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Archive for January, 2011

Is Your Town Or City Tough To Build In? Well Boston Properties Wants To Talk To You

Friday, January 28th, 2011

Developers just love to curse and moan about local officials and their crazing zoning rules.

And let me tell you, especially hated are all the stubborn, NIMBY types so often found on city and town boards here in New England.

But don’t complain to hometown giant Boston Properties. Apparently, the grumpier and more difficult the local officials are to deal with, the better, as far as the company is concerned.

Hard to believe? Well check out Mortimer Zuckerman’s comments to Wall Street analysts earlier this week.

Zuckerman, the media mogul who chairs Boston Properties, noted the company would like to expand into a new market.

That’s significant, since BXP has spent years buying and building towers in New York, Boston and Washington.

But not just any old market. Rather, a major city with “high barriers to entry.” Let me translate: That’s code for hyper demanding local officials and endless red tape of the type that leave most developers threatening to take the next flight out. And of course, little if any land left to build on as well.

Not Boston Properties. The real estate investment trust has made untold millions over the years figuring out how to get permits to build in cities like Boston that routinely chew up and spit out other, less savvy developers.

How can that be good? Well it’s the competition, stupid – or more specifically the lack thereof.

BXP can be confident that its new, Russia Wharf office tower on Fort Point Channel will have to wait years, maybe longer, to face new competition. Over the past decade, BXP has been one of just a handful of developers who have figured out how to get things approved – and built – in Boston.

So if you are interested in recruiting Boston Properties, skip that portfolio highlighting the last big tower or two that was built in your downtown.

Forget the happy talk. Instead, send a box stuffed with all those grand plans submitted by developers that never got built. And for good measure, throw in a few press clippings of all the nasty things builders said about your town as they stomped off in frustration.

Commercial Brokers Busier - Even As Tenants Stay In Place

Friday, January 21st, 2011

Any business is good business for hard-hit commercial brokers. It has been a lean couple of years.

Chat with a broker and you are likely to find some cautious optimism.

But it’s not based on hot rumors of blockbuster office space moves. Rather, it’s the more pedestrian, lease renewal deals that are keeping our local commercial real estate firms humming right now.

Basically, companies are realizing they have the leverage to negotiate a killer deal without going anywhere. So instead of hitting the market, they are renewing their current leases and locking in great rents for years to come, contends CresaPartners Joe Sciolla, in the firm’s latest market report.

In fact, looking ahead into 2011, CresaPartners predicts as many as 75 percent of Boston area tenants will stay put and restructure their current leases.

Not all that exciting, but it’s the kind of business that pays the bills.

Glimmer Of Hope For Landmark Roxbury Development?

Friday, January 21st, 2011

There has been a lot of hype over the years about the potential redevelopment of Parcel 3, a large tract of vacant land off Tremont Street.

But so far there has been little action, though a recent announcement by City Hall does raise a small glimmer of hope.

For years, neighborhood activists and leaders have campaigned to transform the empty eight acre lot near Boston’s police headquarters into a commercial and arts hub for the Roxbury area.

After more than a decade of talk, it looked like the Boston Redevelopment Authority was poised to finally get rear in gear on this key project back in 2005/2006 when all things real estate were hot.

Instead, the typical byzantine city/neighborhood selection process saw one group of local businessmen get the deal, only to have it revoked in favor of a local nonprofit, led by a prominent neighborhood artist, with plans for a museum and retail and commercial development clustered around.

The new group – Elma Lewis Partners – then struggled to line up financing for its $300 million-plus Ruggles Place.

So it convinced City Hall to extend its deal for 18 months back in 2009.

OK, well now that grace period is over. So city officials have given the would-be nonprofit developers another 18 months to work with.

Sounds like the same old, same old of pushing a hard decision down the road, but maybe not.

A local developer, Feldco Development Corp., has joined the mix.

And, as we head into 2011, the economy is finally starting to brighten again.

A groundbreaking would be sweet, but we are likely still a few years out.

Back Bay, Route 128 Emerging As Greater Boston’s Hottest Office Markets

Friday, January 7th, 2011

That was one of my takeaways from Jones Lang LaSalle’s annual market overview. The food wasn’t so bad either.

The briefings, which date back to the old Spaulding & Slye days, gives reporters and business writers a chance to chat it up over lunch with some of the top market experts and brokers in Boston.

Jones Lang’s numbers point to a market that began to come back to life in 2010 and for which better days are ahead as we move into 2011.

Some key points:

  • The Rt. 128/Mass Pike market saw nearly 1 million square feet in positive absorption in 2010, with fast-growing tech and biotech firms helping drive growth. While overall vacancy is still high – 20 percent – no one else came close.
  • Well, except for the Back Bay, which saw financial services firms and other companies gobble up nearly 300,000 square feet of empty space. Available space – just around 10 percent.
  • Sorry Financial District, but you are definitely not hot, with more than 200,000 square feet of additional empty office space having hit the market in 2010. Vacancy is 20 percent.
  • With the local economy growing again, the Bay State is on track to add more than 81,000 office jobs over the next five years. By the end of 2012, we will have regained the office jobs we lost during the Great Recession – and then some.

Awesome! Higher Taxes, Fees And More Government On The Way For Boston’s Office Market

Friday, January 7th, 2011

Now that should be enough to spoil your lunch, especially if you own or lease space in downtown Boston.

But sadly, just as the commercial real estate industry starts to climb out of a savage downturn, along comes City Hall rattling a tin cup, looking for cash.

Boston’s first business improvement district will kick into gear this spring, covering Downtown Crossing and a rich little slice of the Financial District, as well as extending out to the borders of the Theater District and Chinatown as well.

Overseen by local building owners, the new BID will take in $3 million to $4 million a year to pay for everything from tidier streets to concerts and flower pots.

However, it comes atop a not insubstantial jump in Boston’s commercial tax rate as City Hall scraps for cash after a tough downturn and insatiable budget demands.

But if you think this is a one-time experiment to bail out struggling Downtown Crossing, think again.

Other civic and business groups are researching their own potential BIDs, from North Station to Chinatown, according to Rosemarie Sansone, president of the Downtown Crossing Partnership which helped launch the new Dowtown Boston BID.

Of course, there can be good reasons for BIDs. One that was more narrowly targeted on Downtown Crossing, instead of expanding into other neighborhoods, might even win me over.

But a city crisscrossed by BIDs, each with its own petty government/corporate fiefdom sucking millions fees out of the private sector? That definitely is over the top.

If nothing else, it takes the pressure off City Hall to mind its own finances – and find more efficient ways to provide key services.