Tag Archives: commercial real estate

Optimism: the way to start your day

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This post was written by Kimberly Sherman, and originally appeared on the Nickerson PR blog, CheersLive!

On Thursday November 29, 2012, over 400 attendees gathered at the Seaport Hotel Boston for the NAIOP/SIOR Annual Market Forecast, one of the industry’s leading market forecasts. Nickerson PR was the sponsor of the much-anticipated event. “Being knowledgeable as a peer in the field, helps Nickerson PR to provide a better service to our clients – we want to be a knowledgeable business partner to every client – not just a vendor. It was very important to sponsor such an event,” said Lisa Nickerson, Principal of Nickerson PR and Board Member SIOR New England.

Barry Bluestone NAIOP.jpgBarry Bluestone, Dean, School of Public Policy &
Urban Affairs at Northeastern University

David Begelfer, CEO for NAIOP Massachusetts moderated the program. The Keynote speaker, Barry Bluestone, Dean, School of Public Policy & Urban Affairs at Northeastern University, offered an optimistic and timely economic snapshot of our local real estate market. Bluestone’s economic overview mostly centered on why we will return to a 0.2% growth rate. He outlined six things we haven’t paid enough attention to.

1. The demographic boon is over
2. The plateau in educational attainment
3. Increase in inequality
4. Globalization and outsourcing
5. Energy and environment
6. Twin deficits

In closing, Bluestone firmly stated that to avoid this path, we would need major innovation and investment for large-scale ideas. He reminded us that the good thing is the US has accomplished this before, so we should have the confidence that we can do it again.

NAIOP Panel.jpg

Some of Greater Boston’s most active real estate professionals presented an analysis of the Massachusetts commercial markets, with a special look at the office, industrial and capital markets. Panelists discussed the drivers and fundamentals behind 2012 statistics, including emerging trends in specific markets, new growth areas and a general outlook for the future. Among these market experts were:

The majority of attendees I spoke to were pleased to leave the event with a feeling of optimism. In the words of market expert panelist Petz, “Boston is hot, we are lucky to both live and work here.”

Some take-aways from NAIOP Forecast attendees:

“It’s always great to hear lots of optimism about the direction of the commercial real estate markets for 2013 and beyond. Absorption rates are increasing significantly throughout the region which bodes well for the CRE market for years to come.” Bud LaRosa, Chief Business Performance Officer, Tocci Building Companies

“It was refreshing to hear Barry Bluestone speak to overcoming the fiscal cliff and offer insight as to why there is plenty of good news ahead for the real estate market.” Merrill H. Diamond, Founding Partner of DIAMOND SINACORI, LLC and IGNITION Residential, LLC

“With 7,500 new multi-family units planned and Boston supporting the effort, it’s nice to be assured that Boston real estate is hot right now.” Markell Blount, Partner, Sparta Consulting Inc.

“I am happily surprised by the level of optimism expressed today. The last few events have been more doom and gloom, so I’ll take this news any day.” Mark Glasser, Principal, Packard Design

Strategies for Today and Predictions for Tomorrow

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The following blog post was submitted by Ally Quinby, Account Executive at Solomon McCown.

NAIOP Massachusetts’ Smart Money in Real Estate event, on September 19, gathered together a distinguished panel of Boston’s real estate professionals to discuss the state of today’s market, as well as their predictions for the future.

To set the table for the event, NAIOP MA disseminated a poll to members regarding their current perceptions and future predictions. Doug Poutasse, Executive Vice President, Head of Strategy and Research at Bentall Kennedy, and moderator of the panel, leveraged the results from the poll during the discussion.

In regards to real estate investment, Jeff Furber, CEO of AEW Capital Management, listed the four qualities investors are seeking currently: Safety, Income, Control and Liquidity. Tier 1 core costal markets like Boston have been a major beneficiary of this fact due to the lack of risk associated with investing in stable regions.

Similarly, Jon Davis, CEO of The Davis Companies, believes there are many value-add opportunities in healthier cities, “Here in Boston, we are transforming neighborhoods. Take Kendall Square and the Fort Point Channel; there is so much vibrancy in these areas.”

According to one panelist, what the Boston area is lacking is supply of retail space. Despite the recent buzz around grocery-anchored retail centers, Tom DeSimone, Executive Vice President of WS Development, believes centers like this are “overplayed” and the increase in food sold outside grocery stores across the country, in retail shops like Wal-Mart, will be a problem in the future. In agreement, Mark Weld, Managing Director of Clarion Partners, said, “Distressed debt is aggregating in grocery-anchored retail centers across the country that people thought were on the path to growth.”

Looking forward, all the panelists agreed the looming effects of sequestration raise many questions for real estate professionals across the country. Despite the increased activity seen in markets like Boston, New York, San Francisco and Washington, D.C., uncertainty of this type has its effects. According to Jon Davis, “cleaning up from sequestration is the single biggest risk” we are facing today. There is no indication of whether or not Congress is going to be able to come together.

General sentiment among the panelists regarding the economic future was mild, noting there will not likely be significant improvement or dramatic decline in the state of the market.  Instead, all panelists agreed success today—and in the future—will rely heavily on partnering with the right people for leverage. Especially in times like these, what matters is one’s character and ability to execute.

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.

Boston’s parking freeze needs to be thawed

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This Letter to the Editor appeared in the June 14, 2012 edition of Boston Business Journal.

To the editor:
The viewpoint expressed in your recent article titled “Seaport Squeeze” piqued my interest. I find it worrisome that the Seaport area will soon transition from servicing commuter parking for downtown Boston, to an area servicing parking for its new residents and businesses.

We should all be a bit more concerned about the results of this impending transition. The parking freeze was initially proposed in the early 1970s for downtown Boston and Logan Airport. Subsequently, parking freezes were adopted in Cambridge, East Boston and other parts of Boston. With the growth of the office market over the past three decades, many workers have certainly taken advantage of Boston’s mass transit system, but those who commute by car benefit from the low-cost parking in the undeveloped Seaport area.

With a parking inventory freeze in the Seaport, long-term availability of satellite surface parking is at odds with the construction of high-rise apartments and offices. As the amount of commuter parking diminishes, the stress on businesses in the Financial District, to keep their commuting employees, increases. Mass transit cannot absorb all these commuters. At some point, companies that have relied upon employees that commute to work may be forced to look elsewhere for office space.

There are two areas that need attention. Firstly, Boston businesses are highly dependent on the MBTA and the legislature needs to act, not just with a short-term fix, but with a multiyear plan to reduce the T’s burdensome debt, and increase the long-deferred investments to enhance, expand, and improve ridership capacity and satisfaction.

Secondly, a myriad of programs have been implemented nationwide to reduce parking and transportation demand that do not depend on freezes. Even the city of Cambridge has abandoned its parking freeze approach and implemented a Vehicle Trip Reduction programs to address parking, traffic and air-quality issues.

Maybe the time has come to take reevaluate the city’s parking freeze policy, which is one of the very few left in this country.

David Begelfer
CEO of NAIOP Massachusetts

Breaking Ground in Back Bay

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The following blog post was submitted by Sheridan Wachtel, Marketing Assistant at Solomon McCown.

On May 31, experts from all sides of the real estate industry joined us at the Sheraton Hotel to discuss one of Boston’s most iconic and sought-after neighborhoods, the Back Bay. The program, “Breaking Ground in Back Bay,” discussed the future opportunities for retail, residential, office and hotel in the neighborhood that has been the epicenter of the city for decades.

The panel included Peter Meade, Director of the Boston Redevelopment Authority; Michael Jammen, Principal, UrbanMeritage, LLC; David Martel, Executive Director of Cushman & Wakefield of Massachusetts, Inc.; Michael Roberts, Vice President Development of AvalonBay Communities, Inc.; Jeffrey Saunders, President of Saunders Hotel Group, LLC; and was moderated by Leggat McCall Properties LLC Executive Vice President, Mahmood Malihi.
Meade set the table for the discussion citing the pipeline of projects slated for the Back Bay including the redevelopment of the Christian Science Plaza, 888 Boylston, Chanel’s new retail store, and Copley Place residential building—which will be the tallest building in the Back Bay once completed.

Jammen, one of the architects of the Newbury Line Program, discussed the “red hot” retail scene in the Back Bay and more specifically, Newbury Street. “Constrained by being only eight blocks in length, retail real estate on Newbury street is seeing more demand than supply,” said Jammen in light of the fact that the street’s architecture isn’t traditionally window-display friendly. “It doesn’t have the windows like Rodeo Drive and other luxury retail streets of the world…but no one is going to build another Newbury street anytime soon,” said Jammen.

Having represented some of Boston’s most notable office spaces including The Hancock Tower, Martel discussed the increasing value of Back Bay’s office properties. “We have seen a quantum shift in office space demand in the Back Bay since 2008,” said Martel explaining how the coveted 24/7 lifestyle of the neighborhood is an increasingly important factor to office tenants to attract and retain talent—a factor that sets it apart from both contemporary urban areas like the Seaport and traditional office space properties like the Financial District and suburban areas.

With a growing desire to work in the Back Bay, residential real estate in the area has only increased in value. Roberts commented on the demographic shift that has made residential real estate in the Back Bay boom. “Young professionals landing a majority of newly created jobs, along with empty nesters wishing to return to city-livingare the key demographics in residential real estate in this area,” said Roberts.

And, according to Roberts, residents of the Back Bay aren’t planning to move out of the Back Bay anytime soon, citing residential properties in the neighborhood see half the turnover rate than all other neighborhoods in their portfolio.

Rounding out the panel was long-time hotelier Saunders, who discussed the resiliency of hotel occupancy in Boston’s Back Bay despite the influx of new hotels in Boston’s Seaport district. “Back Bay continues to be ground zero for people who want to visit the city,” said Saunders whose hotels operate at 90+ percent occupancy rate in the summer months and projecting 2012 to yield its highest occupancy rates in recent years.

With a full spectrum of real estate development projects underway and even more projected in 2013 and 2014, real estate in the Back Bay will continue to be hot commodity and a place where residents, tenants, tourists and developers want to be.

Watch a video of the panelists, or view photos from the event.

Getting Real in Affordable Housing

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The following blog post was submitted by Anne Baker, Account Executive at Solomon McCown.

 

It’s all about perception versus reality.

That was the takeaway message from NAIOP’s Affordable Housing: Challenges and Initiatives panel on May 23.  The panel included Howard Cohen, Chief Executive Officer at Beacon Communities; Lawrence Curtis, President at WinnDevelopment; Tony Fracasso, Senior Vice President at MassDevelopment; Bart Mitchell, President & CEO at The Community Builders, Inc.; Jeanne Pinado, Chief Executive Officer at Madison Park Development Corporation; and was moderated by Solomon McCown CEO Helene Solomon.

The meeting was kicked off by Aaron Gornstein, the newly appointed undersecretary for the Department of Housing and Community Development (DHCD).   Gornstein outlined his plans for DHCD, emphasizing that the agency is planning ahead for growth in the state.  Streamlining the permitting process, giving support to promising communities, marketing the opportunities available to developers and building needed infrastructure are all essential elements of Gornstein’s affordable housing plans.

But while some may only see affordable housing as a social issue, Gornstein was clear that the high cost of living in Massachusetts has serious long-term ramifications for whether businesses decide to locate here and that the construction of affordable housing creates needed jobs.

False perceptions were also a constant theme throughout the panel discussion. The public is not aware that family homelessness is a relatively recent problem and that it’s easily solved through the construction of affordable housing, Pinado said.  Mitchell and Fracasso both emphasized the creative financing options that are available to affordable housing developers who are looking for them.

Curtis argued passionately that while the construction of affordable housing is important, it alone can solve the housing gap in Massachusetts; we must work together for the preservation of existing low-income and affordable housing.  Cohen also noted that while many upscale communities fight affordable housing developments out of a fear for negative impacts on their school systems, there is little evidence to suggest that is reality. It’s all about overcoming how local communities often approach affordable housing and making the case that inclusion will benefit us all.

View video of Affordable Housing panelists.