|Today, as expected, the Baker-Polito Administration announced that it will be extending the current eviction moratorium by 60-days, using emergency powers granted by Chapter 65 of the Acts of 2020, An Act Providing for a Moratorium on Evictions and Foreclosures During the COVID-19 Emergency. This Act suspends most residential and small business commercial evictions, as well as residential foreclosures. It does not relieve tenants or homeowners of their obligation to pay rent or make mortgage payments. The extension will expire at 11:59pm on October 17, 2020. |
As reported on Friday, Massachusetts currently has the highest unemployment rate in the nation. In addition, the additional $600 available in federal unemployment benefits is expected to expire at the end of the month. Today’s announcement comes in the wake of the filing of House Docket 5166/Senate Bill 2831, An Act to Guarantee Housing Stability During the COVID-19 Emergency and Recovery, which seeks to institute a blanket eviction moratorium for 12-months beyond the end of the March 10 state of emergency that is currently still in effect. NAIOP has joined a coalition of real estate groups in strongly opposing this legislation. If enacted, HD 5166/SB 2831 would paralyze the real estate industry in Massachusetts by instituting rent control practices and rent cancellation, exposing good faith property owners to 93A damages, and sealing the records of all renters, not just those impacted by COVID-19.
NAIOP is in constant communication with the Administration and Legislative Leaders on this issue and we continue to work with a subcommittee of attorneys and owners on eviction policies and legislation. If you or a member of your firm would like to share your experience with this moratorium, please reach out to CEO Tamara Small or Government Affairs Associate Anastasia Nicolaou.
On May 5, City of Boston announced it will be taking an incremental approach to broadening the allowable categories of construction. Effective May 5, all essential construction projects (as defined by the state, which currently means residential, hospitals, public schools, mixed use with residential, public works and construction related to COVID-19) with approved safety plans and signed affidavits as required under the COVID-19 Safety Policy for Construction will be authorized to prepare the site with project specific COVID-19 safety measures.
As of May 18, the City of Boston will allow a subset of essential construction projects on sites that meet specific criteria to commence (hospitals, public schools, 1-3 unit residential buildings, road and utility work or other outdoor/open-air work such as steel erection). On May 26, all essential construction projects as defined by the state may re-commence construction in adherence to safety plans.
At no time will the City of Boston permit any construction beyond what is allowed by the Commonwealth. DPW and ISD will continue to monitor and enforce the COVID-19 Safety Plans for Construction. In accordance with the signed affidavit, contractors acknowledge and agree that non-compliance with any requirements may result in suspension of termination of work in progress of revocation of the City’s permit for such work.
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.
|Today Governor Charlie Baker extended his emergency order to close non-essential businesses and his stay-at-home advisory until May 4. It requires all businesses and organizations that do not provide “COVID-19 Essential Services” to close their physical workplaces and facilities to workers, customers and the public. In addition, the Administration also updated the “COVID-19 Essential Services” categories. Of interest to NAIOP members, the list of “essential” construction related activities was modified so that only construction related to housing (including mixed use with housing) and critical infrastructure are now considered “essential.” |
The revised construction-related activities list is as follows:
-Workers performing housing construction related activities, including construction of mixed-use projects that include housing, to ensure additional units can be made available to combat the Commonwealth’s existing housing supply shortage.
–Workers supporting the construction of housing, including those supporting government functions related to the building and development process, such as inspections, permitting and plan review services that can be modified to protect the public health, including allowing qualified private third-party inspections accountable to government agencies.
-Workers such as plumbers, electricians, exterminators, builders, contractors, HVAC Technicians, landscapers, inspectors and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, businesses and buildings such as hospitals, health care facilities, senior living facilities, and any temporary construction required to support COVID-19 response.
-Workers – including contracted vendors – who support the operation, inspection, maintenance and repair of essential public works facilities and operations, including roads and bridges, water and sewer, laboratories, fleet maintenance personnel, construction of critical or strategic infrastructure, traffic signal maintenance, emergency location services for buried utilities, and maintenance of digital systems infrastructure supporting public works operations. Critical or strategic infrastructure includes public works construction including construction of public schools, colleges and universities and construction of state facilities, including leased space, managed by the Division of Capital Asset Management; airport operations; water and sewer; gas, electrical, nuclear, oil refining and other critical energy services; roads and highways; public transportation; steam; solid waste and recycling collection and removal; and internet and telecommunications systems (including the provision of essential global, national, and local infrastructure for computing services).
-Workers who support infrastructure, such as by road and line clearing and utility relocation, to ensure the availability of and access to needed facilities, transportation, energy and communications. The previous definition of construction workers was as follows: “
Construction Workers who support the construction, operation, inspection and maintenance of construction sites and construction projects (including housing construction)”.
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.
Every year, NAIOP takes its members on a walking tour that explores the latest real estate development projects in a specific neighborhood. This year, NAIOP members toured the Seaport, where they had the chance to see recently opened buildings and get an invaluable sneak peek of what’s to come. A still evolving neighborhood, the Seaport has seen incredible investment in everything from office and lab space, to residences along the water, and innovative retail. The district is 23-acres of mixed-use zoning, including 10 acres of open space, and has become a new hub of commerce, culture, and innovation in the City of Boston.
The sold-out walking tour kicked off at the Icon Theater. The group got a lesson on the history of the neighborhood from David Martel of Newmark Knight Frank, and an important reminder that what is happening in the Seaport now is the result of over 30 years of work from visionaries, investors, and developers who came together to transform the Seaport into what it is today. Yanni Tsipis of WS Development discussed the billions of dollars of public investment, including the Harbor cleanup and Big Dig, that catalyzed the growth of the Seaport. He also discussed his firm’s massive, transformative development, Seaport Square, including the forthcoming 88 Seaport, a mixed-use retail and office project, and 111 Harbor Way, future home to Amazon.
121 Seaport Boulevard
The group then headed to 121 Seaport, home to PTC’s global headquarters and Alexion Pharmaceuticals. Developed by Skanska, the project officially opened earlier this year. Carolyn Desmond of Skanska discussed the development of this 17-story, 450,000 square foot elliptical tower, which included the discovery of a long-buried ship during construction! Marc Margulies of MPA then covered the cutting-edge design of the PTC headquarters. The building’s unique shape provided increased opportunities to build out a truly unique space for the offices, providing optimal light and functionality. Attendees then toured the PTC office, including its incredible rooftop terrace.
Outside of 121 Seaport, Martin Zogran from Sasaki discussed his firm’s work to create an expansive public realm program, which weaves together a unique fabric of residences, offices, shops, restaurants, civic uses, and hotels.The master plan is designed to encourage walkability and alternative mobility options with 39% of the total project area being exclusively devoted to pedestrian-only open space. As an example, a tree-lined pedestrian path, Harbor Way, punctuated by plazas and amenity spaces serves as the district’s cultural corridor and north-south connector between the Institute of Contemporary Art (ICA) and the Boston Convention and Exhibition Center (BCEC). Their work will bring a diverse mix of uses, pedestrian-oriented public space, and greater coherence and connectivity to the Seaport.
A quick walk across the street brought attendees to EchelonSeaport. Developer Michael Schumacher of The Cottonwood Group and Phil Casey of CBT gave an overview of this 1.33 million square foot community, featuring two condominium towers and one multifamily tower with 60,000 square feet of indoor and outdoor residential amenity spaces. The design, focused on the intersection of art and commerce through the lens of luxury hospitality, will include significant public space and promises to be a striking addition to the Boston skyline. With amenities for both towers ranging from pools to private dining rooms, EchelonSeaport promises to provide residents with much more than just a place to live.
The St. Regis Residences, Boston
Attendees then went to the former Whiskey Priest location, which will soon be the St. Regis Residences, Boston. Sean O’Grady of Cronin Development and Rebecca Eriksen of Elkus Manfredi Architects discussed the project, which broke ground in Fall 2018. The project faced a unique caveat in initial design – the property borders the Harbor on two sides. Rising to the challenge, the latest residential waterfront development in the Seaport promises to evoke nautical themes in every aspect of its architecture and décor. Currently slated to open in early 2021, the 114 residences will provide a highly curated experience, featuring signature design, dramatic views, an 8,000+ square foot bistro with additional terrace space, on-site spa, and other luxury amenities.
From there attendees went to the Seaport’s Fort Point Channel, where Jamie Carlin and Paul Connolly of Crosspoint Associates discussed the future of Thomson Place – a renovation and reinvigoration of one of the area’s historic warehouses. Scheduled to open in Fall 2019, the project will include office, retail and mixed-use space. Currently home to Trillium Brewing, Bartaco, and a new public plaza, the project brings new energy to the neighborhood, while preserving its historic character.
The group wrapped up the day at The Grand for a networking cocktail hour sponsored by WS Development. Attendees had the opportunity to chat with brokers, project teams and each other to wrap up a successful tour with a well-deserved cocktail in hand. Plans are already underway for next year’s tour. We look forward to seeing you then!
On May 14, NAIOP’s CEO Tamara Small testified before the Joint Committee on Housing in support of H.3507, An Act to Promote Housing Choices. If passed, the bill would enable cities and towns to adopt certain zoning best practices related to housing development by a simple majority vote, rather than the current two-thirds supermajority.
Small testified on a panel with representatives from a coalition of groups responsible for permitting and building housing throughout the Commonwealth including Jon Robertson, Legislative Director at the Mass Municipal Association; Benjamin Fierro III, Counsel to the Home Builders and Remodelers Association of MA; Greg Vasil, CEO of the Greater Boston Real Estate Board; Robert Brennan, President of CapeBuilt Development; and Kathleen Franco, CEO of Trinity Management. The group expressed their strong support for the bill, which would make it easier for communities to enact local zoning changes that encourage housing development.
In her testimony, Small underscored the importance of partnerships between developers and the communities. “Any successful housing development requires a partnership between the developer and the community to ensure that the project addresses local needs,” said Small. “The legislation preserves that partnership by requiring a majority vote, while making it easier for communities to rezone property to encourage more housing production.”
Throughout the hearing, mayors, housing advocates, and business leaders, including Mayor Kim Driscoll of Salem, Mayor Joseph Curtatone of Somerville, the Metropolitan Area Planning Council, the Smart Growth Alliance, CHAPA, and the Massachusetts Business Roundtable testified in support of the bill and called on the Joint Committee to report H. 3507 out favorably.
NAIOP will continue to advocate for passage of the bill as soon as possible. Because communities enact zoning changes at annual Town Meetings, quick passage of this bill is needed to ensure that implementation of these important reforms is not delayed another cycle.
This post originally appeared in the Boston Business Journal on November 20, 2015.
In the coming years, the Massachusetts economy may be at serious risk. The Commonwealth’s most valuable resource is its educated, skilled talent. Maintaining that resource is essential for continued economic growth. However, there is a threat which is making that goal harder and harder to achieve. Massachusetts has one of the highest housing costs in the nation – a significant barrier for talent recruitment and retention. Without an adequate supply of workforce housing, Massachusetts may soon lose that talent to other, more affordable, markets.
The UMass Donahue Institute’s Population Estimates Program concluded that the state’s population will increase by nearly 300,000 over a 20-year period. Good news, but the population of Massachusetts grew only by 3.1 percent between 2000 and 2010, while the U.S. population increased by 9.7 percent. Of concern, the study also projects an increasingly older population for the state.
Though a good portion of Massachusetts’ growth is driven by a net natural increase (number of births greater than deaths), a larger share of the growth is attributed to net immigration. Looking more closely, there is a net domestic outflow of residents (more people moved out of Massachusetts than into it from other parts of the U.S.), offset by a large number of international immigrants.
This is occurring during a boom time for the Greater Boston region, while the rest of the country, with a few exceptions, is still working its way out of the recession. Another way of looking at it is that, for the past few years, there have not been many job opportunities attracting our younger workers away from the state.
It was not that long ago that most of the country was experiencing stronger job growth than Massachusetts. As documented in a 2003 University of Massachusetts/MassINC report, Mass. Migration, over 200,000 more domestic residents moved out of Massachusetts than moved into the state between 1990 and 2002. And then, between 2002 and 2004, that imbalance became worse.
Fortunately, at that time, foreign immigrants helped to offset these population losses, but they frequently arrived with lower levels of education and skills than those who were leaving. Those departing tended to be younger, better educated, and more likely to be employed in a knowledge-intensive industry.
These trends will have substantial workforce and business implications and should be a call to action. The costs of both rental and for sale housing have been accelerating, reaching record highs. More and more young individuals and families are being priced out of the market. In some cases, the problem is restrictive zoning, other municipalities are shunning any housing that increases the school population, and in some markets, the cost of construction makes workforce housing uneconomical.
The solutions may be difficult, political, and costly, but without action at the state and local levels, the future of the Massachusetts economy is at risk.
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.