Like many cities today, Boston has a shortage of affordable housing. Along with that, the Boston population is expanding significantly faster than housing can be built. What will this mean Bostantonians long term?

Solutions for limited space, reducing project expenses and expediting the preconstruction process all come down to the initial design phase.

Design leaders are approaching policy, incorporating technology to expedite permitting and utilizing space to build smaller units at volume more than every.

Join Bisnow May 26 for a deep dive into how leaders and designers plan to usher in a new and more affordable era through design in Boston CRE.

There will be plenty of time for questions.

If you can’t attend live, register. We will be sending the recording to all registrants.

During this webinar we will discuss:

–What innovative design solutions can reduce housing expenses?

–How do high-density housing models present new opportunities for housing expenses in Boston today?

–How changes in design policy can facilitate new support systems in the inner city?

–What are new ways to approach the limitations of land and build space in downtown Boston?

–How technology is being used to change the design process and eliminate delays that increase development cost?

Register HERE.

Boston office rents will be affected, but not in the near term. According to CoStar Group, the economic downturn of 2008 started the gradual drop in rents with the bottom of the market occurring in 2010.

By Tim Logan | Boston Globe | May 6, 2020

Rents for office space in downtown Boston could fall sharply this year as companies lay off employees and reassess how and where they work amid the coronavirus outbreak, according to a report out Wednesday.

Estimates from Moody’s Analytics project a 12 percent drop in office rents in the city, one of the five steepest declines in the country, as the impact of the pandemic sweeps through the economy, and particularly through dense downtown business districts like Boston’s.

It would mark the end of a long run-up in rents and demand for office space in central Boston, though the study’s author, Victor Canalog, noted a 12 percent drop would be softer than the crashes of the early 1990s and 2001, and about what the region endured amid the broad economic collapse in 2008 and 2009.

In that context — and given the cratering economy and job market — things could look a lot worse, he said.

“This is the world we live in right now,” said Canalog, who is head of commercial real estate economics at Moody’s. “If we say ‘It’s going to be about as bad as 2008 and 2009,’ that’s actually a good thing.”

But Canalog’s report points to some troubling longer-term trends for cities such as Boston, which thrive on their busy business districts. If employers embrace work-from-home technology, they may ultimately decide they need less office space in general. If, at the same time, they decide they need to spread out workers who do come into the office, it may make sense to relocate to suburban office parks where rents are typically far lower.

“If it’s true that we’re going to reduce footprint, then there are going to be winners and losers,” Canalog said. “A company might not move from Boston to North Dakota. There are good reasons they want to be near Boston. But they might move out of downtown Boston to someplace 20 miles away, where they can get many of the same things.”

But those are longer-term decisions. At the moment, seven weeks into a public health emergency that has shut down big swaths of the region’s economy, the impact on Boston’s office market has been muted.

Few new leases have been signed, in part due to the complications of touring and inspecting space, and also because of the broader economic uncertainty. Several large deals in downtown office towers reportedly nearing completion have been put on hold, or scuttled, while companies reassess the market.

But no companies have publicly backed away from signed deals to move in the next couple of years. Some tenants, particularly in tech and life sciences, continue to look for space. And developers with large towers under construction say they still plan to deliver the buildings, fully leased, if perhaps a bit delayed by construction shutdowns.

So far, building owners have been reluctant to lower rents to lure tenants, said Mark Hickey, director of market analytics in the Boston office of Costar, a real estate data firm. Instead they’re offering more concessions or longer-term leases.

But it appears they could face competition from a growing inventory of sublease space, particularly from tech companies that in recent years gobbled up large blocks of office space for future growth, which they may no longer need and may put out for lease at a discount. The real estate firm Colliers estimates there was 1.6 million square feet of sublease space on the market at the end of April, more than Boston had during the real estate crash of 2009.

Even aside from questions of supply and demand, this experience is likely to change how companies view and use office space, said Aaron Jodka, managing director of research at the Boston office of the real estate firm Colliers. The question is how.

“Do tenants need more space because of distancing requirements? Or less space, because more people are working from home?” he said. “I don’t know. It’s too soon to tell.”

By Dees Stribling | Bisnow | May 13, 2020

“What keeps you up at night?” a Bisnow webinar audience member asked Ron Druker, Boston commercial real estate luminary and president of The Druker Co.

“Right now, my dog keeps me up at night,” Druker said. “The answer is — I can only control what I can control. Our real estate is good real estate, and even in the depths of all the other recessions, we’ve come back. We’ll come back from this.”

Bisnow’s Boston webinar, A Discussion With Druker Co. President Ron Druker, covered a lot of ground on Tuesday: occupancy and rent collections at the company’s varied portfolio, the history of U.S. economic dislocations going back to World War I, the 1918 Spanish Flu and what landlords should do — and should not do — to meet post-pandemic standards, and his thoughts on the crisis.

“It’s important that we recognize everyone that’s putting themselves on the line, whether it’s truck drivers, UPS, FedEx, nurses, doctors — all the people who are up front,” Druker said. “I think we’re going to be at this for a while.”

The Druker family has been part of Boston real estate for more than a century. Ron Druker’s grandfather, John, got the Drukers into the business nearly 120 years ago, developing the Hotel Kenmore and the Braemore Hotel in Kenmore Square. His son Bertram followed, building the Colonnade Hotel on Huntington Avenue and affordable housing in various parts of Massachusetts.

Ron Druker has carried on the family development business. In the 1980s, his Heritage on the Garden condos were an important part of Back Bay’s resurgence, and in the 2000s, the Atelier 505 development was part of the South End’s revitalization. Most recently, Druker Co.’s 350 Boylston development received approval from the Boston Planning & Development Agency.

Druker, along with co-moderator Wil Catlin of Boston Realty Advisors, spoke about the day some years ago when a startup with big plans wanted to lease an entire building in the Druker Co. portfolio.

The deal gave Druker pause. For one thing, the tenant improvement allowance was about $200/SF, with $70/SF for the lobby and $130/SF for the rest of the space. As an older building, Druker Co. would have also had to spend money on the HVAC system. Those expenses weren’t the worst of it, however. Druker was worried about the company’s long-term staying power.

“I didn’t like the credit, and as it turns out, I’d rather be lucky than good, because they are where they are now,” Druker said.

He nixed the deal. The would-be tenant: WeWork. “They create single-purpose space,” Druker said. “So I guess we were lucky in looking at it the way we did at the time.”

In a less real estate-related anecdote, Druker also mentioned the time he met songwriter and record producer Mark Ronson at a small restaurant in Tokyo, and another time he talked with Keith Richards for two-and-a-half hours at a resort bar in Turks and Caicos. “Two old grandfathers sat and talked about life,” Druker said.

Druker said that in his company’s portfolio, rent payment during the pandemic has varied according to property type. Residential payments have been about 99%, while office payments are in the mid-90% range. Retail, on the other hand, has been at about 50%.

“We’re working with our retail tenants,” he said. “There are smaller retail tenants, some of them real mom-and-pop operations who pay rent predicated on how they did the month before, and we’re working with them. There are other more nationals, and we’re working with them as well.”

With some of the smaller tenants, Druker Co. has specifically tried to help them avail themselves of some of the public subsidies on offer.

“Because we’re not highly leveraged, our portfolio is in good shape, but it’s work,” Druker said. “I’m spending 12 hours a day at my desk. Most of the people I talk to are working harder [than before].”

Regarding the 240K SF project at 350 Boylston, Druker said that his company is making proposals via Zoom, and so far has received two requests for proposals that the company has responded to.

“There’s interest in the building,” Druker said. “The advantage that we have now is that we’re taking steps to make the building more hygienic.”

With only one to four tenants, he said, 350 Boylston will be relatively simple to enter and leave, and that ought to be an advantage for the building as well, he said.

On the other hand, it is possible to go overboard with building modifications in response to the pandemic.

“The protocols relative to cleanliness and social distancing … make sense today,” Druker said. “But to make major physical alterations to a building for something that … will be short term, we don’t believe makes sense.”