2011 ‘Should Be A Breeze’
Why This Is The Year Greater Boston Will Get Back To Work â€“ Mostly
Welcome to 2011 – the year of the big rebound.
From home sales and office rents to the overall economy, the coming year should see a significant turnaround.
Sure, we will have our share of challenges, with a legion of doom-and-gloomers eager to convince us that any number of disasters await us just around the bend.
But if you have made it this far, surviving the worst downturn in decades, 2011 should be a breeze. We can look forward to further declines in the jobless rate and a steady pickup in hiring, especially here in tech/biotech rich Greater Boston.
And that should work wonders for our battered real estate market, whether we are talking about office tower leases or home sales.
Inside are some big local business stories/trends to keep an eye on as the year unfolds.
Big & Controversial
While it won’t break ground this year, plans will also start to move forward in the Legislature for a $1 billion-plus expansion of the Boston Convention and Exhibition Center. Believe me, in a state where we like to battle over projects large and small, there will be more than enough to fight over here.
Among the flash points – who will pay for a near doubling of the size of the hall and a giant new hotel backers say must accompany it? There’s already angling by project backers to get the hotel, which could be the biggest ever built in the Hub, on the public tab.
If that were not enough, expect a rerun of last year’s high-stakes debate on Beacon Hill over casino gambling. Last year’s proposal fell apart at the 11th hour in a nonsensical spat between House Speaker Robert DeLeo and Gov. Deval Patrick over whether to include racinos, basically racetracks with slot machines. Gambling investors have already staked out their turf and are likely to make a big – and in some cases desperate – push at the State House.
Builders, after years of hardship amid a savage recession, can look ahead to a brighter 2011.
Sure, a major expansion of Boston’s convention center or a casino building boom might be nice. But after falling off a cliff in the fall of 2008, the construction market is poised to come back to life across Greater Boston as 2011 heats up, with or without these big and hotly contested projects.
A range of colleges has announced big building plans, from Northeastern University to the Boston Architectural College. Developers are also dusting off their plans as well, with apartments in and condos out. Keep an eye out for construction cranes at the Prudential Center as Avalon Bay forges ahead with plans for a new rental high-rise.
Tower Developers Get Back To Work
You won’t see much, if any, office construction in downtown Boston in 2011. But you may start to see some developers dust off old plans and begin planning again.
After stabilizing toward the end of 2010, the office market, both in downtown Boston and in the suburbs, should start to slowly tighten over the next 12 months as companies shift back into growth mode. And as the number of empty corporate suites goes down, rents will start to feel some upward pressure again. Expect investors to be on the hunt as well, eager to snap up prime downtown towers and suburban office parks before prices start to skyrocket again.
Signs Of Another Housing Bubble
Look for Greater Boston to buck a downward trend in home prices.
Real estate values are likely to fall again this year – by as much as 10 percent across the country. But Boston area home prices, still up at the end of the fourth quarter over 2009, may defy gravity.
A dearth of new construction during the boom means less unsold inventory to deal with. As foreclosures near their peak over the coming year, the number of options for buyers is likely to start slowly shrinking. So while another housing bubble may seem farfetched now, it maybe less so as we near the end of 2011.
Municipal Finance Meltdown
The troubled finances of cities and towns across the state could prove to be political and economic flashpoints as 2011 develops. The federal stimulus money that saved local governments from savage cuts is now gone, having filled untold numbers of potholes and kept who knows how many firefighters and teachers on the job.
Now, many cities and towns face the harrowing prospect of having to live within their means, even as big declines in commercial and residential real estate values have wiped out billions in taxable value. In addition, many have taken on extra debt through the federally subsidized Build America bond program. With the Republicans now in control in Congress, the subsidy is now set to sunset.
“For most communities, [their revenue] is all real estate taxes,” notes John Lynch, a top Boston real estate lawyer and an expert in municipal taxation. “I think you will be seeing tax increases across the board all across the state.”