COVID-19 Update: Boston Announces Office Reopening Framework

Today, Mayor Marty Walsh announced a new framework for all office spaces located within Boston. Starting June 1, office spaces located within the City of Boston will be required to limit capacity to no more than 25 percent of the maximum occupancy level during phase 1. This framework is in place as an operational recommendation to be used as a reference in line with Federal and State-wide mandates.

These operational recommendations apply to operations during Phase 1 of the Commonwealth’s phased reopening plan, and are subject to revision and modification during subsequent phases or as necessitated by public health considerations. The City’s operational recommendations include, but are not limited to:

  • Identify and clearly communicate a workplace coordinator who will be responsible for COVID-19 and the impact to the workplace.
  • Providing personal protective gear for any employee whose job functions requires it, as identified in the hazard assessment, including training on how to put on and remove equipment safely.
  • Limiting the number of people in an elevator at a time to no more than four. All individuals must wear face coverings in elevators, except where unsafe due to medical condition or disability.
  • Stair usage should be limited to one direction (down) except in cases of emergency.
  • Regular sanitization of handrails, buttons, door handles and other high-touch frequency areas.
  • Establish accommodation and leave policies for employees that are consistent with federal standards.

We encourage all of our members and member-organizations to review the City’s framework. These operational recommendations incorporate the Commonwealth’s Sector Specific Workplace Safety Standards for Office Spaces and supplement them with recommendations based on guidance from the CDC, U.S. Chamber of Commerce, and industry associations to offer best practices for preparing and returning to the physical workplace, preparing your workforce, and ensuring continuity of operations. NAIOP presented to the City regarding Industry Best Practices and we are pleased to see that many of our recommendations have been incorporated into this guidance.

The Mayor has made it very clear that the City hope’s employees who can work from home continue to do so throughout this recovery in order to limit potential exposure and allow for a successful and resilient reopening.

NAIOP will continue to advocate for policies, Executive Orders and legislation that address how this public health crisis is affecting real estate and overall economic development. We are working on numerous initiatives. Please feel free to reach out to CEO Tamara Small or Government Affairs Associate Anastasia Nicolaou if you have any questions.

What Does 2020 Hold for CRE in Massachusetts? Companies Incorporate Real Estate as Recruitment Tool

By: Tamara Small, CEO of NAIOP Massachusetts

The following first appeared in Banker & Tradesman on December 29, 2019.

The end of 2019 marks more than 10 years in the current real estate cycle. As we enter a new decade, now is a good time to take stock of current market conditions and make predictions for 2020. 

Experts are predicting continued, moderate, growth for 2020. Nationally, investor appetite for real estate remains strong and active in all sectors – retail, industrial, lab, office and housing. National vacancy rates are not showing signs of oversupply, and banks are remaining disciplined and conservative in their lending practices.  

While slow and steady job growth is expected, trade wars, political uncertainty and a labor shortage pose the biggest threats to continued economic growth. Market fundamentals remain strong, but such threats should be monitored closely given their potential to dramatically impact the market. 

Access to Talent Drives Market  

The Greater Boston market had an exceptionally strong year in 2019 with record rent growth and tenant demand. Boston remains one of the top markets for foreign investment. However, while continued growth in 2020 is expected, threats exist.   

Construction and land costs continue to soar, weakening returns and potentially threatening the feasibility of new projects. In the third quarter of 2019, Massachusetts real gross domestic product declined 0.2 percent according to MassBenchmarks, while U.S. real gross domestic product grew by 1.9 percent. A labor shortage, which is only expected to continue, is viewed as the single largest threat to the Massachusetts economy.  

At the recent NAIOP/SIOR Annual Market Forecast, which featured leading real estate experts who provided an analysis of the 2019 statistics and predictions for 2020, the need for access to a talented workforce – and what this means for real estate – was a major theme.   

Historically, tenant space was viewed as a cost center by employers, but it is now being used to attract and retain talent. While WeWork’s business model may have been flawed, it did have a dramatic impact on tenant expectations. Whether it’s beer on tap, game rooms or state-of-the-art fitness centers, employers are now using their space to gain a competitive edge when it comes to getting the best talent. This can be seen in the suburbs as well as Cambridge, Boston and surrounding markets, and it will continue in 2020. This all translates into a rising need for new or renovated space and an average tenant improvement allowance average of $5 per square foot. 

Looking Ahead to 2020  

As we enter a new decade, the Boston market remains strong with opportunities opening up beyond the urban core. Limited supply and high demand for lab space are fueling growth. With East Cambridge lab vacancy rates now at 0.8 percent, life science projects are moving forward in Watertown, Alewife, Allston/Brighton and Somerville, as well as Dorchester, the Seaport and South Boston. Cambridge’s success will also create opportunities for well-located suburban assets, particularly transit oriented development projects with the right amenity base.   

Unprecedented growth is expected to continue in the industrial sector. According to Rick Schuhwerk, executive managing director at Newmark Knight Frank, every $1 billion in online sales translates to 1.25 million square feet of new warehouse demand. The demand for “last-mile” facilities near high-density urban centers is driving up values. In the last five years, rents in core urban industrial space have more than doubled. In 2020, with online sales only expected to increase, vacancies will drop and rents will continue to rise. Spec developments are expected as well as a western migration of industrial space.  

On the housing front, according to Kelly Whitman, vice president of investment research at PGIM Real Estate, opportunities exist to upgrade and develop larger suburban apartments. Suburban apartment annual rent growth continues to outperform the urban, and, given changing demographics, a shift away from small units in the suburbs is expected. As the housing crunch continues, these areas outside of Boston’s core are vital to easing the pressure and providing middle income housing.  

On Tap on Beacon Hill 

Finally, while national economic and market indicators tell us that continued growth is expected next year, legislative and regulatory proposals at the state and local levels have the potential to significantly impact the market and should be watched closely. 

Housing: More housing production is needed to keep up with increased population growth. H.3507, An Act to Promote Housing Choices, is targeted at lowering voting thresholds in key zoning votes, allowing for increased production of housing. If it is not passed before the end of the legislative session, anticipate a continued tightening of the housing market, statewide. 

Transportation: NAIOP believes that a functional, accessible transportation system is key to continued development and investment. As area residents and business owners know, congestion has gotten worse in Greater Boston. The Baker-Polito Administration recently filed the Transportation Bond Bill, (H.4002), outlining a capital plan for addressing gaps in transportation infrastructure statewide. Other legislative proposals to address transportation are expected in 2020.  

Fossil Fuel Bans: A number of communities are considering bans on natural gas connections in all new construction, which will likely halt development entirely. While addressing climate change must be a priority, it is critical that policymakers employ achievable measures that are grounded in the reality of today’s technologies, without blocking housing production.  

Where is Housing for the Middle Income Family?

Thomas Grillo did an excellent job on BBJ’s recent article, “The story behind Greater Boston’s housing bottleneck”.

As rightly pointed out, communities have tightened permitting, making it harder to build and meet the demand for housing in general, and moderately priced and affordable units in particular. Zoning requirements have become more onerous with local rules and special by-laws, making the development process longer and more unpredictable. Interestingly, the municipalities and planners are crying out that they do not have enough control and want new land use reforms. However, there is currently a serious lack of permits issued for housing for families and these changes would actually hinder the production of reasonably priced housing.

Many communities have some of the strictest zoning in the region, with large minimum lot sizes, restrictions limiting multi-family housing, and unworkable cluster zoning ordinances. Opportunities for young families to rent a moderately price apartment or find a reasonably priced starter home is virtually impossible. The Massachusetts economy cannot fully expand without the support of its highly talented college graduates. Unfortunately, as the recovery continues nationally, local business leaders are finding it more difficult to attract the best talent when competing with other states. Economic development professionals across the country are already starting to attract young families out of our region and into areas that are more affordable, leaving us, yet again, with the risk of a declining skilled workforce.

The strangest trend to occur in housing production is that children have become society’s “toxic waste”! Many housing proposals that would attract families with school age kids are denied at the local level. More and more municipalities are fighting the permitting of three or four bedroom apartment units, or even requiring 55 and older residency age restrictions. If it appears that developments will bring children into the community, they are fought aggressively by the local boards. Even towns where the school populations are predicted to decline are reluctant to allow apartments that accommodate two or more children.

We are losing our 25 to 34 year olds at a faster clip than we are growing our total population. Our future is our young families and their children. Once and for all, we need to develop a serious policy that allows for the construction of family-friendly apartment housing and of smaller, denser, affordable, single family starter homes.

The future of our economy and our workforce depends on it.

Optimism: the way to start your day

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