0 CRES Stats Report | Week Ending July 31

CRES Report Week Ending July 31, 2020

Continuing the trend 43 spaces (over 1,000 SF) hit the market as available equaling 180,000 SF, much less than last week, but typical for many of the weeks over the past 4 months;

13 spaces (over 1,000 SF) came off the market (56,000 SF) which has been consistent over the past month, many of these spaces are merely going to direct available from a previously listed sublease;

Quarter To Date net absorption is -139,000 SF and Year To Date absorption is -985,000 SF.

The Office VACANCY RATE in Cambridge (“ride the Red Line from Alewife to Kendall”) is 5.5% with 3.9% sublet availability, for a TOTAL AVAILABILITY of 9.4%.

0 CRES Stats Report | Week Ending July 24
















Boston Office stats from the PAST 7 days: (sublease & direct – in all cases temp space excluded) in Mass Ave to the Seaport, South to North Station

  • 39 spaces (over 1,000 SF) hit the market as available equaling 300,000 SF, a 4X increase over the last week;
  • 14 spaces (over 1,000 SF) came off the market (~57,000 SF) averaging only 4,000 SF per suite;
  • Charlestown’s (21 buildings, ~2.4mm SF) vacancy rate is 16.8% and it’s availability rate is 17.7%
  • There is currently 2,800,000 million square feet of sublease space available in the subject area;
  • The total availability STAYED ROUGHLY THE SAME at 11.2%.


0 LogMeIn CEO rethinks corporate headquarters for a post-COVID era

By Jon Chesto | Boston Globe 

As few as one out of five employees will spend all workdays in the office

Six months ago, LogMeIn chief executive Bill Wagner never would have imagined he would hire his next chief financial officer without meeting him in person first. Wagner would have said that’s crazy.

Not anymore. Sure, we live in crazy times now. But some changes won’t be temporary. The ones playing out at LogMeIn, one of Boston’s biggest tech companies and a key player in the remote-work software business, illustrate just how different the office scene in Boston could be once this pandemic finally ends.

All 700-plus of Wagner’s Boston employees work remotely right now — like most of Boston’s white-collar workforce — and they will continue to do so until October. But some won’t ever return to LogMeIn’s headquarters. Only a small portion will work all five weekdays at the main offices along both sides of Summer Street in Fort Point.

How few? Wagner said he expects 20 percent to return five days a week after the pandemic is over. One in five. Let that sink in for a moment. Sure, many colleagues will come in less frequently, but others will be essentially remote workers all of the time. The breakdown won’t be known for months, probably not until a vaccine is widely available.

Wagner predicts LogMeIn’s corporate office will become more of a place for team meetings, training sessions, and similar get-togethers and less of a place where people dutifully show up every morning at 9 to grind out another workday.

Wagner said it’s far too early to know what this means for the 230,000 square feet LogMeIn leases in Fort Point — how much he’ll need, how it will be reconfigured. Even harder for Wagner to predict: What will happen to all the lunch places, bars, and other businesses that serve all the workers who used to arrive like clockwork?

This isn’t primarily about saving money, Wagner said, even though cost savings could be found. (A spokeswoman says some savings would be redeployed to help equip home offices.)

Instead, Wagner said he’s keen on letting employees work where they want to work. LogMeIn surveyed its 3,700 employees worldwide. About 3,200 responded. Of those, only 5 percent said they want to be in the office five days a week. People like the flexibility they have now, he said. They are sleeping and exercising more. And many say they are more productive now that they no longer spend hours commuting.

But employees still miss the social aspects of office life, Wagner said. That’s one reason why Wagner envisions adopting a hybrid model, of sorts.

The shift also significantly widens the pool of talent available. Existing employees might be able to move to another state if they want. In fact, Wagner said his chief of staff, Chris Perrotti, plans to do exactly that: He is moving to his Vermont home. And new hires don’t need to move to Boston. They just need to be in the same time zone.

Case in point: the new chief financial officer. LogMeIn is expected to be acquired by summer’s end by two private equity firms, Francisco Partners and Evergreen Coast Capital, in a deal valued at $4.3 billion when it was announced in December. Wagner wanted someone with experience taking a company private to replace Ed Herdiech, whose retirement was announced last fall. Rich Veldran, the new CFO, fit the bill: He guided the financial information provider Dun & Bradstreet when that company went private.

LogMeIn’s interviews with Veldran were conducted remotely. Like many other CEOs, Wagner considers the chief financial officer to be the number two job, the top lieutenant. Veldran still lives in New Jersey. (He joined LogMeIn on June 15.) While Veldran may get an apartment in Boston, Wagner said he doesn’t expect his right-hand man to have to pick up and move here.

The increasing acceptance of remote work was already under way, Wagner said. COVID-19 just accelerated it. Companies are under pressure to reduce their carbon footprints, to shave real estate and travel expenses, and to hire more diverse workforces. Going remote can help accomplish all three goals.

Sure, Wagner is a bit biased here. He does, in fact, sell software geared specifically for this kind of transition: LastPassjoin.me, the entire GoTo suite. Sales have surged through the pandemic, although LogMeIn did make some technology available for free to nonprofits and government agencies.

Executives at other white-collar companies are pondering similar questions. And some are acting.

The real estate brokerage Colliers reported that companies put nearly 900,000 square feet of office space in Boston on the sublease market for the first time in the second quarter. That’s the highest number since 2004 — when corporate giants Fleet and John Hancock were gobbled up within a 12-month time frame — and the third-highest of any quarter since 1990.

(Side note from Aaron Jodka of Colliers: With the exception of a 100,000-square-foot chunk of space opening up at Tripadvisor’s headquarters in Needham, Boston’s suburban office market seems stable right now.)

LogMeIn was a trendsetter back when it relocated from Woburn to Boston in 2013, as suburban companies decamped for the big city in the hunt for talent. It became a flagship member of the city’s Innovation District, the branding applied at the time to Fort Point and nearby environs in the Seaport. The following year, the company even secured $2.5 million in city tax breaks and nearly $1.1 million in state tax credits to help pay for an expansion there.

Now, LogMeIn might be leading a new kind of trend as it rethinks its corporate headquarters, and this one might have even bigger consequences for the Boston economy.

0 Why Go To The Office? Few Want To — Some Need To

By Liz Neisloss | WGBH | July 20, 2020

Downtown Boston’s office buildings loom over urban canyons, now echoing with the occasional complaint of a seagull. It’s the third phase of reopening in the state — which allows offices to fill to 50 percent capacity — and these buildings are mostly empty because their usual occupants are staying away.

“I park underneath the Prudential Complex. It’s the second largest garage north of New York City. It’s a ghost town,” said Wil Catlin, managing director of Boston Realty Advisors.

Catlin, who heads the company’s downtown office leasing team, estimated that the majority of workers in Boston’s “urban core” — 82 million square feet of office space — haven’t returned.

“On a good day,” he said, his own Back Bay office is “maybe 18 percent” full.

Catlin said he thinks many workers are deterred by fear of coronavirus exposure during the commute.

“People might feel safe in the office at the Prudential Complex, but they don’t feel safe getting to the office. So that usually is the part that creates the most amount of anxiety for the commuter,” Catlin said. “They might be commuting on the commuter rail. They might be commuting on the subway. They might be commuting on a bus. That’s the fear.”

And once at the office building, there’s no more squeezing in the elevator like in the old days. Catlin described the process for a typical large downtown building.

“So if there’s four people to an elevator, each person has to face the wall,” he said. “It is a cumbersome amount of time just to get in the elevator and then just to get upstairs.”

But what if work can’t be done from the kitchen table? The greater Boston area has many scientists — what companies call “building-dependent workers” — who have had to return to their labs, for example. But even there, routines have changed.

Mandatory mask-wearing is just the start of the changes at Agios Pharmaceuticals in Cambridge. Inside the lobby, a security guard with a clipboard runs visitors through a brief health questionnaire to ask about any recent rides on public transport or exposure to anyone with COVID-19. Employees can use an app to self-report when they come in. All entrants then lean into a stand for a quick temperature check and a pump of disinfectant for their hands. Once through those steps, it’s one person at a time in their lobby elevators.

Agios develops medicines to treat cancer and rare diseases, and the majority of their employees are based in Cambridge, where lab scientists represent just over 10 percent of the workforce.

“We’re running experiments in support of the discovery of those medicines. And so in order to run those experiments, we need to be in the building. And those are really a critical part at the core of what we do as a company,” said Agios Chief People Officer Melissa Mclaughlin.

Before entering the lab, as always, rubber gloves go on, along with lab coats and goggles. Since masks are now required, the goggles are now anti-fog. But lab scientists are used to protective gear and precautions. The most dramatic change here is in how much time they can spend in the lab.

On a recent day, Bo Wang sat alone at the lab bench in what’s known as the “wet lab.” Wang is researching potential therapeutics for leukemia. He can now only work a half day at a time and leaves by noon so there’s no contact with the next shift. Wang says he feels safe at work, but he wishes he could stay longer.

“It limits the work we can do, but also I miss seeing the other people, seeing my friends and colleagues. I’m only seeing half of the people, unfortunately. So that’s probably hard, hard for our communication and science exchange,” Wang said.

In an adjacent cell culture lab, there are multiple stations, but researcher Gabrielle McDonald is solo. She’s studying the activity of genes as part of her cancer research. To an outsider, it appears to be work suited for one, but employees here describe research — which requires collaboration — as a “team sport.”

“It’s very different to have just me by myself or me and one other person. So, it’s really quiet. It’s hard to get used to. I kind of miss having other people around,” McDonald said.

As soon as they finish their allotted shifts, these scientists have to leave the office and continue work from home. Collaboration has shifted online.

“If you’re coming in to run an experiment in the lab, you come in and you run the experiment. You may write up that at home, you may do meetings when you get home to talk about the experiments. So really, what needs to happen at the building should happen,” McLaughlin said.

Outside of these specialized labs, the Agios offices are mostly empty. If employees can do their work from home, it’s still the preferred approach.

Dave Madson, director of workplace for design firm CBT, is familiar with the challenge of getting employees back to the office during a pandemic.

“For those that have started to go back, it is very slow and deliberate,” Madson said, “It really is quite a sparse and slow return.”

And until social distancing is no longer required, most companies won’t be able to fit more than 50 or 60 percent of staff in the office at a time.

“The idea of every person on a staff coming in at the same time until there’s a vaccine — it’s probably not going to happen for nearly every company. I think that would be quite difficult to achieve with the current guidelines and rules in place,” Madson said.

Madson looks at floor plans to see what measures are needed to create “a safe environment,” he said. Not surprisingly, this includes creating signage, estimating room capacities and knowing where sanitation stations are needed.

“One of the most onerous parts of this is really air filtration and fresh air ventilation that’s in many of these high-rises. That isn’t something where they can simply just turn up the fans or open the windows,” Madson said.

For now, it seems, whatever the work, there’ll be no gathering at the water cooler for office gossip. In addition to the physical changes at offices, Madson said, communication with staff and putting in place COVID-era rules are essential.

“There’s a lot of education that needs to happen,” Madson said, ”to make sure everybody is on the same page and what you can expect when you do come back to the office.”

The return to the office, he said, is “a sort of psychological experience” that workers need to prepare for.

0 Boston Construction And Design Efficiency







Boston, like many markets across the US, has been pushing for a more efficient and innovative way of developing. Technology is evolving, design solutions are being explored and the way we construct developments has evolved as a result. How are construction leaders and designers keeping the net-zero energy building goal by 2030 in mind? Can mass timber provide a solution that works across the market? What are design leaders doing to propel efficiency-based construction forward?

Join Bisnow and BRA’s Wil Catlin on July 23 along with Generate CEO John Klein, Consigli Construction Company Project Executive Matthew Tonello and Placetailor Director of Strategy Colin Booth for a discussion on how construction and design innovation is creating a more efficient Boston and what that means for developments tomorrow.

Our content will touch on:

  • New construction methods are being explored to maximize energy efficiency. What are these methods and how are they being used to create new developments?
  • How can mass timber be used to help create more sustainable developments?
  • Sustainability implementation has been largely driven by technology. How are designers and contractors utilizing technology to create more sustainable solutions?
  • How can investment potential and cost-savings be determined prior to breaking ground on a sustainable development project? What is the comparable value?
  • Net-zero energy building by 2030 is an initiative that has been widely supported by the industry. How do we get there and what resources are available to accomplish it?

Register HERE.

0 ‘We Were Way High’: Reality Of Phased Office Comeback Falls Short Of Landlord Expectations

Dees Stribling | Bisnow | July 14, 2020 

Office space has been open in Massachusetts since Phase 1 of the commonwealth’s reopening plan went into effect on May 25, but office workers and their managers aren’t rushing to return. That doesn’t mean they never will, just that the uncertainty is still too strong.

During the early days of the pandemic closures, the expectation was that reopening, when it occurred, would be a series of relatively quick steps up, Oxford Properties Group U.S. Head of Office Chris Mundy said on Bisnow’s Boston Office Update: Subleasing, Retail and the Evolving Market webinar last week.

Those steps would begin at perhaps 25% of pre-pandemic occupancy and then move up to 50% and 75%, Mundy said.

“Candidly, we were way high,” he said. “There’s really been caution among the office tenants in coming back.”

In Boston, the current total at Oxford Properties’ portfolio is about 5% of pre-pandemic occupancy, according to Mundy, who said the Canadian pension fund-owned Oxford saw similar numbers in New York and Washington, D.C. Rent collection for those offices is almost 100%, however, he added.

Uncertainty is the guiding factor in workers staying away, and it is still weighing heavily on forecasts for office owners like Oxford.

“There’s a lot of speculation about what the impact of the pandemic will be, but there’s a wide range of [possible] outcomes, so it is hard to make long-term decisions,” Mundy said.

Office workers who can work at home have adapted to the new reality, and until the coronavirus pandemic is under control, they don’t see any reason to work in an office — and their bosses don’t either.

That is true even in a state like Massachusetts, where the number of COVID-19 cases has flattened, as opposed to the spikes in places like Arizona or Florida. In early July, new cases in the Bay State totaled fewer than 100 many days, compared with well over 2,000 new cases per day during much of April.

Also, since mid-April, the seven-day average for the positive coronavirus test rate is down 94%, and the three-day average of hospitalized patients was down 84% Monday, according to the Massachusetts Department of Public Health. Earlier this month, the commonwealth rolled out Phase 3 of the reopening of the state’s economy. That phase isn’t about office space but allowed some kinds of retail, such as movie theaters and health clubs.

The reluctance to return to office space directly affects central business district retail and restaurants, which need office workers, but also students and tourists, Boston Realty Advisors Managing Director and partner Whitney Gallivan said. Boston is going to have a lot fewer of all of those for an uncertain while.

“Every retailer that we talk to, and every landlord that we speak to, is doing something different,” Gallivan said, adding that landlords are trying to keep the tenants they have if at all possible.

“The bottom line is that they’re trying to work together,” she said. “If you have to refill a vacant space, there’s not much activity out there. Some, but not enough to let these tenants go.”

Retail rental payment has been between 40% and 60%, with properties leasing to grocery stores and pharmacies toward the upper end of that spectrum, Gallivan said.

Though there are a number of possible outcomes to the current situation, and uncertainty is the norm for now, it is also probably a mistake to believe that all of the adaptations to the pandemic will be permanent, such as a majority of workers working at home full time, Mundy said.

He told the story of a tech tenant whose CEO was considering giving up on office space and going 100% remote, which would have been a loss for Oxford Properties. But it also would have meant a loss in cohesion for the company’s workforce, the CEO came to realize.

“The CEO started to share the idea with his senior team, and one of his top lieutenants said, ‘That’s great, I’m moving to Idaho.’ The CEO said, ‘I don’t know how I feel about that,'” Mundy said, and he rethought his plan.

Different aspects of the pandemic probably will stay, however, especially in the retail world, such as takeout windows or the convenience of having items brought out to one’s car, Gallivan said, noting also that online platforms are going to get stronger.

“It may be hard to go back to [having] to walk into the store, take my kid out of the car and go pick this up,” she said.

People will want to keep the alternatives they’ve gotten used to during the pandemic.

Surviving retailers and restaurants will come out of this period a stronger business, Gallivan said, since they will have learned practices that help the consumer.

0 Landlords and commercial tenants negotiate delicate deals with high stakes

By Tim Logan and Janelle Nanos | Boston Globe 

It’s a tale of two cafes, and a story that’s playing out all over town.

Nir Caspi owns Cafe Landwer, with locations in Cleveland Circle and Audubon Circle. Both opened in the last three years on the ground floors of new residential buildings. Both were doing well serving fine coffee, kebabs, and Israeli breakfast specialties before COVID-19, Caspi said, but business has suffered since the virus brought the economy to a crashing halt. He is confident one will survive. The other has been in limbo.

That’s largely because Caspi’s two landlords have taken different approaches to the crisis.

It is a delicate dance, with high stakes for all. Over the last four months, many restaurants and retailers have been engaged in seemingly endless negotiations with the owners of the buildings they occupy. Rent typically accounts for an enormous chunk of tenants’ fixed expenses, and with revenue scarce, they can’t pay it. But landlords have bills to pay, too — including mortgages, and property taxes — and some are accountable to investors. For them, it’s a matter of weighing a desire to be flexible with tenants against the need to meet financial obligations.

The fate of an entire generation of small businesses could be at stake in this fraught balance, the kind of places that collectively employ thousands of people and often help form the fabric of their neighborhoods.

“It can be a really touchy thing,” said Ann Earhart, co-owner of retail brokerage firm Boston Urban Partners. “There’s no one-size-fits-all here.”

Just ask Caspi.

At the Cleveland Circle cafe, his landlord is National Development, a prominent Boston builder that developed the South End’s Ink Block and other big projects that blend uses such as housing and retail. When the state urged people to stay home and ordered nonessential businesses to close, National came to him right away, Caspi saidIt offered a deal that allowed him to pay rent based on a percentage of sales instead of a fixed amount. He kept the cafe open as a result and has been taking a steady stream of orders throughout the pandemic.

“From day one they’ve been reaching out and asking us how we’re doing and how they can collaborate,” he said. “They’re taking the initiative to help me from their side and not waiting for me to beg for mercy.”

Caspi said his dealings with his landlord at Audubon Circle, which is a small, family-run real estate operation, were more challenging. When the shutdown began, he tried opening for takeout, but made only a few hundred dollars a day because the college students who frequented the cafe had departed. So he shut down for several weeks until outdoor dining in Massachusetts resumed. All the while, talks with the landlord, Chestnut Hill-based developer Dan Yu, were tougher, and more intermittent than those with National Development. Caspi said Yu encouraged him to apply for funding from the federal Paycheck Protection Program. Caspi did, and received some money. But as the months dragged on, Caspi worried about finding terms they could both agree on.

Last week, Caspi said, he finally reached a tentative agreement with Yu, who did not return messages from the Globe.

“I can understand he has a mortgage and he wants to pay the mortgage as well,” Caspi said. “We need to find the right way for both of us.

These types of talks are taking place all over Greater Boston as the pandemic and related economic crisis drag on. With their futures intertwined like never before, tenants and landlords are trying to sort out a changed relationship on the fly. Brokers and others involved in these rent discussions say the variables involved in reaching an arrangement are many.

How successful was the retailer before the crisis? How leveraged is the landlord? Is the store in a larger office or apartment building — where retail rent is a smaller piece of the bottom line ― or is it a storefront location where rent revenue is critical? Most important, and hardest to know: When might business return to normal?

“It’s so tenant specific. It’s really landlord specific, too, in terms of what a decision will be,” said Whitney Gallivan, managing director of retail at Boston Realty Advisors. “No one knows how long this might last.”

Some landlords, especially larger ones with deep pockets, are leveraging their size and resources to help tenants ride out the downturn.

WS Development, which owns shopping centers such as The Street in Chestnut Hill and Marketstreet in Lynnfield, is coaching vendors on how to build their own marketing campaigns. It also launched “Storefront Stories,” a social media campaign that highlights business owners and workers as their stores reopen.

“It’s a peek into their lives,” said Lindsay Binnette, director of field marketing at WS. “A way for people to share what they’re excited about in reopening.”

Samuels & Associates, which in recent years has redeveloped a huge swath of the Fenway neighborhood, is converting plazas into outdoor seating for restaurants in its buildings, and helping tenants navigate new permitting processes at City Hall. It has three people working full-time on lease negotiations with 70 or 80 commercial tenants, said president Joel Sklar. The goal is to reach deals that make sense for everyone — including Samuels and its lenders.

“These are really complicated discussions,” he said. “It’s got to be balanced and it’s got to be a partnership. That’s what we keep hitting on over and over.”

Samuels also operates several million square feet of office and apartment buildings in the Fenway, so while retail rents are important, they’re a relatively small piece of the firm’s financial pie. The company used to own more traditional shopping plazas — it built Dorchester’s South Bay in the 1990s — and Sklar acknowledges the math for the large mixed-use projects it oversees these days is quite different.

“We probably have more flexibility than a shopping center that’s 100 percent retail and probably has 80 or 90 percent of its tenants asking for rent relief,” Sklar said. “That’s a really big issue in the retail world, and not one with an easy solution.”

Indeed, many landlords aren’t being as flexible. About 50 percent of members of the Massachusetts Restaurant Association and the Retailers Association of Massachusetts said in recent surveys that their landlords have been unwilling to adjust rents. Given the state of the economy, that’s an unrealistic stance, said RAM president Jon Hurst. Even national retail chains only paid 68 percent of their rent in June, according to real estate data firm Datex Property Solutions.

“There needs to be a repricing,” he said, meaning lower monthly payments.

Tenants, especially major ones, can also play hardball. National chains such as The Cheesecake Factory and Starbucks have demanded rent breaks, or halted payments altogether during the pandemic. The Gap Inc., stopped paying rent when many of its mall stores closed in the spring, prompting lawsuits from two of the nation’s biggest mall operators — Simon Properties and Brookfield Property Partners — seeking tens of millions of dollars.

But many tenants and landlords say having a good working relationship — ideally, one that predates the pandemic and will outlast it — is essential to figuring out how to survive. John Pepper, cofounder of Boston-based burrito chain Boloco, said he has spoken for hours with landlords at his seven restaurants, trying to navigate a new world in which both parties’ business models have been upended. He’s noticed one consistent thread.

“The smaller the landlord, the more personal the conversation,” Pepper said. “We’re in a place where we need to figure this out together.”

That has also been Charlie Talanian’s experience. The longtime Newbury Street landlord, whose tenant base includes hair salons and small clothing stores hit hard by the coronavirus shutdowns, has logged a lot of time on the phone, trying to work out rent agreements. These are small-business people, Talanian said, just like him. Most have never skipped a rent payment, and they don’t want to now ― they just need time to rebound.

“So it’s, ‘Can you pay half? Can you pay a quarter?‘ ” Talanian said. “We’re all in this together and let’s assess the damage when we get to the other side. I can’t be successful if I don’t have tenants.”

0 Coworking Company Workbar Expanding to Boston’s South Shore

Coworking – Some are expanding while others are giving backspace.

By Connect Boston | June 26, 2020

Boston-based coworking company Workbar is expanding to Boston’s South Shore.

The firm will open its 10th area location at 101 Accord Park in Norwell on July 1. The 10,000-square-foot location is being developed by JEI Ventures. The space will be housed in an office building on Route 3.

Workbar currently has locations in Back Bay, Downtown Boston, Burlington, Arlington, Needham and Salem. The company has attempted to make members feel safe during the COVID-19 pandemic by adding sanitation stations as well as adding more private office space as compared to a mostly open floorplan.

0 Boston Office Update: Subleasing, Retail & The Evolving Market







The Boston office landscape, like many markets across the U.S, still has a lot of uncertainty. Occupancy is lower than expected, retail and restaurant tenants in office assets are being hit hard and subleasing is spreading. How are owners responding to the needs of a shifting market? Are they bailing tenants out financially? To what degree is office occupancy being impacted moving forward? What is being done to plan for the unknown?

Join Bisnow on July 9 along with Oxford Properties US Head of Office Chris Mundy and Boston Realty Advisors Managing Director and Partner Whitney Gallivan for an update on the Boston office market, where it is today and what it means for tomorrow.

Our content will touch on:

  • Are owners offering financial support to retail tenants?
  • Subleasing is on the rise nationwide. What does the rise in subleasing mean for the state of the office market today? Are your tenants doing the same?
  • What occupancy rate is the Boston market seeing and how does Boston compare to the other markets in the U.S?
  • How does the slower-than-expected return to office properties shape plans going into the fall? Will there be extensive interior changes or installations for more measures to ensure social distancing?
  • Coworking is heavily in question given the limited demand and inevitable decrease in density. How are coworking tenants faring and what kind of conversations are being had?

There will also be plenty of time for questions.

Register HERE.