CRES Stats Report | Week Ending January 15
CRES Stats Report | Week Ending January 8, 2020
Get Out To Vote! A Message From Boston Realty Advisors, Massachusetts’ Largest Independently Owned Brokerage Firm
| Boston Globe | May 26, 2020
It says a lot that the busiest spot on Newbury Street on a gorgeous Tuesday was the decidedly unglamorous UPS Store, where people spent their lunchtime lined up outside to mail packages.
In normal times, this stretch of the Back Bay would have been jammed with pedestrians who had come to shop, eat, and people-watch. Parking would have been harder to find than toilet paper at a Walmart in April. It would have been the perfect day to play hooky after lunching outside on the patio of Stephanie’s.
Instead, like during the previous 10 or so weeks, Newbury Street was eerily quiet. The Massachusetts economy may have tentatively reopened, but you couldn’t tell by walking down this quintessential street of Boston commerce. Between the papered-up windows and “for lease” signs, it was hard to find a store or a restaurant that was open for curbside or takeout service.
Consider the end closest to the Public Garden, where the poshest shops are located. Burberry was open for curbside pickup, but Chanel next door was not. Both Salon Capri and Mario Russo Salon welcomed back clients, but not the Italian boutique Brunello Cucinelli in the storefront below them.
In this coronavirus spring, a stroll down Newbury Street felt neither leisurely nor luxurious. Instead, it was one more reminder of the economic toll of the virus, which forced the shutdown of so-called nonessential businesses for two months.
Some stores felt frozen in time, their windows plastered with March postings about being temporarily closed. Other shops flashed signs of life — like the handwritten note on Anthropologie’s front door that read: “Hi UPS + USPS we are back in store every day 10 am-2 pm!”
But it is the papered-up storefronts that really give you pause: How many of these stores will be part of the state’s economic restart?
Dan Dumenigo, owner of the Barbershop Lounge, wondered the same as he opened his shop on Monday for the first time since March 24. People are long overdue for a haircut ― you’ve seen them on Zoom ― and by Tuesday morning Dumenigo had only two appointments left for the rest of the week. While his barbershop is busy, he couldn’t say the same about an empty Newbury Street on a picture-perfect day.
“It’s definitely depressing,” Dumenigo said through his face mask.
He’s especially worried about his stretch of Newbury, between Fairfield and Gloucester streets, which benefits from being a block away from the Prudential Center. How many of those people working from home will come back to the office tower? Not so long ago, thousands of workers used to spill out on to Boylston and Newbury during lunch time. They grabbed a bite to eat, did a little shopping, and maybe even got a haircut. Together, they spent a lot of money.
With the prospect of more people shifting permanently to working from home, Dumenigo said, some retail business tenants wonder if they can get by with fewer customers.
Even before the pandemic, the future of Newbury Street as a retail and restaurant destination was in doubt. As the mom-and-pop businesses that gave it character were being forced out by rising rents in recent years, national and international chains have taken over. Restaurateurs with the biggest buzz passed over old-style brownstone dining to open up in the shiny neighborhoods of Fenway and the Seaport. Now, some of the most vulnerable shop owners along Newbury worry that the coronavirus fallout might be the “final straw,” said Dumenigo.
Vacancy rates have hovered around 10 percent to 15 percent on Newbury, which is higher than Beacon Hill’s Charles Street or Harvard Square, according to Whitney Gallivan, partner and managing director, of Boston Realty Advisors, a brokerage advisory firm.
But Gallivan isn’t ready to write off the neighborhood. As the virus makes us reimagine everything, including shopping, she believes Newbury will remain relevant.
“Newbury has always been a fixture in the city’s retail shopping . . . there is nothing else like it,” she said. “Newbury will be on the list of places people will want to shop.”
But Gallivan and others point out that its survival will, in part, depend on the strength of the relationship between tenants and landlords. They need to work together because the economic recovery will be slow, with revenue kept down by limits of the number of shoppers and diners allowed inside stores and restaurants. Covering the rent is going to be a huge challenge. Compromises will need to be reached, and soon.
As longtime Newbury Street tenant Patrick Lyons puts it: “What COVID is going to do is lay bare the reality of stupid leases.”
Lyons, whose Sonsie restaurant has been on Newbury for close to three decades, credits his longevity to a landlord who isn’t out looking to lease to the highest bidder.
“We have an enlightened landlord who understands the magic of Newbury Street,” he said.
The City of Boston can enhance that magic by closing streets to auto traffic and encouraging outdoor dining, something it’s considering for neighborhoods across Boston. Since 2016, Mayor Marty Walsh has promoted a few car-free weekends a year on Newbury, drawing crowds and rave reviews.
How about expanding that to weeknights? Then leave it up to the ingenuity of business owners to add bells and whistles like strolling musicians and dancing under the stars.
Some days it’s hard to imagine how we can ever return to our pre-pandemic lives. But Meg Mainzer-Cohen, president of the Back Bay Association, reminded me we’ve been here before.
“I remember sitting in my office overlooking Boylston Street – completely empty after the Boston Marathon bombing . . . will this ever turn back to normal again?”
We know the answer. We eventually emerged from the horror of that day. Just as we will one day walk down Newbury Street again, no longer weighed down by the pandemic.
In Cameron Sperance’s latest, he says that, “TAMI tenants accounted for 40% of all office transactions in Boston’s central business district last year.” Fresh off of over 140 leases in 2019, Managing Partner of Boston Realty Advisors, Wil Catlin said, “Office space in Boston has become a commodity, and commercial landlords are stepping up to ensure their asset is ready for today’s workforce. It’s a competitive environment and the landlords with quality, ready-to-go space are getting deals done.”
By Cameron Sperance | Bisnow | March 5, 2020
A string of recent layoffs in Boston was bad news for the city’s typically robust tech sector. But analysts say the furloughs have more to do with normal business operations than signs of a tech pullback from Beantown.
Cambridge-based Akamai Technologies cut around 75 jobs in early February. Wayfair laid off 550 employees worldwide, including 350 employees at its Boston headquarters, Feb. 13. The following week, Boston-based software company LogMeIn cut 300 jobs, nearly 70 of which were in Boston. Agricultural tech startup Indigo Ag then announced at the end of last month it was laying off 150 employees.
Wayfair’s job cuts were tied to the company’s previous overexpansion. LogMeIn said its layoffs were due to “evolving priorities,” per the Boston Globe. Indigo Ag is “focusing resources on the fastest growing aspects of the business,” the company said in a statement to Bisnow.
Akamai, Wayfair, LogMeIn declined or didn’t respond to requests for comment. But Boston real estate experts don’t see the layoffs impacting the office market.
“I don’t sit at the dashboard of Wayfair, but it’s normal to right-size,” Boston Realty Advisors Managing Director and Senior Partner Wil Catlin said. “What’s happening is labor is your No. 1 item on the [income statement]. But if you choose to let go of 10% of those people, you’re not going to get rid of 10% of your office space. You’re getting rid of that salary component.”
The February layoffs followed Needham-based TripAdvisor’s 200-job cut in January. Even if the layoffs are perceived as standard business practice, the impacted companies are leading office tenants across Greater Boston, which means this could ripple through property. Numerous tech companies, including Indigo Ag, are actively seeking hundreds of thousands of square feet for office expansion, according to independent brokerage documents obtained by Bisnow.
Catlin, who focuses on small to midsized tenants, doesn’t expect that demand to go away. A little more than 70% of the active tenants of that size are TAMI (tech, advertising, media and information) companies, Catlin said. Office developers are almost exclusively building for those kind of tenants.
“Today, subleases are few and far between and typically lease off market,” Catlin said. “Office space in Boston has become a commodity, and commercial landlords are stepping up to ensure their asset is ready for today’s workforce. It’s a competitive environment and the landlords with quality, ready-to-go space are getting deals done.”
Boston is the third-fastest growing tech hub in the U.S., according to job listing site Indeed. But housing production hasn’t kept up with the surge of new workers flooding into Boston, pushing costs higher and higher. Boston is the second-most-expensive city to own a home, according to a January report by moving research firm Move.org.
The high cost of living could be weighing on employers determining who stays in the urban core and who could be employed in a cheaper environment.
“It’s getting tougher and tougher to keep those borderless sales jobs in downtown Boston,” Hunneman Director of Research Tucker White said.
Other major Boston companies have been moving select operations out of the city for years. Fidelity Investments announced in 2011 it was moving 1,100 jobs from its downtown headquarters to other parts of the country. Liberty Mutual maintains its corporate headquarters in Back Bay, but has also built a Plano, Texas, campus where the insurance provider is expected to eventually employ 4,000.
Tech companies could be looking to do the same, especially with artificial intelligence expected to impact as much as 25% of all U.S. jobs, including many tech jobs.
“Wayfair is committed to Boston and that’s allowed them to grow, but at the end of the day, they’re still paying a comparatively high real estate cost to other markets and can hire similar personnel elsewhere,” White said.
There may have been a string of early 2020 tech layoffs in Boston, but there have also been some industry wins.
Boston-based restaurant tech firm Toast is now valued at $4.9B after a $400M round of fundraising. Its revenue increased 109% in 2019 due to thousands of new restaurants using its payment hardware, Toast announced last month.
Following its planned merger with sportsbook technology provider SBTech, DraftKings is expected to be valued at $3.3B. The fantasy sports company is headquartered in Back Bay and has the leading U.S. market share for sports betting, according to Morgan Stanley.
Amazon continues to expand its tech reach across Greater Boston, with new offices planned for Medford and the Seaport.
There are 23,764 open tech jobs across Massachusetts — with more than 9,000 in Boston alone, according to Burning Glass Labor Insight data. That is more than 1,000 more open positions than there were at the end of 2019.
The collective, ongoing growth is enough to offset the layoffs, according to one of the state’s leading tech voices.
“When you look at each of the examples [of layoffs], there are real business reasons for it and [it] doesn’t reflect a larger trend in the economy,” said Pat Larkin, director of the Massachusetts Technology Collaborative Innovation Institute. “We don’t view what happened as a trend.”
Professional, scientific, technical services and information tenants, which encompass the TAMI sectors, have the largest office footprint in Boston, with a little more than 34% of the overall office sector, according to Newmark Knight Frank. TAMI tenants accounted for 40% of all office transactions in Boston’s central business district last year.
Despite the layoffs, strong demand coupled with job growth from burgeoning sectors like cybersecurity and digital health keep brokers and landlords cautiously optimistic in signing deals with tech tenants.
“Landlords don’t want a repeat of the bust era and are being mindful to sign tenants that can perform to the lease terms they have available,” Catlin said.
The biggest isn’t always the best. Fortunately, Boston is chock-full of great work space. What strategies are you solving for & how can we help?
One Post Office Square in Boston.
W. MARC BERNSAU
Nelson Mullins Riley & Scarborough LLP plans to move its Boston office to One Financial Center next year, in part to avoid the disruption caused by construction in its current home at One Post Office Square, according to its local managing partner.
The South Carolina-based law firm is taking approximately 43,000 square feet on the 35th and 36th floors of One Financial, the office tower across Atlantic Avenue from South Station, said Peter Haley, the firm’s leader in Boston.
It’s about the same amount of space that it currently occupies at One Post Office Square, where it’s been for most of the decade-plus it’s been in the Boston market. But the Post Office Square building is undergoing a major renovation, including a new-look glass exterior, a large-scale interior makeover, and a significant expansion of rentable space. The project is being co-developed by JLL and Anchorline Partners.
According to Haley, had Nelson Mullins stayed in Post Office Square, it would have needed to move at least once, and perhaps twice, within the building over the short term to accommodate the makeover. The firm’s leaders were wary of that level of disruption. JLL “was great” about trying to find a solution, but the firm “couldn’t quite find something that was right for us,” Haley said.
Nelson Mullins expects to move into One Financial in 2020, potentially in August. Haley anticipates the new space will have about 65 offices, with a more efficient, glass-filled floor plan compared to its current location.
The law firm’s local headcount has changed significantly in recent years. In early 2015, it had 60 attorneys in Boston, but by the next year that figure had dropped to 35 after teams of attorneys left for K&L Gates LLP and LeClairRyan PC.
Since then, however, Haley and the firm’s leadership have been aggressive about wooing partners from other Boston law offices. Its local headcount is back up to 53, according to Haley. The new recruits hail from a variety of firms and practice areas: This year alone, its additions include intellectual property attorneys from Pepper Hamilton LLP and Mintz and a litigator from State Street Corp.
“We’ve had a nice ability to attract lawyers from around the city,” Haley said.
That level of growth is reflected in the firm’s recent financials. In 2014, its $298 million in revenue put it outside the 100 highest-grossing law firms in the U.S., according to American Lawyer Media data. In 2018, it grossed more than $400 million across its more than 20 offices, earning it a ranking as No. 87 in the country.
The new address and new names aren’t the only changes coming to Nelson Mullins. Later this month, Haley is stepping down as office managing partner in favor of his colleague, Brian Moore. Haley has been the office’s leader since 2013 and felt a change in leadership would be good for the future of the firm. He plans to return to his practice full-time, although he will hold onto some managerial responsibilities at the firmwide level.
“The turnover’s very helpful in terms of developing and building leadership within the office,” he said. “Just having one person staying there for 10 or 15 years, I think you miss out on opportunities to build future leaders.”
Oxford Properties’ proposed office tower at 125 Lincoln St. in Boston would span 625,000 square feet.
Oxford Properties has kicked off development review, one of the first steps in the city’s approval process, for its first ground-up tower in Boston, a 24-story office on the edge of Boston’s Chinatown neighborhood that will span 625,000 square feet when complete.
Oxford is the real-estate arm of Canadian pension fund OMERS, and has more than two dozen new development projects in the work worldwide. The tower at 125 Lincoln would be Oxford’s first new construction in Boston, outside of its redevelopment work at 500 Boylston/222 Berkeley, 125 Summer St. and other offices.
Mark McGowan, Oxford’s vice president and head of development in Boston, said the company has not yet determined whether to wait for a tenant to lease space prior to construction, or to build on a speculative basis.
Oxford Properties has pitched a 24-story office at 125 Lincoln St. in Boston.
Oxford bought the existing five-story property at 125 Lincoln St. in 2017 for $40 million. The property has some office and above-ground parking, but its ground floor houses both C-Mart Supermarket and Hei La Moon — a grocery store and restaurant that are culturally significant to Boston’s Asian community. McGowan said Oxford recognizes that importance.
“Because those are cultural institutions, we’re really focused on making sure whether there’s a place for them back in the building or a great relocation option. We’re serious about that,” McGowan said in an interview. “For us as a long-term owner and operator, an important piece of the project is making sure that they are all treated well, and we can figure out what the best long-term place for them is. We’re super sensitive to that.”
Does the Amazon effect play into retail vacancy in Boston? We, in short yes. How we shop and what we shop for online has changed and will continue to do so. Retail is still vibrant and strong, but not all retail spaces are created equal. Some historical retails spaces are better suited for office which in part has to do their size and proximity to public transit.
An example of this transformation is the Cambridge Side Galleria Mall in the East Cambridge. The red hot Kendal office and lab market will continue to gobble up under performing assets.
An empty storefront near 560 Washington St.
By Tim Logan GLOBE STAFF APRIL 12, 2019
One of the biggest retail spaces in Downtown Crossing may soon become home to offices.
The Boston Planning & Development Agency on Thursday approved plans by the owner of Lafayette City Center to convert much of its long-empty ground floor into office space, perhaps to house the state agency that handles workers’ compensation claims.
The move by veteran Boston developers The Abbey Group highlights the soft market for large-format retailers as they face mounting online competition. The change also has something to do with the particular quirks of the building, which was built in the 1980s as the inward-facing Lafayette Place Mall before being repositioned as storefronts with office space above.
The proposed change also is raising concerns in some quarters about a block and a half of Washington Street in the busy shopping district being converted to office space.
Much of the building’s ground floor — about 75,000 square feet — has been empty for at least 15 years. The last sizable tenant, an Eddie Bauer outlet store, closed in early 2016. Abbey and its brokers have struggled to fill the space. Among other challenges, the first floor is as much as 7 feet higher than street level in places — a design quirk of the old indoor mall and its underground garage.
“We think of ourselves as creative developers who apply innovative thinking to problems like this,” Abbey chief operating officer David Epstein said. “It simply isn’t feasible” to use the space for retail, he said.
But Abbey has leased more than 500,000 square feet of office space on the floors above street level, mostly to tech companies. When the state began looking for 33,700 square feet to house its Division of Industrial Accidents — which needs to move out of the Government Center Garage ahead of a redevelopment there — Abbey offered up the ground floor.
A spokesman for the state’s real estate agency said it received five proposals for the office, including Lafayette Center. A final decision has not been made, he said.
Workers’ compensation courtrooms may not be the sort of retail and restaurant Downtown Crossing is known for, but it fits with other legal offices around the neighborhood, said Rosemarie Sansone, president of the Downtown Boston Business Improvement District.
“This place has been empty for 20 years,” she said. “They found an unusual and interesting use for it. This is all good.”
Still, the shift comes as several key locations sit empty along Washington Street, from Lafayette Center to the long-shuttered Barnes & Noble (which is now being renovated by a new owner) to a cluster of empty storefronts at Washington and Bromfield streets that have been largely dark since plans to build a skyscraper there stalled in 2016.
Sansone acknowledged the empty buildings but also noted that several restaurants and stores have opened in and around Downtown Crossing in recent years. Building owners and the BID, she said, are aiming to bring in more retailers to cater to residents and workers who fill nearby office towers, including a day care center, pet stores, and more home goods stores. She also said Trader Joe’s is considering opening a grocery store in the neighborhood, though a Trader Joe’s spokeswoman would not confirm that.
Some landlords on Washington Street, Sansone said, are being patient, waiting for the right tenant.
“There have been some deliberate attempts to make sure that whatever comes is going to be successful, that it’s what people want,” she said.
One BPDA board member Thursday asked Epstein about the wisdom of leaving retail space like Lafayette Center vacant for years, especially given the effect on foot traffic for neighboring businesses.
“It’s a form of job destruction,” Carol Downs said. “I don’t really understand why this space was let to stay empty for so long.”
Epstein said the market has shifted away from the larger-format retailers it originally envisioned would lease at Lafayette City Center, and the technical challenges of opening in the building were too great for smaller stores. Filling two-thirds of the long empty storefront with office workers will bring foot traffic and, he hopes, will make it easier to rent the rest of the vacant space.
“We’re excited about the prospect,” Epstein said.
Tim Logan can be reached at tim.logan@globe.com. Follow him on Twitter at @bytimlogan.
Credit: BBJ
What will it look like? That’s the question so many property owners and developers face when first envisioning a renovation, and thanks to Terrence Masson of Building Conversation, we will soon be able to get a much clearer idea. The company will allow architects and others to visualized a proposed building within the context of its surroundings.
“It does that through the camera of an iPad or iPhone which acts as a “window,” on top of which architectural design proposals are overlaid. This technology is known as augmented reality, which offers users a live view of a real-world environment combined with elements that are computer-generated,” according to a Bizjournals.com posting.
“In effect, you get to see and walk around a full-scale hologram of the proposed architecture through the iPad,” said Building Conversation’s CEO Terrence Masson, who founded the company with George Thrush, the director of the School of Architecture at Northeastern University…Masson started working on the technology as part of a Capstone project at Northeastern about three years ago.
You can read the full article on BizJournals.
Credit: Banker&Tradesman
Building trades continue with Brickman of New York acquiring 186 Lincoln Street for just over $300 per square foot.
Banker&Tradesman offered context on the sale, indicating “the 68,526-square-foot multi-tenant office building near South Station is 70 percent leased, with tenants including Roche Diagnostics, Full Contact and Greystone Solutions…The South Station submarket contains 1.3 million square feet of office space in 22 buildings, 85 percent of which is class B product.”
You can read the full B&T article, here.
