemaking, flexibility and evolution along with density and walkability. While the architecture of each area is different they all share these characteristics which have played a large role in the success of the projects.
After Mr. Manfredi’s introduction, the expert panel took the stage moderated by Sara Cassidy of AEW Capital Management. Representing Federal Realty Investment Trust, the minds behind Assembly Row, was Donald Briggs, Executive VP of Development. Mr. Briggs mentioned that as a realty investment trust Federal Realty had the large balance sheet to a take risk on a piece of land in Somerville that had been tied up in a 6-year lawsuit. He also discussed how the Assembly Row site is much closer to Boston than many people originally realized making it a great location for a development opportunity.
Steve Samuels, Chairman & Principal at Samuels & Associates discussed how his company “stumbled” into the Fenway neighborhood as it was being held hostage by Fenway Park. His team had to convince people one use at a time to come to Fenway for something other than baseball. The final panelist was Yanni Tsipis, Senior VP-Seaport at WS Development. WS has been involved in the Seaport since 2006 when it was just a wide open lot with great water views. Mr. Tsipis noted this blank slate provided an interesting opportunity for the development team and once momentum swung in their direction his team decided to triple down and buy out their remaining partners in the Seaport Square area.
The developers had their own story to tell on how the pieces of each neighborhood came together. The Fenway, Mr. Samuels mentioned, was already a great neighborhood but it had no core. His team worked to build relationships with stakeholders in the area and then began to buy up lots one at a time. They then rezoned each lot, again piece by piece, leading to a very slow process. Assembly Row also started off slow, as Federal Realty stepped into a deal that had been stalled with that 6-year lawsuit. However, settling the lawsuit did have a positive outcome as Mr. Briggs pointed out, it pushed his team into embracing office space. Although not part of their original plans the offices turned out to be a very positive driver of growth. In the Seaport it was very important for WS Development to ensure the area developed a sense of place very early on in the process. As Mr. Tsipis pointed out the neighborhood is still growing, with only about ⅓ of the planned construction now complete.
Other key points echoed across the panel were the importance of responsiveness to the market and also ensuring public realms and first floor retails spaces are unique and inviting to the neighborhood. Mr. Briggs suggested it is always prudent to entitle more square footage which allows for flexibility and optionality. Federal Realty sacrificed density at the beginning of their project to build on a horizontal context and are now moving to build high rise projects. In the Fenway, The Samuels team had to find the right balance between old and new architecture. Ultimately their goal for the area is to be ⅓ office, ⅓ residential, ⅓ retail but as Mr. Samuels quickly mentioned the market will drive these decisions.
In Seaport Square, WS has devoted time and energy to planning the public spaces and also programming around these areas as these events organically bring people together. Mr. Briggs agreed, pointing out that he believes creating fabric in architecture, space between buildings is more important than buildings themselves.
When discussing retail spaces all agreed it was most important to get the first floor spaces right to command a premium above. With the continued success of these three neighborhoods, the insights from the panel were certainly valuable as the city’s development boom continues.
This op-ed originally appeared in Viewpoint on bizjournals.com on September 13, 2018. The joint op-ed was authored by Ned Abelson, attorney at Goulston & Storrs and co-chair of the NAIOP Brownfields Committee, and by David Begelfer, NAIOP Massachusetts CEO and an active participant in the passage of the Brownfields Act.
Twenty years ago this summer, Gov. Paul Cellucci signed into law the “Brownfields Act,” establishing new incentives and protections to encourage parties to clean up and redevelop contaminated property in Massachusetts. This law provides comprehensive liability relief and financial incentives to attract new investment in these properties while ensuring a safe and effective cleanup. Simply put, without the passage of the Brownfields Act, many communities that are now thriving would be filled with vacant and contaminated properties.
A Brownfield site is blocked from productive use because of potentially hazardous contaminants. Prior to the passage of this law, developers considering cleaning up and then redeveloping such a property often concluded the effort was simply too risky, too expensive and too time-consuming to offset future profits from leasing the property to retailers, businesses and residents.
A model for states across the country, the Brownfields Act allows innocent Massachusetts real estate owners and operators to apply to the Department of Revenue for a state income tax credit to offset the net cost of the cleanup. Any party that contaminated a property or owned the property at the time of contamination is not eligible for the tax credit. Depending on the extent of the completed cleanup, the taxpayer may apply for a credit equal to either 25 percent or 50 percent of the cleanup cost. If the site has an Activity and Use Limitation, or AUL — typically a use restriction placed on title as part of the cleanup process — then a 25 percent credit would apply; if no AUL, then eligibility increases to 50 percent. Without this tax credit, many contaminated properties would remain a public health risk and there would be no incentive to clean up and return these sites to productive use.
The credits have provided critical additional funding for community development corporations, or CDCs, and other community-based organizations. And a change to the law in 2006 has helped nonprofit organizations, which were previously not able to use all of their credits, to sell or transfer the credits to others. In recent years, the state Department of Revenue has distributed between $28 million and $61 million annually in Brownfields tax credits, benefitting between 40 and 80 development projects each year.
The Brownfields Act was created through a unique collaboration of Massachusetts policymakers and a truly diverse set of stakeholders. Developers, town officials, environmentalists, business association representatives, scientists and many others spent hundreds of hours negotiating the details of this landmark legislation.
For Massachusetts residents and businesses, the benefits have been significant. By cleaning up these sites, public health conditions improved, local communities were revitalized, housing was built in vacant areas, new jobs were created, and municipal real estate tax revenue grew. For developers and their partners in engineering, construction and architecture, redeveloping a former industrial site no longer posed a financial or legal death sentence.
For a very modest investment by the commonwealth, billions of dollars of investments have been made throughout the state, benefitting its citizens and municipalities. We commend the Legislature’s work this session to provide for a five-year extension of the Brownfields tax credit in the Housing Bond bill, signed by Gov. Baker on May 31. Twenty years later, the Brownfields Act’s approach to economic development and public health policy continues to be bipartisan, beneficial, bold and, most important, very successful.
This post comes from BLDUP.com: BLDUP Spotlight – David Begelfer, Reesa Fischer and Tamara Small of NAIOP Massachusetts.
Last week NAIOP announced that David Begelfer would be retiring after more than 27 years leading the organization. NAIOP’s Board of Directors voted Reesa Fischer, currently Chief Operating Officer, and Tamara Small, currently Senior Vice President of Government Affairs, to co-lead the association. Fischer will serve as Executive Director with operational, financial, programming and membership/marketing oversight. Small will serve as Chief Executive Officer with oversight of the organization’s government affairs and lobbying activities, public relations, and research. BLDUP sat down with the three industry leaders to discuss the transition and NAIOP’s goals for the future.
BLDUP: For our readers that are not familiar, what is NAIOP?
Tamara Small: Officially NAIOP is The Commercial Real Estate Development Association. Long ago NAIOP stood for National Association of Industrial and Office Parks. It was then changed to National Association of Industrial and Office Properties. In 2009, the national organization recognized we represented so much more than industrial and office properties. They did not want to lose the brand recognition that NAIOP had so they kept the acronym, but changed what it stood for. We now represent office, retail, mixed-use, multifamily, lab and institutional space here in Massachusetts. We are the largest of all the NAIOP chapters at nearly 1,700 members.
Reesa Fischer: Our membership is made up of a variety of industry leaders. While we are primarily (60%), owners, developers, and operators, the other 40% is made up of attorneys, brokers, and everyone else who supports the commercial real estate industry. This variety of folks involved in the organization is also a big differentiator for NAIOP. We operate based on a 3 legs of the stool principle, government affairs advocacy, events/education & networking.
BLDUP: What is NAIOP forecasting for the Boston market? Are there any trends you are seeing?
David Begelfer: What I see as our greatest risk going forward is probably not a recession, at least locally. The Boston market is quite strong and we do not see a lot of oversupply or speculative projects.
A serious downturn does not look like it’s in the cards for the next 2-3 years but we do anticipate somewhat of a slow down because of our success. There are two major components exceeding inflation, land cost and construction costs (the biggest part being labor costs) and these two issues affect development. We have a very tight market with regards to the construction industry and the number of people and subcontractors. We also have barriers for entry for companies and individuals to move in from out of state because of the high cost of living. We are seeing inflation in costs of land/construction because of our dynamic economy. Because of this, we are already starting to price out residential rent projects, pushing them toward condos.
Another aspect of this looming problem is the limited capacity of skilled unemployed workers that can fuel the market going forward. We have relied upon immigration from out of the country for the last 25 years of growth. Immigration is starting to have some cracks for various reasons (policy, political, practical economic). We have concerns that the constant flow is drying up and Massachusetts has always had a problem with net migration out of the state. The bottom line, as I see it, is that we are at a greater risk from our success than from a possible recession.
BLDUP: David, What is your proudest achievement as outgoing CEO of NAIOP?
David Begelfer: It is very hard to choose one particular moment, but if I had to take an overview of the past 27+ years, I’m very proud of the “secret sauce” of NAIOP. From the start, the secret sauce was to integrate the top professionals and engage in our organization primarily in government affairs and advocacy. It’s very difficult to handle the wide range of issues that we deal with, regulatory, legislative, judicial, policy and then within each of those baskets another array of issues from environmental, transportation, economic, building codes, all across the map. The only way we have been able to handle this and provide expert feedback is the unbelievably involved professionals who work with us. This has allowed us to expand the breadth and depth of issues that we deal with and we have done it in a way that we can give something back. We can’t pay for this counsel but instead, we offer networking, connections, and leadership opportunities to add value to our relationships and provide a win/win for everyone involved. The involvement and growth of volunteerism within the organization is the greatest success I could imagine.
Additionally, we have been able to bring some of the top people in the industry onto our staff. One of the reasons this is a seamless transition is that others have developed expertise within our organization. It was very easy to choose Reesa & Tamara to move forward into the leadership of the organization.
Reesa Fischer: I feel it is important to mention David’s ability to embrace change. Most trade associations are very stagnant and very conservative. They do what they do and as long as it’s not broken they don’t fix it is. One thing we value at NAIOP (and it’s why I love working here) is that embracing change is what it’s going to take to stay competitive. We like to think of our organization as a disruptor and we are always trying new things that people wouldn’t necessarily expect from a trade association.
David Begelfer: We are always looking to see what can be changed and done differently. There is no complacency in this organization. People talk about having periodic strategic plans; we strategically think about our organization throughout the year. That may cause more work, but it keeps us relevant. You can’t fight change you have to embrace it!
BLDUP: Government affairs and advocacy is a big part of what you do. How do you work to accomplish your advocacy goals?
Tamara Small: We have our eyes and ears on anything that would have an impact on the industry and we weigh in wherever appropriate – whether it’s legislative, regulatory or judicial advocacy. The process is a very collaborative one. We have over 200 people on our Government Affairs committee and a very active board of directors who provide input. This expertise allows us to provide real-world examples that illustrate the impact of any proposed changes.
As an example, we just wrapped up the legislative session which ran from January 2017 through July 31, 2018. There were about 8,000 bills filed this session and we tracked hundreds of them, provided testimony, served on legislative task forces and met with legislators. Clearly, no legislator can be an expert on every single issue. So, for those issues that are of interest to us, we provide substantive, factual information on how the bill would affect the commercial real estate industry – and often the greater overall economy. Through this approach, we have built strong relationships with legislators and regulators.
A good example of how NAIOP handles advocacy would be a provision of the economic development bill that was signed into law by Governor Baker on August 10. The bill includes language that will bring clarity to the development process for properties along railroad rights of way. The process had been a source of frustration to the development community for many years. So, through our government affairs committee, we drafted a legislative fix and worked for 8 years to educate lawmakers on the need for the change. Through the leadership of key legislators and MassDOT Secretary Stephanie Pollack, we were able to work together on language that was signed into law. It will bring transparency and predictability to the development process – two things that are critical for any real estate project. Talking about railroad rights of way may not be the most exciting topic, but it is one of those things that will affect important transit-oriented projects throughout the Commonwealth.
BLDUP: What is the next legislative issue you will be focusing on?
Looking ahead, our three areas of focus will be: Housing, Transportation, and Climate Resiliency
We believe that climate resiliency is a top priority for the industry. It’s an economic development issue. We were very supportive of the climate change legislation that passed this session. The bill that was passed requires the Commonwealth to develop a climate adaptation plan, complete vulnerability assessments at the state and local levels, and identify how the public and private sectors can work together to really think through what climate change means for the real estate industry and for the greater economy.
Another broader economic development issue that we are passionate about is the need for more workforce housing. We were very supportive of Governor Baker’s housing bill. We worked with all of the business groups as well as the Mass Municipal Association to try and get that passed in the final hours of the legislative session, but unfortunately, it didn’t make it. In my mind, it would have been the most significant housing bill in years. We also thought it was very significant that we had such a broad coalition of support for the first time in 30 years of discussion around this issue. We are going to continue to push for this in the next session, which kicks off in January.
Our third big area is transportation. We will continue to advocate for an efficient, world-class transportation system in MA. We need the type of system that allows people to get in and out of the city and to expanding areas with ease. We are going to be looking at that in the next legislative session to ensure we can expand on existing capacity.
BLDUP: Reesa & Tamara what are your goals for the NAIOP in next 5-10 years and David what would you like to see continue after you retire?
David Begelfer: I do think that NAIOP is going to continue to sit on the same 3 legs of the stool, advocacy, education, programming/networking. Every member gets something from one or all of these areas. We need to take a look at new technology, be proactive, be entrepreneurial, be thoughtful, and stay in touch with members and their needs. We also want to offer new platforms for information.
One thing that is NOT going to be happening, is people are NOT going to be totally virtual. They want to meet face to face. That’s never going to change. You will always need networking.
We have also taken a look at online learning and have seen a much greater demand for face to face learning but in a tighter timeline. We are moving into podcasts. That seems to be a very popular way for people to get information while driving, walking, or spinning. It’s hard to plan for the future when technology is changing so quickly. Right now we have a partnership with the MIT Center for Real Estate that enables us to see what is on the cutting edge of the industry. We just need to continue to keep an open mind.
Reesa Fischer: It’s about expanding the information and knowledge the we can provide the members and providing them with different options of delivery. People are just so busy and not everyone can come to a site event. Some people prefer podcasts or live webinars. We need to expand our information and methods of delivery to stay relevant.
We have also seen a huge demand for professional development skills that are outside of the industry. The membership is looking to be able to provide skills for their talent. Talent is a big issue right now, retaining and obtaining. Learning professional skills while networking and engaging with people in the industry is a unique opportunity we can provide our members.
Tamara Small: We are nothing without members. We look forward to working with our many member-driven committees and continually seeking feedback directly from the industry. As Reesa and I transition to our new roles, we will be sitting down with our leadership and members to do our own focus groups in order to understand what they need. We look forward to growing and expanding with them.
Reesa Fischer: Yes, we are very externally focused!
BLDUP: What is the last book you read that you would recommend and why?
Reesa Fischer: The Road to Recognition by Seth Price. Seth is a local guy who runs Placester and did a keynote at one of our marketing conferences. The book is about building your personal brand which plays into a corporate brand: being authentic, setting up expectations, meeting expectations. Detailing ways to keep you competitive either personally or professionally. It’s how I look at our organization so that we can continue to be important in the industry.
Tamara Small: Starting Small and Making It Big: An Entrepreneur’s Journey to Billion-Dollar Philanthropist by Bill Cummings. It is interesting to hear his rags to riches story and his unbelievable drive and entrepreneurial spirit that have helped create his company. The book provides history about the CRE industry but also an inside look at one of the most entrepreneurial people I’ve encountered. He is also someone who has really devoted a good part of his career now to charitable endeavors and that is very admirable.
David Begelfer: Leonardo da Vinci by Walter Isaacson. It’s astounding the genius that was there but not just genius: the genius was combined with unbelievable curiosity. Almost anything he saw he wanted to look further into it. It’s frightening that a lot of what he discovered was never published and lost for hundreds of years. People would rediscover these things hundreds of years later. He discovered something about how the heart works but it was not actually verified until 1970. He was way ahead of his time. It is a very fascinating read and again it was not just intelligence but a need to be entrepreneurial and also a great observer and creative.
BLDUP: It is important to note that despite the CRE industry being primarily male, NAIOP’s new leadership team is female. Tamara and Reesa what are your thoughts on this.
Reesa Fischer: Just a little history, when I started here 8 years ago, the percentage of women in the industry and in NAIOP was significantly lower. It is really exciting to see that women have very quickly been getting involved. Our female membership rates have gone from around 10% up to 28-30%.
About 7 years ago we started an annual event, the Women of Influence luncheon. It sells out 200+ tickets every year with wait lists of people. I think the pipeline is filling up as young women are starting to come into the industry and seeing there are a variety of ways to get involved, not just brokerage but in the development world as well.
Women are very organized and project management focused and very collaborative and that is what this industry is. It’s about time women recognize they can actually play an important role. We are also more women in senior roles and running companies.
Our Distinguished Real Estate Award recipient this year is Related Beal, run by Kimberly Sherman Stamler. Our President-elect for next year is also a woman so the top 3 levels of our organization will be female. We are very excited to feel like we are following the trend and blazing new trails for women in the industry.
Tamara Small: Going forward we will operate under a collaborative leadership structure which we found is much more common with women. Reesa and I have worked together for so many years and we both have our own unique strengths so we are excited to continue this and take NAIOP to the next level.
David Begelfer: We have not said we want to have women run the organization, we have put into place the best people we have for the position and they happen to be women. They are stepping up and being chosen to lead because of their skills.
BLDUP: David, to conclude on more of a personal note, what are your plans for your new free time?
David Begelfer: I have a lot of interests to stay active and involved in the industry. I love to travel, play golf, those are wonderful things, but I don’t see that as sufficient to keep me alive and well and excited about my future. I’m looking into opportunities that will allow me to keep active and participate in this active industry. I am mostly looking forward to being a member of NAIOP and getting all the value that a member gets from being involved.
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