Dec 14, 2018
NAIOP's Expert Panel Discusses Opportunity Zones
Opportunity zones were created in late 2017 as part of the Tax Cuts and Jobs Act to bring development dollars to low-income urban and rural communities nationwide. Since their inception, investors have been keen to take advantage of the major tax breaks this program provides. NAIOP put together a panel last week to dive deeper into this new program from a legal, legislative, and development point of view.
Mike Kennealy, Assistant Secretary for Business Growth / Executive Office of Housing & Economic Development, took a quick look at how the state selected the zones from the 110 communities that had eligible tracts. After meeting with the communities the zones were evaluated using three major criteria:
Opportunities: sites and businesses that are opportunities for private investment and development
Planning: community describes the planning work done in the tract
Demographics: poverty rate, median family income, and unemployment rate in the tract and in the wider communities
After this process was complete the state selected 138 tracts, all of which were approved for the program. 48% of tracts are in gateway cities with 16 tracts in Boston Cambridge and Somerville. There are 6 zones in Worcester, including the Central Business District and the areas adjacent to the Commuter Rail stop and 7 in Springfield including the City’s downtown. The state foresees development in these areas will continue the growth in the Commonwealth and position communities for success. Kennealy also touched on the other state programs such as MassWorks Infrastructure that may be used within an Opportunity Zone to further development.
To help explain the complexities of this new program, James O. Lang of Greenberg Traurig discussed applications of the policy and details on how the funds must be utilized to qualify for the big tax breaks. According to Lang, there are $6-$10 trillion dollars in capital gains that could be eligible to be invested into this program and it is attracting many new types of investors to the real estate sector.
Per this new program, investors have 180 days to invest their capital gains into a qualified opportunity fund. The fund then has 31 months to invest in a qualified Opportunity Zone. The three tax benefits to this program are:
Temporary deferral of inclusion in taxable income for capital gains reinvested in an Opportunity Fund. The deferred gain must be recognized on the earlier of the date on which the opportunity zone investment is disposed of or by December 31, 2026.
A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from taxation.
A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years.
While there are still some points of the policy that need to be refined (such as how to handle construction delays and penalties) there are proposed regulations under review that will clarify some of these questions and, as Lang pointed out, everything that is in the works is very taxpayer friendly.
Larry Curtis of Winn Development also spoke on the panel. His firm has extensive experience developing properties in many areas that have turned out to be within these Opportunity Zones such as The Watson in Quincy. While Curtis supports the program, he did note that with the high cost of construction, rents still do not support development in many of these zones unless developers look at additional subsidies to make the numbers work. Curtis also pointed out that some of these tracts are now prime property, like Assembly Row, as the data used for determination was from 2010. He fears many developers will only flock to these areas and ignore the tracts that the plan was set in place to help. Having worked on many of these areas in the past, Curtis also discussed how important it will be to get local governments on board to expedite deals and permitting in these areas so that the funds can be deployed in the required time frame. For sites that are largely permitted, towns should be pushing these developments forward as there is a first wave of capital that investors need to deploy now.
While there are still many questions to be answered, and with regulations still to be finalized, this program does provide significant tax incentives for long-term investors and will hopefully spread the Boston/Cambridge building boom to some underserved areas of the Commonwealth.
Check out the full Massachusetts Opportunity Zone Map here
For more information about NAIOP Massachusetts and their 1650+ members visit their website at http://www.naiopma.org
Dec 06, 2018
The question on everyone’s mind as another positive year draws to a close is: How long will this boom last?? Our friends at NAIOP put together an all-star panel to provide insight on the current market and predictions for 2019. The overall sentiment was very positive for the coming year in Boston and the suburbs. The high demand for space (5:1 for office & 11:1 for lab) in Cambridge is driving rents up and also pushing companies into downtown Boston or the suburbs. In the industrial market, vacancy is at a historic low, however, functionality continues to be key outside of the city with the growth of e-commerce. Each presenter provided key metrics that demonstrated the strength of the market currently and into 2019.
To kick the event off Doug Poutasse of Bentall Kennedy, an expert on economic analysis and forecasting, provided his thoughts on the market at a national level. As an economist Poutasse said he is “always pessimistic” but he does feel 2019 will be a solid year, while not as strong as 2018. Throughout the past year vacancy rates were low, with a historical low on the industrial front. As everyone knows construction inflation is high, at 6.5% far ahead of the national average of 2%. Poutasse did also want to point out he is predicting 2020 will be a tough year. “Lookout for 2020” he stated.
Mark Roth: Newmark Knight Frank
Roth is predicting a strong year for the Boston Suburbs in 2019 with expected rents to hit $40 in Burlington and Westwood. As Roth pointed out it’s a new era for suburban lab space with a diverse mix of tenants, from tech startups to robotics firms bringing diversity to the tenant base. The recent sale of The Linx in Watertown at $852/sf provides an example of how an asset can be repositioned for positive gain. Roth also expects rents to continue to increase; however, new lab requirements for startups will drive owners to consider larger TI’s and or shorter lease terms.
Peter Bekarian: JLL
Lab and office space inventory is at such a low point in Cambridge, Bekarian calls the current conditions a “crisis for tenants”. In East Cambridge office and lab vacancy rates for 2018 are below 1%. Many projects, like 145 Broadway & 399 Binney Street, in the pipeline, are already pre-leased as well further limiting the availability. Because of these factors, developers are looking at repositioning existing product like parking garages or the 3rd floor revamp coming to the CambridgeSide Galleria. The tight market is also driving companies out of Cambridge to downtown Boston or the suburbs.
Chris Cuddy: Colliers International
In downtown Boston, much of the product in the pipeline is also already spoken for. The question then remains which developers will move forward with projects on spec, such as Skanska is doing with Two Drydock. The other major trend everyone has their eye on is coworking space. WeWork now leases over 1 Million SF in Boston with their new concept HQ just kicking off. Cuddy also pointed out the importance of amenities and design in helping companies attract and keep top talent.
Doug Rodenstein: CBRE- New England
The Boston industrial market is now on the 8th year of positive absorption and vacancy rates at 6% are at a historical low (average is typically between 12-14%). As Rodenstein noted demand to be in Boston is resulting in increased rents while outside of 495 functionality is most important. With the rise in e-commerce, more loading docks are key. Typical warehouse space in the past would require 1 dock per 10Ksf but now 1 dock for every 6K sf or less is needed. As vacancy is much lower than in the past, even if the market softens slightly industrial will still be in good shape.
Sarah Lagosh: Eastdil Secured
Lagosh was also positive in her outlook of the capital markets in the Boston area as many of the trends that investors want are available here. These include Boston/Cambridge as growth markets, trophy properties with credits, core with a story, and niche sectors like life science or student housing. Lagosh predicts that values will hold in core markets for 2019 as relative value becomes important than ever before. She also expects Premier Innovation Centers to be a new trend of importance within the capital market sector.
Based on these forecasts the boom won’t bust in 2019 and NAIOP will continue to work with their 1650+ members through advocacy and education to ensure they are able to take advantage of this strong market. For more information on NAIOP MA visit their website at http://www.naiopma.org.
Sep 18, 2018
NAIOP Event Showcases Three of Boston's Top Developers
Development Unicorns Wrap Up
The developers of three of Boston’s most changed neighborhoods, Fenway, Assembly Row, and Seaport Square came together last week for NAIOP’s panel discussion, Development Unicorns. If the catchy title didn’t grab your attention the insight provided by these forward-thinking developers certainly will. The event opened with a keynote from David P. Manfredi, Elkus Manfredi Architects, that highlighted the 8 Place Making Principles these neighborhoods have in common. Mr. Manfredi also spoke about the important changes at work in each of these neighborhoods; public investment in infrastructure, skillful placemaking, flexibility and evolution along with density and walkability. While the architecture of each area is different they all share these characteristics which have played a large role in the success of the projects.
Pictured above: David P. Manfredi, Elkus Manfredi Architects.
After Mr. Manfredi’s introduction, the expert panel took the stage moderated by Sara Cassidy of AEW Capital Management. Representing Federal Realty Investment Trust, the minds behind Assembly Row, was Donald Briggs, Executive VP of Development. Mr. Briggs mentioned that as a realty investment trust Federal Realty had the large balance sheet to a take risk on a piece of land in Somerville that had been tied up in a 6-year lawsuit. He also discussed how the Assembly Row site is much closer to Boston than many people originally realized making it a great location for a development opportunity.
Steve Samuels, Chairman & Principal at Samuels & Associates discussed how his company “stumbled” into the Fenway neighborhood as it was being held hostage by Fenway Park. His team had to convince people one use at a time to come to Fenway for something other than baseball. The final panelist was Yanni Tsipis, Senior VP-Seaport at WS Development. WS has been involved in the Seaport since 2006 when it was just a wide open lot with great water views. Mr. Tsipis noted this blank slate provided an interesting opportunity for the development team and once momentum swung in their direction his team decided to triple down and buy out their remaining partners in the Seaport Square area.
The developers had their own story to tell on how the pieces of each neighborhood came together. The Fenway, Mr. Samuels mentioned, was already a great neighborhood but it had no core. His team worked to build relationships with stakeholders in the area and then began to buy up lots one at a time. They then rezoned each lot, again piece by piece, leading to a very slow process. Assembly Row also started off slow, as Federal Realty stepped into a deal that had been stalled with that 6-year lawsuit. However settling the lawsuit did have a positive outcome as Mr. Briggs pointed out, it pushed his team into embracing office space. Although not part of their original plans the offices turned out to be a very positive driver of growth. In the Seaport it was very important for WS Development to ensure the area developed a sense of place very early on in the process. As Mr. Tsipis pointed out the neighborhood is still growing, with only about ⅓ of the planned construction now complete.
Other key points echoed across the panel were the importance of responsiveness to the market and also ensuring public realms and first floor retails spaces are unique and inviting to the neighborhood. Mr. Briggs suggested it is always prudent to entitle more square footage which allows for flexibility and optionality. Federal Realty sacrificed density at the beginning of their project to build on a horizontal context and are now moving to build high rise projects. In the Fenway, The Samuels team had to find the right balance between old and new architecture. Ultimately their goal for the area is to be ⅓ office, ⅓ residential, ⅓ retail but as Mr. Samuels quickly mentioned the market will drive these decisions.
In Seaport Square, WS has devoted time and energy to planning the public spaces and also programming around these areas as these events organically bring people together. Mr. Briggs agreed, pointing out that he believes creating fabric in architecture, space between buildings is more important than buildings themselves.
When discussing retail spaces all agreed it was most important to get the first floor spaces right to command a premium above. With the continued success of these three neighborhoods, the insights from the panel were certainly valuable as the city’s development boom continues.
Pictured Above: Sara Cassidy, Donald Briggs, Steve Samuels, Yanni Tsipis
Sep 06, 2018
NAIOP Development Unicorns Preview
Next Thursday, 9/13/18, the top development minds in Boston will meet for NAIOP’s Development Unicorns breakfast event at the Seaport Boston Hotel. The event will feature a keynote from David Manfredi of Elkus Manfredi along with a panel discussion featuring Donald Briggs of Federal Realty, Steve Samuels of Samuels & Associate, and Yanni Tsipis of WS Development. The panel will be moderated by Sara Cassidy, Executive Director at AEW Capital Management. Cassidy shared her excitement for the event with BLDUP stating, “This is such a great panel! This caliber of speakers is hard to get together in one room. Donald, Steve, and Yanni are visionaries."
While there are countless questions for the minds behind Assembly Row, The Fenway, and Seaport Square, Cassidy plans to delve deeper into what initially triggered these opportunities. She hopes to gain some insight into how each of these brilliant developers had their unique vision that turned these neighborhoods into Boston’s most sought after. Cassidy also wants to dig into “placemaking”, a very important aspect of all three of these projects and will, of course, look to the future of these neighborhoods and the Boston development scene.
To ensure your team is on top of the biggest trends in development reserve your seat at the event now or stay tuned for BLDUP’s wrap up.
DEVELOPMENT UNICORNS: Neighborhood Game Changers
Aug 03, 2018
In 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 goes 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 the 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 job site 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.
Jul 24, 2018
Boston’s South End is booming and a large group of comfy shoe clad CRE professionals saw the progress first hand as they trekked the area on the NAIOP walking tour this past Wednesday (July 18th). The tour brought together the top minds who have shaped the South End’s progress and expanded Boston’s center of gravity. Beginning at the brand new, highly stylish, 345 Harrison & wrapping with drinks at the Ink Block pool, our partners at NAIOP have once again provided members with an informative and entertaining program.
Tour Highlights included:
This new 585 mixed-use project spans a 2-acre site across from the Ink Block. Elizabeth Likovich, Director, UDR, explained that 345 Harrison was thoughtfully designed to feature several different facade types so the project would appear to be 5 or 6 different buildings instead of a “superblock”. The development has also embraced the artistic side of the South End with over $1 million of art on display throughout the common areas, most by local artists. 345 Harrison includes a variety of unit types from micro studios (all of which are already leased) to three bedrooms designed for families.
With permits in hand, Todd Fremont-Smith, Senior VP, at Nordblom Company told the crowd they hope to break ground on this project on August 1st. 321 Harrison, to be built on top of the existing garage, will include over 230K of office space. The glass facade, facing downtown Boston, will include the Roman numerals, 3,2,1 a nod to the building's address. Construction is expected to be complete by summer 2020.
Exchange South End
The Abbey Group acquired the 5.6-acre parcel, home to the Boston Flower Exchange in September 2016 and has been working with the community and city on planning since. Their vision is to create a new urban campus of 4 new mixed-use buildings of lab, office, and innovation/tech space. Audrey Epstein Reny, Managing Partner of The Abbey Group mentioned that the firm decided to move toward office and lab space to complement the existing housing in the neighborhood and they hope to bring 4,000 to 7,000 jobs to the area. The new Exchange South End will also feature ample green space in the form of a 1-acre park to be called Albany Green.
Harrison Albany Block
Construction has begun on this upcoming 600,000 square-foot mixed-use project being developed by Leggat McCall Properties. The underground parking garage, shared between the residential components is being completed first, followed by the first residential tower expected to open in with December 2020. In total Harrison Albany block will add around 600 residences to the area with 8600 square feet of ground-floor retail. Existing buildings at 600 Harrison & 575 Albany will stay in place with improvements to house additional office space along with 50 additional units.
The Ink Block was the first domino to fall in the South End redevelopment boom and there are now 6 buildings complete within this project. The 7th, 7INK by Ollie, was just approved by the city and will be Boston’s first major co-living development. This project will offer 250 units of all-inclusive living with amenities ranging from laundry service to a full calendar of social events. Ted Tye, Partner and Director of Acquisitions at National Development, said he hopes to break ground this spring on the final piece of this game-changing development.
Another major piece of this project has been the clean up of the once neglected area under the highway. This new “Underground” is now home to neighborhood events and has energized this area that connects the South End to South Boston.
Jun 12, 2018
The NAIOP 15th Anniversary Bus Tour took off from Post Office Square earlier this month on a whirlwind excursion to view and tour some of Boston’s most exciting development projects. The “Then. Now. Next” tour began at One Post Office Square where the crowd of Boston’s commercial real estate leaders were treated to a presentation detailing the upcoming full-scale renovation of the building. This renovation will not only change the face of the structure but will add office square footage, a full floor amenity center, and fully automated parking garage.
Once the buses were boarded the group made their way through the Seaport, the hotbed of development in Boston, to view the numerous commercial and residential projects ongoing there. It was then onto South Boston and Dorchester for a stop at The Beat. The Beat, former Boston Globe headquarters, will be transformed into a 695,000-square-foot modern hub for creative office, laboratory and retail use.
After a windshield tour of the South End, Back Bay, and Fenway the final stop of the day was Boston Landing. Totaling more than 1 million square feet, this mixed-use development will feature office, lab, and athletic space including the Warrior Ice Arena, which many of the contingents were lucky enough to tour. Other groups viewed the luxury residences of Lantera, office and lab space at 80 Guest Street or the new commuter rail station which ties this development to downtown Boston.
The team of top leasing and investment sales professionals NAIOP recruited to serve as guides throughout the day provided the valuable insight that has made this event a must-attend for the past 15 years.
Jun 07, 2018
On Thursday, June 14th at 11 AM, join NAIOP for their 30th Anniversary Golf Tournament and Celebration at The International. If you haven’t played there yet, it is a golfer's paradise that features two award-winning 18-hole golf courses, including The Pines, designed by Robert Trent Jones.
At this time, in order to ensure a reasonable pace of play, foursomes have been limited and are reserved for sponsors only. Last year’s tournament sold out early. Sign up early to guarantee your participation and support. There are a variety of sponsorship levels, along with the option to play in either the 6th Annual Championship Cup or the scramble tournament. There will also be a box lunch, dinner buffet, and lots of great prizes and networking.
Since it began in 1989, the NAIOP Annual Golf Tournament has raised more than $2.9 million for Heading Home. New this year! We're excited to partner with Heading Home’s Economic Mobility Center, proceeds raised at the 30th Annual Golf Tournament will go towards providing ongoing training, one-on-one counseling, resources and support for those looking to improve their financial education or career paths.
For more information regarding registration or sponsorship: 30th Annual Charitable Golf Tournament benefiting Heading Home
Apr 12, 2018
Climate Change Resiliency & The Future of Development
At an April NAIOP event, Climate Change Resiliency & The Future of Development, local experts from organizations in Boston addressed the situation and offered insight into what the future may hold.
As the development boom continues, climate change is affecting the way projects are designed and built. Regulators at all levels of government are considering how laws and policies should address the changing climate.
Both the public and the private sectors are both greatly impacted by these changes as they continue to occur at an increasing rate. The BPDA is continually making efforts to ensure preparation for the present and future of Boston.
One main focus right now is to reduce the impact the city has on Greenhouse Gases. According to the office of the Mayor, “reducing greenhouse gas emissions is critical to avoiding more extreme climate change conditions.” The Mayor has set a goal for Boston to be Carbon neutral by 2050. The city is focusing on new building projects that employ an integrated planning and design approach to maximize building efficiency and include onsite clean and renewable energy solutions to ensure the constructed building has minimized greenhouse gas emissions. Moving forward, projects should use the Massachusetts Environmental Policy Act Protocol when calculating greenhouse gas emissions.
Additionally, extreme heat is an issue contributing to the rising sea levels. The BPDA reports that the annual average temperature has increased by about 2 degrees in the past 100 years and will continue to rise. The average annual temperature could also rise from the current 46 degrees to 56 degrees. According to Chris Busch of the BPDA, the number of days above 90 degrees (currently averaging 10 a year) could rise up to 90 per year.
The BPDA added, that future project planning should identify future strategies for adapting to higher annual temperatures and more extreme heat waves including both building envelope and mechanical systems.
The other major concern regarding climate change is the rise of sea-level and extreme precipitation events. The BPDA reports that from 1958-2010 there has been a 70% increase in the amount of precipitation that fell on the days with the heaviest precipitation.
The Boston Research Advisory Group reports that under a medium emissions scenario, there is a 5% probability that sea levels will rise higher than 3 feet by 2070 and a 65% probability that they will rise to that amount by 2100.
According to David Wilkinson of Tishman-Speyer, there are actions that buildings can take to mitigate the problems associated with rising sea levels. New technology such as an aqua fence can be deployed prior to a flood to prevent damage to structures. Additionally, mechanicals of buildings can be elevated to upper level floors to avoid any other serious issues in the case of a flood.
Although we are already feeling the effects of global warming, as a city, an effort can be made to minimize the impacts of the damage that has already begun. Boston will lead the nation in reducing greenhouse gas emissions and safeguarding the commonwealth from the impacts of climate change. With an environmental bond bill of $1.4 billion focused on building climate change resiliency, Boston will lead the country into the future of green building and energy efficiency.
Mar 07, 2018
Amenities and Technology: The Evolution of Workspaces
As the building boom continues across the country and in Boston’s backyard, the value of location is shifting. For the first time in 300 years, downtown is losing its allure to the newly built-up Seaport district. It is apparent that societal desires have changed drastically over the past decade. As technology evolves and culture changes, personal and business necessities strongly influence all decision making. As a result, the construction and real estate industry have felt the impact of this shift. Locations, amenities, and experiences are all changing the way people think across the board. On Monday, February 26th, NAIOP in partnership with Convene (a workplace-as-a service platform) held a luncheon address the changing landscape and talk about where things are heading.
According to Rick Peiser, the Michael D. Spear Professor of Real Estate Development at Harvard’s Graduate School of Design, the demand for space is going down. Building spaces are increasingly offering amenities to remaining competitive while co-working spaces continue to grow in popularity. Tenant’s are looking for interaction and spaces for community building (lobbies, roof decks, and hallways).
In a recent study a team of researchers at the University of Michigan’s Steven M. Ross School of Business, discovered there are “two key benefits to the coworking experience, both of which have been linked to improved employee performance. Simplified somewhat, it comes down to flexibility and autonomy without dispensing with meaningful community.”
Although rental prices are higher for amenities, it is the shift that companies are moving towards. Just as tech companies provide their employees with many perks, they want to see the spaces they are working in offer additional value to their workforce. For many companies, urban amenities are now an integral part of decision making when committing to leasing space. Many businesses are now opting to move to the Seaport and Fort Point when looking for new offices as the area is becoming a complete one-stop shop. The ability to live, work and play, all in one location is an absolute game changer.
In a 2015 report, Deloitte claims, “enjoying what you do and how, when, and where you do it is resulting in higher retention rates and attracting some of the best and brightest to work for a forward-thinking company over one tied to the status quo.”
Chris Kelly, the CEO of New York based, Convene, see’s the value in trends. According to Kelly, having free beer in the office doesn’t carry the weight that it might once have. As developers are placing bets worth hundreds of millions of dollars, they need to be forward thinking while society continues to innovate. Companies are looking to attract and retain top talent. In 2018, millennials want a quality of life and experience at work, not a corner office.
“Technology drives convenience and community, which allows for sharing of ideas and experiences.”
Convene see’s the change in demand as an opportunity for landlords. They now have an opportunity to sell their space based on experience and not just square footage. It is a new way to bring tenants into your building who previously might not have seen the value based on the cost of square footage alone. As Convene partners with landlords, they are creating an environment like a full-service hotel. Their spaces offer fitness, lounges, alternative seating and other amenities commonly found in hotels.
Chargespot, a leader in wireless charging technology has echoed these claims, “employees are busier than ever and this leaves little time for personal errands. As a result, great employers are looking at ways to address this by investing in concierge services. These services include everything from taking in your dry-cleaning to booking airline tickets.”
Andrew Gallinaro, Senior Vice President at National Development echoed the sentiments of both speakers. The approach to attracting tenants is creating a community and promoting connectivity. The ability to bring people together in a work environment is key to the whole experience concept. Gallinaro reiterated that in terms of working spaces, selling square footage is not the approach. It is important to understand what the tenant’s needs are and how it can be created.
While the industry continues to change, it is important to invest in order to stay relevant. If real estate developers do not make changes to keep up, they will be left behind. The opportunity is exponential, as Convene ($113.5 million in raised) and companies like WeWork (valued at $20 billion) and Industrious ($142 million raised) are changing the archaic workplace model.