My Top Ten Predictions for 2019

2019Here are my last predictions as CEO of NAIOP (but not my last predictions)!

  1. Wayfair will double their occupancy in Boston.
  2. Boston and Cambridge Office rental rates will rise to record levels for new space surpassing $120 psf.
  3. Apartment rental rates will be flat.
  4. WeWork will make a move to the suburbs.
  5. Electric bikes & scooters will be allowed in Boston (and then regretted).
  6. Bitcoin value will fall, other Cryptocurrencies will rise.
  7. Foreign investment in commercial real estate will drop.
  8. The stock market will hit an all time low and an all time high.
  9. The Fed will raise rates ¼% only once during the next year.
  10. Tiger Woods will win a major.

Below were my predictions for 2018. Not too bad!
1. Amazon will pass on Boston for a campus, but leave us with a great consolation prize. [Yes and 1mm sq. ft coming to the Seaport]
2. No Turnpike air rights project will start construction (ditto for 2019). [None, so far]
3. Fed. interest rates will be up 75 basis points by end of year. [50 basis points]
4. In Boston, more condos will be permitted than rental apartments (other than the neighborhoods). [Rental approved by BPDA: 33%/Condo: 67%]
5. An office or lab lease will hit $100 per square foot in Cambridge. [Boeing office, 314 Main St.: $106.63 Net effective rent]
6. Construction costs, on average, will be up 7%. [ to date, 6-7%]
7. More than one million SF of commercial space will commence on spec. [Office: Boston & Cambridge: 1,008,000 SF; Lab: Boston & Cambridge: 1,226,000 SF]
8. The 128 office market will show more transactions (both numbers and SF) than the downtown market. [Downtown wins]
9. Foreign buyers will begin to acquire major CRE property outside of Boston/Cambridge. [No]
10. And, yes, the Patriots will do it again. [Almost!]

Legislative Wrap-Up: NAIOP Fights for Industry Through Final Hours of Session

MAStateHouse_GrayIn the early hours of August 1, Massachusetts legislators adjourned a busy two-year legislative session in which lawmakers introduced 4,861 bills in the House and 3,128 bills in the Senate. NAIOP Massachusetts and its Government Affairs Committee members worked tirelessly to represent the interests of the commercial real estate development industry. NAIOP applauds the leadership of the “big three” – Governor Charlie Baker, House Speaker Robert DeLeo, former Senate President Harriette Chandler, newly elected Senate President Karen Spilka, as well as committee chairs and legislators who pursued a wide-ranging agenda. For the remainder of 2018, the legislature will meet in informal session, but during those sessions bills need the unanimous approval of the limited number of members attending to be approved. Any member of the legislature can prevent a bill from advancing simply by objecting.

While NAIOP advocates on hundreds of bills, here are the must-know highlights of the 2017-2018 legislative session and what they mean for CRE:

Railroad Right of Way Reform Passes in Economic Development Bill
In a win for NAIOP Massachusetts’ advocacy, the economic development bill approved by the House and Senate reforms the current railroad right of way statute (MGL 40/54a) that has created uncertainty and delays for projects on former railroad rights of way. The language in Section 10 of H. 4868 removes the confusing “land appurtenant to” language from the review process; directs MassDOT to establish guidelines, timeframes, and a determination of inapplicability option for unimpacted land; and brings certainty to landowners and lenders while protecting properties of importance to the Commonwealth’s future transportation needs. The final language was based on a stand-alone bill filed at the request of NAIOP by Rep. Joe Wagner and was the result of years of discussions between NAIOP, MassDOT and the legislature. The economic development bill also includes $250 million for the MassWorks program and $75 million for workforce skills capital grants, as well as many other bond reauthorizations designed to spur economic development.

VERY special thanks to Secretary Pollack, Rep. Wagner, Rep. Strauss, Sen. Boncore, Sen. Lesser, legislative leadership, and NAIOP members for their work on this issue. The bill is now before Governor Baker and is expected to be signed very soon.

Flawed Zoning Bill Defeated
NAIOP and all real estate groups in the state, as well as the Mass Municipal Association, opposed H. 4397.  The bill was a top priority for planners and environmental groups and contained anti-growth concepts including eliminating the Approval Not Required (ANR) process, reducing the scope of zoning “freeze” protection under current law only to the particular subdivision plan that is submitted rather than to the “land shown on the plan,” authorizing the use of impact fees without limitation, and mandating inclusionary zoning without incentives. NAIOP educated lawmakers on the numerous provisions of the bill, which would have hindered housing production in Massachusetts.  We are very pleased this very flawed bill did not advance.

Housing Production Bill Left on the Table
NAIOP strongly supported H. 4290, which was filed by Governor Baker and given a favorable report by the Joint Committee on Housing.  That bill allowed cities and towns to adopt zoning best practices by a simple majority vote, rather than the current two-thirds supermajority.  This would have been allowed in situations where the zoning change encouraged more concentrated development including the adoption of 40R “Smart Growth” districts or starter homes, reduced parking requirements, allowing accessory dwelling units, and reducing minimum lot sizes.  The bill was supported by a broad coalition of business groups, the Massachusetts Municipal Association, and the real estate industry.  We are disappointed that the bill did not receive a vote.  Governor Baker has encouraged the legislature to move the policy during informal session (now through December).  NAIOP will continue to work with the Administration and the legislature to promote policies that encourage the production of housing.

Vicarious Liability Bill (Wage Theft) Does Not Pass
NAIOP was part of an 18-member coalition of business groups opposing flawed wage theft legislation containing vicarious liability for businesses that employ entities that commit wage theft (S. 2546). It would have targeted innocent, law-abiding businesses and held them responsible for the actions of other businesses. This would have applied stop work orders and penalties to the lead company who would have had no way of knowing about such a violation.  The Senate passed the bill, but it was not taken up in the House.  NAIOP, which served on a working group with legislators and the proponents of the bill (labor interests), will continue to advocate for fair and balanced solutions to wage theft that go after those who are breaking the law, while opposing proposals that target law abiding businesses.

Balanced and Effective Approach to Climate Change Passes
NAIOP supported the environmental bond bill and climate change resiliency legislation (H. 4835), which passed both chambers and is now before Governor Baker for his signature. It directs state agencies to draft a comprehensive climate adaptation plan and evaluate the Commonwealth’s adaptive capacity to respond to climate change. The Plan will be updated every five years, ensuring a focus on climate change resiliency beyond the current Administration. NAIOP was strongly opposed to other climate change legislation (CAMP – S. 2196)  that would have required “all certificates, licenses, permits, authorizations, grants, financial obligations, projects, actions and approvals issued by a state agency or state authority” to be consistent to the maximum extent practicable (MEP) with a plan.  NAIOP opposed the language because “consistency” would have been open to interpretation and the term “maximum extent practicable” was not defined and therefore set the stage for legal challenges against projects.  We are pleased that the final environmental bond bill does not include this language and NAIOP looks forward to working with the Administration to develop this important plan.

Housing Bond Bill – Brownfields Tax Credit Extended
Earlier in the session, Governor Baker signed the Housing Bond Bill (H. 4536), which included one of NAIOP’s top legislative priorities – a 5-year extension of the Brownfields Tax Credit. The bill authorized $1.8 million in new capital spending for the production and preservation of affordable housing with an extension of the Low-Income Housing Tax Credit and an increase in the annual allocation to $25 million. For more information, read our blog post, Brownfields Tax Credit Extension Signed into Law.

NAIOP is grateful to Senator Rodrigues for his leadership on this issue and applauds the housing bond bill conference committee members (Reps. Honan, McGonagle, Hill and Sens. Boncore, Keenan, 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.

Community Benefit District Legislation Falls Short of Approval
Legislation (H.4546) that would have authorized Community Benefit Districts did not receive final procedural support in the legislature after initial approval in the House and Senate. Community Benefit Districts (CBD) impose assessments on property owners, in addition to property taxes, to fund supplemental services. A CBD may be established only if the property owners in the district who sign the petition to create the CBD will pay more than 50 percent of the yearly assessment. Like last session, NAIOP opposed the CBD framework based on the issue that it would impose additional fees on property owners who may not have supported the creation of the district in the first place. Many other advocacy groups and legislators recognized the potential problems with the CBD framework and stopped the bill from becoming law.

Water Banking Fees Defeated
NAIOP strongly opposed Act Providing for the Establishment of Sustainable Water Resource Funds. House Bill 2116 would have provided communities with the authority to create water banks – essentially an impact fee that unfairly targeted new development and focused on environmental mitigation and water conservation measures rather than water infrastructure upgrades or capacity issues.

Job Site Roster Bill Defeated
Senate Bill 1019, An Act relative to transparency in employee benefits reporting in private construction, would have affected projects with 10 or more residential units or commercial projects of 5000 square feet or more by requiring that a roster of employees and independent contractors on a jobsite be publicly posted.  The legislation required a certificate of compliance with no mechanism for applications and issuance, and no timeframes.  Given the extremely fluid nature of a job site, combined with the project delays and costs associated with this legislation, compliance with such a requirement would have been nearly impossible.

Special thanks to all NAIOP members who provided input and expertise on the wide range of issues NAIOP pursued this session. NAIOP will now begin drafting its legislative agenda for the 2019 – 2020 session by meeting with members to determine how to best advance the goals of the industry.

NAIOP Mourns the Loss of Frank Wuest

NAIOP, its leadership, and its members all Wuest_Frankmourn the loss of Frank Wuest, a long time friend, past President, and avid supporter of NAIOP. We will miss his friendship, enthusiasm for life, and his upbeat attitude. To his family and friends, we give our deepest sympathies.

Frank Wuest died on Saturday, August 13, while participating in a fundraising swim in Narragansett Bay, Rhode Island. An avid and skilled swimmer, Frank was 56 years old, a native of Greenwich, CT, graduate of the University of Connecticut and Harvard Business School, and was President of Marcus Partners, having established a successful career in real-estate investment and development.

Passionate about Boston, its people, and its landscape, Frank loved leading the development of vibrant, mixed-income, mixed-use communities. His work included well known developments such as University Park at MIT and Radian in the Leather District of Boston, which he completed while at Forest City Enterprises, where he was for many years president of the Boston office and Head of the Science + Technology Divisions. He served on both the executive committee and board of directors of A Better City as well as the international advisory board of Harvard Business School’s Real Estate Academic Initiative. Mr. Wuest was the Vice Chair of the Advisory Board of the Boston District Council of the Urban Land Institute (ULI) and was a past President and long time member of the Board of Directors of the Massachusetts Chapter of NAIOP, the Commercial Real Estate Development Association. His kindness, intelligence, generosity, and quick smile will be missed greatly.

Frank became a committed long-distance swimmer in 1998, and was a beloved member of the Cambridge Masters Swim Club at Harvard. He was the recipient of many awards including United States Masters Swimming (USMS) Long Distance All Star, USMS Individual All-American, and many USMS Top-10 swims. Earlier this summer, Frank completed a 10,000M swim for time and was the top male finisher in the annual Charles River Swim.

Frank inspired those around him to do their best. A champion of family and time together, he never let a summer go by without a family reunion. He is survived by his wife, Lyn Duncan; two children, Sam Wuest and Allie Wuest and their mother MJ Vigneau; two stepchildren, Micki Duncan and Elias Duncan; his parents Gail and Frank Wuest of Connecticut, two brothers, Kirk of California and Chris of Connecticut, and his sister Avery Horne of Connecticut.

Funeral Mass and Life Celebration

A funeral mass will be held Saturday, August 20 at 11:00 am at St. Paul Church, 29 Mt. Auburn St., Cambridge, MA. An event celebrating Frank’s life will be held immediately following the mass at the Harvard University Murr Center. Because there is no parking at St. Paul Church, parking will be provided at the Harvard Stadium lot next to the Murr Center at 65 North Harvard St, Boston, MA 02163. Shuttle buses will provide transportation between the Murr Center and St. Paul Church before and after the service.

Immediately following the funeral Mass a luncheon reception and celebration will be held at the Harvard University Murr Center Hall of History, adjacent to the parking noted above.

In lieu of flowers, donations can be made to the Frank C. Wuest Memorial Fund, established through Fidelity’s Charitable Gift Fund. Details can be found below.

——————————————————————————————————————————

Frank C. Wuest Memorial Fund
Make checks payable to:
The Fidelity Charitable Gift Fund
Memo:  The Frank C. Wuest Memorial Fund, Giving Acco
unt #1098999

Checks need to be able to be drawn on a US Bank and should be in US Dollars.
We cannot accept cash like instruments (bank checks, cashier checks, money orders, postal orders, etc.)

Regular Mail Address:                                       Overnight Delivery Address:
Fidelity Charitable Gift Fund                        Fidelity Charitable Gift Fund
Mail zone:  KC1D                                               Mail zone KC1D-FCS
P.O. Box 770001                                                100 Crosby Parkway
Cincinnati, OH 45277-0053                           Covington, KY 41015-9325

Questions?
If you have any questions about the donation process, please call Fidelity Charitable Gift Fund at 1-800-952-4438 or visit www.FidelityCharitable.org. Please reference “The Frank C. Wuest Memorial Fund”, Giving Account #1098999.

The Fidelity Charitable Gift Fund is a 501c-3 tax-exempt organization. Its federal Tax Identification Number is 110303001.

6 Steps to Building a Career in Commercial Real Estate

100_0642On February 24th, NAIOP Massachusetts hosted a career panel where dynamic young professionals from the Developing Leaders program offered helpful advice on how to jumpstart or further a career in Commercial Real Estate. Speakers included Molly Davis, Associate Director at Newmark Grubb Knight Frank; Katie Grimes, Business Development Associate at Red Thread; Chris LaFrance, Associate Director of Acquisitions at Intercontinental Real Estate Corp.; Tucker McCrabb, Research Analyst at AEW Capital Management; Jennifer Price, Assistant Vice President at Colliers International; and Sarah Weatherbee Walker, Senior Director at Keller Augusta Partners, who moderated the program.

100_0652At the event, Keller Augusta Partners shared these tips below for college students who are interested in a career in Commercial Real Estate.

The Commercial Real Estate industry is very competitive. Successful candidates must be able to demonstrate experience and interest in the CRE field early and often. Here are some helpful ways to break into the industry:

  1. Coursework
    • Be sure to do exceptionally well in real estate classes (impress your professors!) and maintain high GPA
    • Highlight significant projects or case work from your courses on your resume
  1. Internships
    • Full time summer positions
    • Part-time /semester opportunities
    • Contract work
  1. Industry Professional Organizations
    • Seek out a student membership or student rate for attending events
    • Join committees to make more meaningful connections, don’t just attend events
  1. Leadership Roles within On-Campus Organizations
    • The event planning process is a great reason to reach out to industry professionals
    • This becomes an excellent resume talking point
    • If your school doesn’t have a group, create one!
  1. Networking
    • Utilize your Alumni, Personal & Professional network to build up your industry contacts
    • Be specific about your job search & career objectives during networking/outreach conversations
    • People want to help but being vague puts more work on them
    • Create your 2-minute elevator speech and practice it!
  1. Skills
    • Academic performance (GPA/Test Scores) is highly regarded at top firms
    • Strong emphasis on quantitative skills across many positions

100_0659Below are some additional resources available from NAIOP Massachusetts.

Student Association Membership (SAM) program
Open to any full-time student who is not otherwise employed in the industrial, office, multifamily, mixed-use or related commercial real estate industry. Must present a valid school ID and current full-time schedule.

Benefits include: free admission to networking events and educational programs, opportunities to meet industry leaders and decision makers, access to NAIOP’s national database, special Student Association Membership (SAM) Career Dinners and informational interviews.

University Membership
Available to colleges and universities offering undergraduate programs in real estate and includes up to 25 student memberships.

NAIOP Massachusetts Job Board
Includes full-time jobs and internships. Open to all, NAIOP Members can post jobs for free.

100_0657View all photos from the event.

Speaking of Real Estate

NAIOP Massachusetts is kicking off a video series we will be calling “Speaking of Real Estate”.

The idea behind this effort is to interview leaders in the commercial real estate industry, including developers, owners, investors, as well as some of the heads of the major professional service firms that support our business.

We are starting with a very candid discussion between Tom Alperin, President, National Development and Marc Margulies, Founder and Principal, Margulies Perruzzi Architects. They cover a range of topics that include affordable housing, new design considerations, shared economy, and looking to the future for the industry.

We plan on bringing you the opportunity to hear from individuals that are in the forefront of creating our new urban and suburban “live, work and play” environments. Who are some CRE leaders you would like to hear from in this series? Let us know in the comments section below.

Event Recap: Leadership Lunch + Learn at 101 Seaport

The following blog post was written by Chloe Louise Bouscaren, Marketing and Business Development at CBT Architects.

“An Inventive Setting to Spark Inventive Thinking”

IMG_20151111_122627151On Wednesday, Nov 9th NAIOP hosted a Members-Only Leadership Luncheon at 101 Seaport Boulevard, the new home for PricewaterhouseCoopers, a multinational professional services network. PwC relocated 3000 employees from 125 High Street to Boston’s Seaport District. Shawn Hurley, the Executive Vice President and Regional Manager of SKANSKA USA Commercial Development hosted NAIOP on the building’s 7th floor, the only space that has yet to be leased. Shawn was joined by Charley Leatherbee, VP of Development; Levi Reilly, Director of Development; and Patrick Sousa, Manager of Development, who all played important roles in the success of this high-profile project.

IMG_20151111_121118778The newly constructed 17-story, 440,000 RSF, LEED Platinum state-of-the-art office building was developed by SKANKSA USA Commercial Development Team in Boston. Highlights included a chilled beam mechanical system, triple glazing curtain wall, 300 underground parking spaces, world class retail by WS Development, expansive views of the harbor and Seaport, conference and training centers, and virtually column free floorplates. 82% of the building is occupied by PwC, tenants Red Thread and Skanska will be joining them soon. NKGF’s Dave Martel and Bill Anderson are responsible for the leasing and deal negotiation.IMG_20151111_120951643_TOP

Located on what will be the new Seaport Square Green, 101 Seaport connects directly to Fan Pier Park, creating a continuous public space that reaches Boston Harbor and connects to the Harborwalk Grand civic lawn to support active recreation and public events.CBT2

SKANSKA is also currently working a neighboring 17-story office tower, 121 Seaport, as well as Watermark Seaport, a 300-unit residential complex both on neighboring parcels.CTjJnD2VAAAiuyx.jpg large

For those who have yet to hear Shawn’s presentations on SKANKSA’s developments in the Seaport and beyond, his confidence and presence is unparalleled. Shawn has an innate way of making an audience feel comfortable and that day, we all felt we were part of something big. SKANSKA is clearly making development history in Boston and Shawn and his group are leading that charge the titans of the real estate industry. Hats off gents.

Quick Project Stats
Project Cost: $290M
Project Duration: 26 months
PwC Employees: 3000 (20% more people in 12% less space)
Designer / Design Firm: Jonathan McGuiness, Jacobs Engineering Group

NAIOP’s on-going Leadership Lunch and Learn series is open only to Members and offers unparalleled access to top local real estate leaders. Attendees get an inside look at the area’s most active CRE companies and hear about their latest developments, recent activity, upcoming projects, and more. Not yet a NAIOP Member? Join today!

My Top Ten Predictions for 2015

2015It is that time of year when we try to look forward and plan accordingly. For the commercial real estate industry coming off a rather good year, we have to wonder if we are at the top or still growing?

Here are my predictions for the coming year:
1. Foreign buyers will outspend domestic investors for Boston and Cambridge properties and will make a dent in some communities along 128 (e.g. Burlington and Waltham). They will also be a major buyer of Boston condos.

2. Boston properties will be seeing a record number of office properties changing hands with some of those properties having already transferred ownership within the last 3 years.

3. No surprise that office rental rates in Boston and the surrounding areas will be increasing. I predict a minimum of 10% over this year. Apartment rents will continue to rise with some resistance in the newest buildings.

4. The Wynn Casino construction project will not be starting in 2015.

5. There will be one speculative office building announced in Cambridge, that’s it.

6. Design firms will have their busiest year renovating spaces and providing greater efficiency for existing tenants.

7. Construction costs are going to be up substantially, especially in downtown Boston, with greater difficulties getting multiple competitive subcontractor bids.

8. Boston will experience a major hurricane this coming Fall with substantial flooding due to storm surge.

9. The Federal Reserve will finally raise rates.

10. Boston will be selected by the US Olympic Committee to represent the US bid for the Summer Olympics.