This post originally appeared on BLDUP.

Site of Harrison Albany Block in Boston’s South End – NAIOP Summer Walking Tour

Boston’s South End is booming and a large group of comfy shoe clad CRE professionals saw the progress first hand as they trekked the area on the NAIOP walking tour this past Wednesday (July 18th). The tour brought together the top minds who have shaped the South End’s progress and expanded Boston’s center of gravity. Beginning at the brand new, highly stylish, 345 Harrison & wrapping with drinks at the Ink Block pool, our partners at NAIOP have once again provided members with an informative and entertaining program.

Tour Highlights included:

345 Harrison:

This new 585 mixed-use project spans a 2-acre site across from the Ink Block.  Elizabeth Likovich, Director, UDR, explained that 345 Harrison was thoughtfully designed to feature several different facade types so the project would appear to be 5 or 6 different buildings instead of a “superblock”.  The development has also embraced the artistic side of the South End with over $1 million of art on display throughout the common areas, most by local artists. 345 Harrison includes a variety of unit types from micro studios (all of which are already leased) to three bedrooms designed for families.

321 Harrison:

With permits in hand, Todd Fremont-Smith, Senior VP, at Nordblom Company told the crowd they hope to break ground on this project on August 1st.  321 Harrison, to be built on top of the existing garage, will include over 230K of office space. The glass facade, facing downtown Boston, will include the Roman numerals, 3,2,1 a nod to the building’s address.  Construction is expected to be complete by summer 2020.

Exchange South End:

The Abbey Group acquired the 5.6-acre parcel, home to the Boston Flower Exchange in September 2016 and has been working with the community and city on planning since. Their vision is to create a new urban campus of 4 new mixed-use buildings of lab, office, and innovation/tech space. Audrey Epstein Reny, Managing Partner of The Abbey Group mentioned that the firm decided to move toward office and lab space to complement the existing housing in the neighborhood and they hope to bring 4,000 to 7,000 jobs to the area.  The new Exchange South End will also feature ample green space in the form of a 1-acre park to be called Albany Green.

Harrison Albany Block:

Construction has begun on this upcoming 600,000 square-foot mixed-use project being developed by Leggat McCall Properties.  The underground parking garage, shared between the residential components is being completed first, followed by the first residential tower expected to open in December 2020.  In total Harrison Albany block will add around 600 residences to the area with 8600 square feet of ground-floor retail. Existing buildings at 600 Harrison & 575 Albany will stay in place with improvements to house additional office space along with 50 additional units.

Ink Block:

The Ink Block was the first domino to fall in the South End redevelopment boom and there are now 6 buildings complete within this project. The 7th, 7INK by Ollie, was just approved by the city and will be Boston’s first major co-living development.  This project will offer 250 units of all-inclusive living with amenities ranging from laundry service to a full calendar of social events. Ted Tye, Partner and Director of Acquisitions at National Development, said he hopes to break ground this spring on the final piece of this game-changing development.  Another major piece of this project has been the clean up of the once neglected area under the highway.  This new “Underground” is now home to neighborhood events and has energized this area that connects the South End to South Boston.

On June 14, NAIOP held its 30th Anniversary Charitable Golf Tournament to benefit Heading Home, an organization that provides hundreds of Greater Boston families with housing and services to thrive in the long run. After a fun-filled day of golf, refreshments, and networking at The International in Bolton, MA we are thrilled to report that we have surpassed $3,000,000 in donations to Heading Home. This year’s proceeds will benefit the Heading Home Economic Mobility Center.

Thank you volunteers, sponsors and golfers for your support!

Special thanks to:

2018 NAIOP Golf Committee Co-Chairs: Shawn Hurley of Marcus Partners and Phil Dorman of Oxford Properties

Golf Steering Committee: Vicki Keenan and Matthew Siciliano of CBRE/New England, and John Myers of Redgate

&

Platinum Sponsors: Marcus Partners, Oxford Properties

Gold Sponsors: CBRE New England, National Development, Charles River Realty Investors, New England Development, Newmark Knight Frank, Redgate

Pin Flag Sponsors: Callahan Construction Managers and Walker & Dunlop

Silver Sponsors: Boston Properties and Turner

Hat Sponsor: NB Development Group

Entertainment Sponsor: Keller Augusta

Additional Sponsors:

We will be back hope to see you again in 2019 for the 31st Annual Golf Tournament on June 20! For information, contact Debbie Osheroff at 781-453-6900 x3.

This post originally appeared on the Solomon McCown & Company blog. It was authored by Michelle Cassidy.

You can see NAIOP’s bus tour photos online.

We recently had the pleasure of attending NAIOP’s annual, highly anticipated event: The Bus Tour. This year’s theme – “Then, Now, Next” – offered a glimpse into some of Boston’s most transformative developments in the city’s evolving and historically booming neighborhoods.

We journeyed from the Financial / Central Business District to the Seaport to South Boston / Dorchester. Then, we drove through the Back Bay / South End, before reaching the Fenway followed by our final stop in Allston / Brighton.

Each neighborhood provided a look into Boston’s past while highlighting its promising future. Many buildings that were originally constructed for industrial uses are being repositioned for today’s needs. Here’s a rundown of key takeaways:

Financial / CBD – While highlighting the beautiful renovation of One Post Office Square’s lobby, speakers emphasized that tenants are now moving to better brand themselves and attract / retain talent, whereas historically they were driven by cost. The lobby renovation enables substantial natural light to enter the building and complements the streetscape. Anchor Lines Partners / JLL are renovating the building’s other interiors – we love their flexible fitness floor concept which will provide tenants with a healthy lifestyle at their fingertips.

Eastern Seaport – Given Kendall Square’s limited space, there is a lot of potential for new lab and R & D space in the Seaport, particularly the Drydock area and Raymond L. Flynn Marine Park. Many industrial buildings such as the Innovation and Design Building and 451 D St. are being repositioned for innovative tech or life science companies. The successful mixed-use development along Seaport Boulevard is continuing into this area too. Parcel K, developed by Lincoln Property Co. and designed by Arrowstreet, will bring additional residences, a Hyatt Place hotel and 20,000 square feet of retail and restaurant space. The new Omni hotel, developed by Davis Companies, will also bring more keys, collaborative workspaces and luxury spaces such as a pool deck with views of the Harbor.

South Boston – Redgate and HILCO’s development of The Edison Power Plant is improving the connectivity between the Seaport and South Boston. The 2.1 million-square-foot development includes seven new buildings that consists of more than 1,000 apartments and condos, a 150-room hotel, 339,000 square feet of office space and 68,000 square feet of retail. Investors are taking note of visionary projects such as this and pursuing unique opportunities here; for example, Akelius, the largest listed company in Sweden, recently purchased the Carson Tower Apartments near Carson Beach.

Dorchester – Nordblom is repositioning the former Boston Globe headquarters into ‘The Beat’ (The Boston Exchange for Accelerated Technology). The team is transforming the space into a modern gem with high ceilings, two roof decks, a food hall and a possible brew pub. The space will have the ability to suit various tenants including flex tech, autonomous vehicles and robotics.

The Fenway – Given the booming Longwood Medical area, there is high demand for housing in this area, and Skanska’s recently delivered The Harlo, a luxury residential building with fabulous amenities and ground-floor retail speaks to that demand. There’s also commercial office development – the tour stopped at 401 Park, commonly known as Landmark Center. The building, which was originally a Sears’ manufacturing plant, is being repositioned by Samuels & Associates into an impressive mixed-use development with a million square feet of lab and office space, a coveted ‘Time Out’ food hall, and a 1.1-acre public park with retail and activities.

Allston/Brighton – Our last stop was at Boston Landing, a 1.9 million square foot mixed-use development by HYM and NB Development Group. We toured the luxury apartment building, Lantera, which includes impressive amenity spaces including a pool and roof deck. The interiors, designed and decorated by Elkus Manfredi Architects, are full of beautiful, vibrant colors and are definitely worth checking out. The development is also proximate to public transit. Now that the Boston Landing train station is completed, it’s easy to get to and from the heart of Boston to this area. The station, constructed by Skanska, is built to Envision® Silver verification. To date, this is the highest level awarded in Greater Boston and the first transit project in New England to achieve Envision.

Connectivity continues to improve throughout Greater Boston thanks to the transformative developments and renovations we visited on the Bus Tour. We’re excited for all these projects to deliver and to bring additional vitality to the neighborhoods in which they are located.

On May 31, Governor Baker signed the Housing Bond Bill, An Act Financing the Production and Preservation of Housing for Low and Moderate Income Residents (H. 4536), which authorizes $1.8 million in new capital spending for the production and preservation of affordable housing. The bill included one of NAIOP’s top legislative priorities – a 5-year extension of the Brownfields Tax Credit.

The Brownfields Tax Credit, which was set to expire in August without this important extension,  encourages new “innocent” owners to clean up contamination.  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 to the Department of Revenue for a credit equal to either 25% or 50% of the cleanup cost. If the site has an Activity and Use Limitation (AUL), then 25% would apply; if no AUL, then eligibility increases to 50%. Without this tax credit, first created in 1998, contaminated properties would remain a public health risk and there would be no incentive to clean up and redevelop these sites.

In addition to the Brownfields Tax Credit Extension, the bill does the following, among other things:

• State Low-Income Housing Tax Credit Extension. Extends the state’s ability to commit $20 million per year in tax credits to affordable housing projects until 2025 and authorizes an additional $5 million per year in tax credits specifically to support the preservation of existing affordable housing.
• Housing Development Incentive Program Tax Credit. Extends the states ability to commit $10 million per year in tax credits to market-rate housing projects in Gateway Cities until 2024.

The brownfields tax credit extension provisions (Sections 5, 6 and 7 of the Housing Bond Bill) were first filed at the start of the 2017-18 legislative session, at NAIOP’s request, as Senate Bill 1610 by Senator Michael Rodrigues.

NAIOP is grateful to Senator Rodrigues for his leadership on this issue and applauds the housing bond bill conference committee members (Reps. Kevin Honan, Joseph McGonagle, Bradford Hill and Sens. Joseph Boncore, John Keenan, Patrick O’Connor) for championing the brownfields tax credit, which increases housing, creates new employment, and enhances local and state tax revenues by restoring blighted properties to productive use.

While another NAIOP-supported provision that increased the tax credit to 50% for  projects with an Activity & Use Limitation and twenty percent of the housing set aside for those making 120% or less of Area Median Income had been included in the Senate version of the bill, that provision was not included in the final bill.

Thank you to NAIOP members that advocated on behalf of this key policy priority for the commercial real estate industry and the Commonwealth.

Isn’t there a civic responsibility to plan for massive dislocation?

What should we do if we knew that, in the near future, a large sector of our country’s workers, currently employed with good-paying jobs, would be put out of work by new technologies? Would we ban the new technology to save those jobs? Or, do the scientific breakthroughs and related increases in growth and productivity outweigh the job-loss negatives?

These questions are not theoretical. Thomas Friedman explores these issues and others in his 2016 book, Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations. And a December 2015 study by the McKinsey Global Institute found that the US economy is only reaching 18 percent of its “digital potential.”

The McKinsey report projects that “about half the activities people are paid almost $15 trillion in wages to do in the global economy have the potential to be automated by adapting currently demonstrated technology. While less than 5 percent of all occupations can be currently automated, about 60 percent have at least 30 percent of constituent activities that could be automated. ”

Going forward, McKinsey projects, more occupations will change than will be eliminated through automation. Even a 4-year-old study done at the University of Oxford’s Martin School “estimates that 47 percent of jobs in the US are ‘at risk’ of being automated in the next 20 years.”

As the studies illustrate, it is very clear that technological advances are now coming faster and faster and starting to supplant even white collar skills.

Take, for example, the potential impact of autonomous vehicles. In the US, there are 3.5 million professional truck drivers, in addition to all of the drivers for mass transit, local deliveries, taxis, etc. One out of every 15 workers in the country is employed or associated with the transportation industry. Clearly, the impact of this new technology could be devastating to a large part of the nation’s workforce and their families.

If these disruptive technologies keep probing for efficiencies in our economic system and accelerate the obsolescence of certain classes of workers, isn’t there a civic responsibility to prepare for that inevitability? Living in a world reminiscent of Ayn Rand’s philosophy of positivism, where it is the survival of the fittest and “tough luck” to anyone else, is not going to sit well with the millions of the soon-to-be-unemployed Americans.

“When the rate of change eventually exceeds the ability to adapt, you get dislocation – when the whole environment is being altered so quickly that everyone starts to feel they can’t keep up,” Friedman writes in his book. “There is a mismatch between the change in the pace of change and our ability to develop the learning system, training systems, management systems, social safety nets, and government regulations that would enable citizens to get the most out of these accelerations and cushion their worst impacts. This mismatch is at the center of much of the turmoil roiling politics and society today.”

Bill Galston from The Brookings Institution suggests that many of the displaced workers have not been able to find new jobs that pay as much as the previous ones, with wages dropping an average of 40 percent when they do find a new job.

Eric Teller, CEO of Google X Research stated, “We certainly don’t want to slow down technological progress or abandon regulation. The only adequate response is that we try to increase our society’s ability to adapt.” For workers going forward, the only way to retain a lifelong working capacity is to engage in lifelong learning.

Governments (federal and state) are going to have to do better in two areas. First, they will have to provide a much improved “safety net” for the unemployed.  There will be more of the unemployed and these workers will be out of work for a much longer period of time. It will certainly take longer to find a comparable job that meets the worker’s skills (with fewer of these jobs available). And it will take longer for the worker to get additional training to qualify for those jobs that are available.

I suggest that we need a new system of wage insurance to minimize the negative effects of extended unemployment. The system would provide workers going through a training program with supplemental wages over what they would be currently receiving to give them time to be retrained for a higher-paying job.

Secondly, the US will need to adapt its institutions and training pathways to help workers acquire new skills.  The nation’s educational system and job training programs have not been sufficiently agile to respond to the needs of those businesses that are expanding and hiring. Even a college degree is not sufficient to guarantee a new job in the new economy. New online training modules that can be adapted and adjusted in short order will be needed to fine tune a prospect’s skill set to match a company’s requirements.

According to Friedman, the new workplace employers will value workers who can demonstrate the needed abilities for the job. These employers will need to provide multiple avenues for lifelong learning that are priced right, available on demand, and seamlessly responsive to the changing needs of the workplace. They also need to be fueled by a regulatory and tax policy to assure their widespread adoption.

What is very clear is that the status quo is not an option. Government will soon have to acknowledge that one of the greatest threats to our society will be the wasting away of our human resources. If there is no hope for the future (a job, a family, a home) for everyone in America, then the golden age of America, as a land of opportunity for all, will be a thing of the past.

On Friday, President Trump signed an executive order on immigration and refugees. It establishes federal travel restrictions stopping the issuance of visas to Syrian nationals, suspends all immigration from seven Muslim-majority Middle Eastern countries for 90 days, and extending the ban to citizens of those countries who hold U.S. visas or green cards.

There has been limited impact of this Executive Order on the real estate industry in Massachusetts. That said, besides the obvious humanitarian crisis that this only exacerbates, our region is dependent on, and benefits greatly from, the diverse immigration into our schools and industries. Our domestic population has never been able to fully meet the demands of our growing businesses, with almost every economic boom fueled by immigration.

Historically, refugees have contributed greatly to our Commonwealth. They are an integral part of our engine of innovation, working for our local companies and, in many cases, starting their own businesses, hiring many of our young, skilled resident talent.

We encourage the Trump administration to reconsider this abrupt change in policy.

2016 has been another great year for the commercial real estate industry.

Can we keep it going through 2017?  Here are my predictions for the coming year:

1. Cap rates will finally start to rise in the Boston/Cambridge markets.
2. A new Fortune 500 corporate HQ will relocate to Boston.
3. Apartment construction starts will drop in downtown Boston.
4. The Dow Jones Industrials will finish the year down.
5. Fed interest rates will be raised twice.
6. Foreign investment will increase as a percentage of total CRE sales in Boston.
7. There will be a noticeable business migration from 495 to 128, 128 to Boston, and Cambridge to Boston.
8. Drones will pilot consumer product delivery.
9. An infrastructure bill will pass Congress and be signed by the President.
10. No viable candidate will step forward to run against Mayor Walsh.

Bonus prediction:  Patriots will win the Super Bowl (I’ll be right this time!)

Below were my predictions for 2016. Okay, I blew the Patriots, but 2017 is a new year!

1. Neither casino (Springfield and Everett) will get their final clearances and will certainly not start construction.
2. The Fed will make another move up in the interest rates.
3. Foreign investment will dominate investments in commercial properties in the Greater Boston area, but local buyers will still be the major high-end condo buyer.
4. The Green Line extension will be redesigned at a lower projected cost and will move forward.
5. Some Boston or Cambridge office leases will hit $90 PSF gross.
6. The Northern Avenue Bridge will be approved to accommodate vehicular access.
7. A major office lease will be penned for either of the spec Seaport buildings (Pier 4 or 121 Seaport Boulevard).
8. A developer will be selected for the Winthrop Square garage site.
9. Patriots win the Super Bowl!
10. The Republican presidential convention will not reach consensus on the first 5 ballots.

This originally appeared as part of Boston Business Journal’s article, Boston business leaders react after Trump election victory, on November 9, 2016.

We talked to a wide variety of Boston-area business leaders to understand what the surprising victory of billionaire businessman Donald J. Trump means to them and business in general.

From David Begelfer, CEO, NAIOP Massachusetts:

The election of Donald Trump as President was a surprise to most business leaders, whether they were Democrat or Republican. If there is one thing that business does not like, it is uncertainty.  With a Trump campaign based on sound bites, no one really knows what to expect with respect to his choice of advisors and cabinet members, policies, and international agreements.

That said, one can assume that there will be a fairly quick move to propose tax cuts (and possible tax reforms) and to attack the regulatory environment. For business, in general, and real estate, in particular, it is likely that the recent effort to increase capital gains and go after “carried interest” will be replaced by a plan to reduce corporate income tax rates, eliminate the corporate alternative minimum tax, and ensure the immediate deductibility of capital expenses.

It is not unreasonable to assume that the Trump administration will focus on the EPA and potentially curb some of its oversight and regulation. Areas that could see relaxation may include climate change and stormwater. Also, energy exploration, drilling (e.g. fracking), and pipeline expansion could be encouraged.

There is no question that any changes to trade or immigration policies would affect the New England economy. The region’s economic growth has fed off a very successful set of trade agreements. In addition, the growth of jobs in the region has relied upon a strong flow of immigrants into the area.  If, as promised, the current trade agreements are in question and if immigration is further restricted, we could see a serious impact on the region’s future growth.

Finally, given that the support of the Republican-controlled House & Senate will be needed to accomplish anything beyond Executive Orders, it will be interesting to see how he is able to work with a divided party.