Real Estate Industry Applauds Senate Leadership on Climate Change, Opposes Net-Zero Energy Code

Industry Groups Concerned Provisions Will Chill Economic Development, Increase Housing Costs

BOSTON, MA – NAIOP Massachusetts, The Commercial Real Estate Development Association (NAIOP); the Home Builders & Remodelers Association of Massachusetts (HBRAM); The Associated General Contractors of Massachusetts (AGC MA); and the Massachusetts Association of Realtors (MAR) applaud the Massachusetts Senate for recognizing that climate change is an economic development, public health, and environmental issue that affects every resident in the Commonwealth. 

As the Commonwealth leads the nation in climate mitigation and adaptation, technical and economic realities cannot be ignored. Senate Bill 2477, An Act setting next-generation climate policy includes a proposal to enact an opt-in stretch energy code that defines net-zero building. Achieving a net-zero energy building with today’s technology is not always feasible. As an example, very few net-zero lab properties or residential or office projects over 10 stories have ever been built. The projects that were able to achieve net-zero did so at a cost premium. If implemented, this net-zero code would increase the cost of the construction and maintenance of residential and commercial buildings.  Current rents could not cover the increased costs associated with such requirements.  In addition, the change would dramatically alter project design, in some cases preventing the project from being built at all – threatening the creation of new housing during the existing housing crisis, negatively impacting housing affordability and serving as a financial barrier to homeownership for thousands of young families seeking to purchase their first home.

In addition to increasing costs, it would have the effect of undoing the uniformity of the State Building Code by creating multiple codes – resulting in codes that would vary by community and little to no predictability for developers. This lack of uniformity threatens public safety and security by creating confusion surrounding implementation and enforcement, one of the reasons that the Board of Building Regulations & Standards was charged with implementing a statewide code.

Finally, we are concerned that some communities may adopt the net-zero code as a way to block development.

While we believe that net-zero construction may be possible in the future, we caution the Legislature against codifying timelines that are currently impossible to achieve, and instead encourage the continued investment and development of diverse technologies that will achieve our climate goals.

###

NAIOP Contact: Anastasia Nicolaou / 650-380-9440

Home Builders Contact: Benjamin Fierro / 617-429-3053

MAR Contact: Justin Davidson / 781-839-5510

AGC MA Contact: Robert Petrucelli / 781-235-2680, ext. 114

CEO TAMARA SMALL TESTIFIES IN SUPPORT OF NAIOP LEGISLATION REGARDING UTILITY ACCOUNTABILITY

On Tuesday, July 9 NAIOP CEO Tamara Small testified before the Joint Committee on Telecommunications, Utilities and Cable in support of NAIOP bill H. 2861, An Act to Encourage Predictability in Utility Connections. Introduced by Representative Thomas Golden of Lowell, the legislation is targeted at addressing the frustrations the commercial real estate sector has expressed for years regarding the lack of transparency and predictability for utility connections at development projects. If passed, the bill will ensure that commercial customers, as well as new connections and relocations of existing connections, are included in the service quality standards.

NAIOP CEO Tamara Small testifying before the Joint Committee of Telecommunications, Utilities and Cable July 9,2019

Currently, when utilities request a rate increase, they are “graded” based on how they perform under the Department of Public Utilities’ Service Quality Standards.  Customer satisfaction, response times for service outages, and repairs and maintenance are some of the criteria considered under M.G.L. Chapter 164 §1E.  However, utilities are only judged based on their performance with residential customers, not commercial customers.  In addition, only existing connections, and not new connections, are included in the service quality standards.

“As we saw with the gas moratorium and lockout last fall, new utility connections are absolutely critical for economic growth,” testified Small. “Small business owners could not open their doors, companies could not relocate to new office space, and tenants who had signed leases for new apartments did not have a place to call home.”

NAIOP believes that by including commercial projects, the relocation of existing connections, and new connections in the review process, we will have greater transparency and accountability in the regulation of our utilities statewide. NAIOP will continue to advocate for the passage of this bill so that future real estate development projects could benefit from the proposed change.

Social Media in the Real Estate Industry

The real estate industry is all about people. Whether you’re a developer working to find an investor or a leasing agent trying to reach potential tenants during lease-up, real estate professionals are all looking to make the personal connections that are vital to success in the industry.

Social media in an incredible tool for reaching the people who drive the real estate industry. NAIOP Massachusetts, in partnership with communications firm Solomon McCown & Company, surveyed more than 100 real estate professionals in June 2015 on how they use social media for their business. How do architects, construction professionals, brokers, developers and professionals in all aspects of the business use digital communication tools? Here are the key takeaways from our survey.

LinkedIn is the most popular social media platform for real estate professionals (Tweet this!), with 52.3 percent of those polled saying they use it. Facebook was a distant second place, with 20 percent of professionals saying they use the world’s largest social media network.

Only 6.5 percent of those surveyed said they don’t use social media for personal or professional use. (Tweet this!) It’s clear that professionals in all areas of the industry are active on social channels.

81 percent of professionals in the real estate industry access social media networks on mobile devices. (Tweet this!)

Social media isn’t just used by young professionals. (Tweet this!) While nearly 81 percent of 21-30 year olds in our survey say they use social media both personally and professionally, 66.7 percent of 61-70 year olds also use digital communication tools.

100 percent of real estate brokers surveyed believe social media helps them to do their jobs. (Tweet this!) The only differentiation is to what degree social media is helpful: 61.9 percent of brokers consider social media to be very helpful, while 38.1% consider it somewhat helpful.

89 percent of brokers surveyed have found new leads through social media. (Tweet this!) No wonder 100 percent of brokers say that social media helps them in their professional lives!

One-third of real estate owners say they only use social media a few times a year. (Tweet this!) A scant 22 percent of owners say they understand social media enough to do it in-house at their companies. (What a missed opportunity!)

How do professionals measure success? In our poll, 65 percent of respondents said that engagement with their target audience was the most important goal for their social media campaign. Sourcing new leads was the primary indicator of success for 26 percent of those surveyed.

Take a deep dive into the data unearthed by the NAIOP/Solomon McCown survey in the infographic below.

SMC-NAIOP_SocialMediaRE-infographic

The Changing Face of Downtown Boston

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

Real estate professionals gathered last week to discuss the significant transformation happening in our city’s core. The office, retail and residential sectors are all growing and working together to create a true 24/7, live, work, play environment in downtown Boston.

Even with the boom in the Seaport, Downtown is seeing an influx of new office tenants who want to be in the heart of the city. David Greaney of Synergy Investments told us that of the 70 leases his firm has completed this year, 59 of them were located downtown. And these tenants are looking at more than just the office space. Mark Smith said that Equity includes the amenities of the surrounding area on tours with potential tenants. He also told the room that tenants want comfortable, communicative environments.

All these companies have employees who want to be within walking distance of work. Despite the thousands of apartment units that are planned and currently being constructed, Bill McLaughlin of AvalonBay Communities said that the demand is there because young people aspire to live in the city; we are well-positioned to absorb the deliveries we will see in the next five to six years.

Retail is growing too. Andrea Matteson of CBRE/Grossman Retail Advisors highlighted Walgreens, Equinox, Scholars and the coming Legal Seafoods as game changers who have helped Downtown Crossing look better than ever. She said that first floor tenants are key in providing character for downtown buildings.

Foreign investment and continued development make Boston one of the U.S.’s most dynamic cities, and our panelists agreed that downtown is going to be an integral part of Boston’s growth in the coming years.

2013 Bus Tour Recap: The Suburban Transformation

The following blog post was submitted by David Fleming, Principal at PACE Communications Group, a marketing and PR firm that specializes in commercial real estate and retail.Elisif_20130501_0150

Three signs that spring has finally arrived in Boston: 1) green grass on the Esplanade, 2) the Red Sox back at Fenway Park, and 3) NAIOP MA’s Annual Bus Tour. The 11th edition of the tour took place on Wednesday as more than 250 people aboard five buses toured properties along what is suddenly one of the hottest stretches in commercial real estate in the region: the Route 128 Corridor from Needham to Lynnfield. Here’s a summary:

Elisif_20130501_0115Kickoff at Needham Crossing

  • Needham’s Economic Development Director Devra Bailin, discussed efforts to rebrand the former New England Business Center as Needham Crossing
  • Justin Krebs and Mark Roopenian described two of Normandy Real Estate Partners’ projects along the route:
    • Center 128, which will redevelop Needham’s former New England Business Center into an 825,000-square-foot “super-park,” including a Marriott Residence Inn Hotel
    • Station at Riverside, which will transform MBTA’s Riverside Station into a mixed-use development featuring 295 apartments, a 10-story 225,000 square foot office building, and a 20,000 square foot retail village
    • Mike Wilcox of The Bulfinch Companies discussed development at Needham Crossing and the branding and leasing efforts at Atrium Center. Wilcox concluded with an exciting Atrium Center video that you can see here.
    • In his market overview, Jeremy Grossman of CBRE/Grossman Retail Advisors noted the “flight to quality” among retailers, New Urbanism, the continued expansion of restaurants, the intensifying battle among grocers, and the strengthening of regional markets such as Chestnut Hill, Lynnfield, and Northborough as key trends

Elisif_20130501_0215Bus Tour Highlights

Six tour buses, escorted by members of the MA State Police, traveled along Route 128 beginning in the Needham/Newton area and ending in Lynnfield. Here are a few highlights:

 

Elisif_20130501_0268Lunch and Learn at MarketStreet Lynnfield

The tour stopped in Lynnfield for lunch at MarketStreet Lynnfield, a 680,000 square foot mixed-use development currently under construction. Inside a space that will become a Shoe Market store, WS Development’s Tom DeSimone and National Development’s Ted Tye shared details of the joint venture scheduled to open in August 2013.

When complete, MarketStreet Lynnfield will include 395,000 square feet of shops and restaurants, 80,000 square feet of office space, 180 residential apartments known as Arborpoint at MarketStreet, and the 9-hole King Rail Reserve golf course.

Elisif_20130501_0282Voices on Tour

I caught up with a few people on tour. Here’s what they had to say:

  • Tom DeSimone, partner, WS Development: “There’s no better way to understand real estate than to actually be there. The NAIOP Bus Tour gets you closer to the real estate by providing an introduction. Then you can go back and look at whatever may have peaked your interest.”
  • Ted Tye, managing partner, National Development: “It’s great to people out here having a nice day, getting out from behind their desks, and seeing some projects that are being built. And, it’s incredible that in 2013 that we actually have things being built.”
  • David Chilinski, co-founder and president, PCA: “The best part of the NAIOP Bus Tour is that you really get a sense of what’s happening and, importantly, what’s new in the marketplace.  We all know the tried and true properties, but the tour lets you see new projects as well as cases where people are reinventing or adding to projects. That’s the importance of this tour.”
  • Sarah Walker Weatherbee, managing director, Keller Augusta: “You get a sense of history as well as what the future holds for the Boston-area markets like the ones we saw today. And, the networking that the Bus Tour enables is unique to NAIOP—that really makes the day exceptional.”


While here, please read David’s important post below about National Development’s Roseann Sdoia, who was seriously injured in the Boston Marathon bombings. David includes a link to
Roseann’s Recovery Fund for those who wish to donate toward expenses for Roseann’s treatment and recovery.

Grim Optimism for Real Estate and the Economy

Goodwin Procter’s Real Estate Capital Markets Conference was recently held in New York City in partnership with Columbia Business School.  GP-REConferenceAn exceptional group of speakers discussed the real estate markets, investments, and the economy.

The keynote presentation was delivered by Austan Goolsbee, former chairman of President Obama’s Council of Economic Advisers, and now a Professor of Economics at the University of Chicago’s Booth School of Business. Goolsbee spoke with “grim optimism” about the US economy.  The US has the most productive work force in the world and low energy and new-energy sources will benefit our growth.  Relative to the rest of the world, our fiscal imbalance is manageable. All in all, he believes that the next six to twelve months will be a bumpy ride, but prospects in the long-run look good.

The following are a few interesting observations made during the panel discussions:

  • Demographics are playing a key role internationally, especially in the US. Effects of this will be seen in an increased demand for apartments, senior housing, and retail.
  • With accounting standards likely to change in the future, as relating to corporate leasing and ownership, more businesses will likely choose owning large amounts of their space.
  • Retail sales continue to be impacted by online competition, but retail is still a growing market. The future may move towards more hybrids that have both online and storefront locations.
  • Office space needs are dropping in terms of space requirements per new job. However, there is a sense that over time businesses will start to swing back towards a need for greater space.
  • Multifamily housing rents are back to pre-recession highs and it is likely that rents will experience slower growth going forward.
  • Record amounts of capital were raised both in the public and private markets last year. With less growth worldwide, real estate is very attractive to investors.  Investor interest is focused on yields and risk management. Where in the past, “cash is king”, now, “cash flow is king”.
  • Rates should not be rising in the short term, but that is a big risk for all asset classes. The markets could wake up to a starting spike in rates that, in hindsight, will have seemed inevitable.

Strategies for Today and Predictions for Tomorrow

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.