Ryan Enright
Managing Director, JLL
Age: 47
Industry experience: 22 years
Ryan Enright has been active in Boston commercial real estate since 1997, and during that time he’s brokered more than 800 transactions in the core downtown neighborhoods. But he’s never seen a growth cycle with staying power like the current one when it comes to steady demand for workplace expansions, leading to the emergence of new class A office clusters. Enright joined JLL Boston’s downtown leasing team nearly five years ago, after 17 years representing Equity Office Properties’ Boston portfolio.
Q: After your role at a big landlord in Equity Office, how has your role changed at an outside brokerage?
A: I spent 17 years on the principal side working for Equity when they were a big public company, and I stayed with them when they were acquired by Blackstone in 2007. So that was interesting going from a public REIT to private equity ownership. When Blackstone took over, their goal was to enhance the buildings and ultimately sell the assets. They had a 10-year fund they were in and I stayed with them all the way through 2014, and they started to sell the assets. So, I took the opportunity to join JLL. They had leased a bunch of the buildings for us and we knew them well.
The biggest difference working for an REIT was it was all about cash flow and retention and keeping your tenants happy and in the buildings. Their goal was the highest level of customer service, and they didn’t need to get every last dollar. The private equity model was driven more by creating value with the asset. If we enhance a lobby or do an amenity center, maybe we’re we might give a little bit more free rent away to get that higher rent. At the end of the day, we’re going to sell it, so we’re going to get a higher valuation.
Q: How does the tightness in the Boston office market affect length of leases being negotiated today?
A: One of the unique things we’re seeing in Boston that’s evolved in the last few years, is the WeWork and coworking scene. A lot of companies are looking for flexibility. You’re seeing a lot of early and mid-stage companies that are growing at such a fast clip that they’re hesitant to go sign these big long leases.
I compare it to the dotcom years, where companies were showing up with laptops and saying, “We’re going to take a block of 70,000 square feet and we think we’re going to be this size within two years.” A lot of that didn’t happen, and the market ended up with a ton of sublease space. Companies have learned, and investors are smarter. They’re saying, “Let’s grow smart and take a shorter term.”
That’s where you’re seeing the coworking phenomenon, because companies take on space at a much more measured clip and they have the flexibility to give that space back when the market changes. The more traditional companies are still looking for the five- and 10-year terms, but the younger companies are looking for three to five years. A lot of times, the longer term is needed for significant capital to renovate or enhance their space.
Q: How far in advance are tenants signing renewals?
A: I think it depends on where companies are in their business, because the market is really tightening and the fact that there’s so few options as a tenant of size, you almost have to get out sooner. There may not be options left. There’s new development coming, but it’s a few years away. There’s this pinch point between now and 2022. If you need 100,000 square feet, you’re going to be competing with other local tenants, never mind the tenants coming from out of the market.
That’s been the biggest game-changer in Boston over the last three to five years. It all started when GE made their announcement, and then the search for the Amazon headquarters. That shined a light on the city and all that Boston has to offer. We represent companies and investors all over the world, and all of a sudden, we’re getting calls, “What’s going on in Boston?”
Q: So, that means owners of properties like 601 Congress St. have a lot of leverage for the few big blocks that offer immediate availability?
A: We’re starting to hear they’re finally starting to get some activity over there. It was just that, to a degree, people were trying to get comfortable with the location. You’re seeing this in many neighborhoods all over the city. The Innovation and Design Building, people would say, “We’re not going all the way out to Drydock Avenue.” We’re done a significant amount of leasing with Reebok, America’s Test Kitchen, all coming from out-of-market. What it came down to is they need to be in an amenities area and space they can grow into.
Another neighborhood where we’re seeing the exact same thing is in the South End. You already have an established cluster of technology and medical and life science there. Boston was typically the Financial District, Back Bay and the Seaport. Never have I seen tenants willing to look at all three, and now they’re saying, “Where else can we go?”
The reason you’re seeing other markets become of interest is if you need size and scale, the last thing you want to do is wedge yourself into a tower and not have room to grow. In some of these new developments, you have the ability to almost develop your own urban campus and you can take down space you’re comfortable with.
Q: Any news on The Abbey Group’s Exchange South End development construction?
A: They’re beginning work this fall. It’s a two-year build and 1.6 million square feet in four separate buildings. The first building we’re going with, building B, is going to be 437,000 square feet. It’s lab with 18-foot heights and 12 floors with outdoor terraces. We’re excited about it and it’s going to be a great opportunity to create a presence and make a statement in the South End.
Enright’s Five Favorite Marathons
- Boston Marathon
- New York City Marathon
- Berlin Marathon
- Chicago Marathon
- Lake Placid Marathon
