Make $1B? Leventhal Tells All
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|We snapped Beacon Capital Partners' Alan Leventhal giving away dozens of family secrets yesterday during NAIOP's annual meeting at the Seaport Hotel. OK, not really, but he did advise that during trying times it's important to take the long view. In the ?70s, Beacon Properties purchased land around Post Office Square for $100/SF. Today, it's valued at about $700/SF. Time takes care of quality real estate. During the last real estate recession in the '90s, Alan recalled predictions that technology would blow Boston out of the water. Instead, it's helped build a foundation of intellectual capital that supports the region?s growth. Today, he says, the state is creating jobs and producing 20% more scientists than it did in ?85. The big concern: state and municipal budget shortfalls.|
|Paradigm Properties' CEO Kevin McCall (also NAIOP's 2010 chairman) surprised Alan with some impossible questions that he easily fielded. 5-year Treasuries in two years: 4%. In five years: 4%. When will Class A office rents return to $60/SF? Some already have and others will return to peak pricing within five years. The next new 500k SF downtown office will get into construction in three years. And a Super Bowl prediction: That goes without saying. Regarding TARP: Alan says it saved the financial system and made money.|
|We snapped Charles River Realty president (and incoming NAIOP president) Brain Kavoogian, who says the fate of CRE is tied to the economy. Massachusetts is doing better than many states, but the situation is still tenuous. Alan agrees there's an aura of unsettling uncertainty but says we're on the right track, moving slowly. In response to worry about Massachusetts job growth, Alan tells us that the Commonwealth only needs to have office-using job growth of 1.3% to 1.4% to return to ?08 employment levels. The next one to three years may be trying, but if there aren't many new offices built, we'll return to peak job and rent levels in four to five years.|