News
Good Morning, Boston: Bisnow Here
October 4, 2010
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| We thank you for welcoming us so warmly. At our premiere Bisnow Breakfast & Schmooze Thursday morning, we were humbled at the attendance of 1,000. But we know the reason, of course: Two amazing panels. And presumably the reputation of the Marriott Copley Place for good coffee and pastries. Parking, not so much. |
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| Our first panel featured Equity Office's Andrew Maher and National Development's Tom Alperin with moderator Goulston & Storrs? Doug Husid. Andrew says the market is at or past bottom, with tenants making decisions and expanding for the first time in 24 months. Tom agrees but notes that tenants are tough negotiators. He also says that the capital markets may be ?ahead of demand.? He expects real rent growth when there's ?robust job growth.? But given the strength of the LMA, Tom says he expects to ?start construction soon? on a 450k SF project next to the Joslin. Meanwhile, Andrew says despite the challenge of ample vacant low- rise space, he's cautiously optimistic. |
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| We snapped Boston Properties Bryan Koop and Normandy Real Estate Partners' Justin Krebs, who are parties to the nation's largest deal so far this year, the agreement to sell the Hancock Tower for $930M, (see above). Justin says that Boston—along with DC and the West Coast— are ?economies that have definitely come back.? Also, Justin says among private equity, he senses ?a need to invest capital.? As a public REIT, Boston Properties is obviously finding investment opportunities with agreements to purchases the Hancock and Bay Colony Corporate Center for $185M announced about a week apart. As a landlord, he finds this spring?s six-year record in tours ?really encouraging.? Companies here don't have much ?overhang space? and others want to move in to ?pursue talent.? |
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| On the second panel, we snapped Holliday Fenoglio Fowler?s John Fowler and Cushman & Wakefield Massachusetts? Rob Griffin. Rob says that Harvard?s stalled Allston campus project will get developed eventually and ?long term will look like a great assemblage.? In Back Bay, Rob says, ?I think rents will run.?Healthcare is a ?zero vacancy market,? Cambridge Class A office vacancy is low but watch the suburbs for sales at 30 cents on the dollar. For strong returns, John says focus on multifamily rentals and retail. On the other hand, he adds, ?office is a ways from making sense? for new construction unless it's pre-leased, biomedical, or healthcare. He agrees with Tom that capital markets may be a little ahead of themselves but are in good shape. Debt is being recapitalized in ?lots of deals getting done quietly.? |
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| Also, on the second panel were McCall & Almy?s Bill McCall and CBRE's Andrew Hoar. Bill offered some encouragement. With 30M SF of leases rolling over annually, there's always opportunity to realize good transaction fees. But he is ?nervous? about the slow growth in jobs and the overall economy. In healthcare, he says, ?Obamacare has [the hospitals] scared to death.? He says hospitals will take in less revenue and therefore may have layoffs. He also expects a ?big drop? in office rents. Andrew expects big transactions in the next few years and says job growth may be stronger than expected. ?We've all been doing with less? for awhile. He expects tenants to come to Boston from Cambridge and the inner suburbs for the lifestyle and because ?the price is right.? |
