Boston CRE Players Holding Fire On Wu's Challenges To Development-Friendly City Hall
Players in Boston’s thriving commercial real estate industry say they are withholding judgment on Boston Mayor Michelle Wu’s administration for now, expressing cautious optimism as they wait to see how the progressive Wu’s challenges to the development-friendly City Hall unfold.
Wu was sworn in Tuesday during a ceremony inside Boston City Hall’s City Council chamber attended by local, state and federal officials. She hits the ground running after an unusually quick two-week transition from her election victory, a timeline kicked off by former Mayor Martin Walsh’s departure to Washington, D.C., in March. Wu campaigned on lofty goals, including abolishing the Boston Planning and Development Agency and boosting affordable housing efforts, drawing mixed reactions from Boston’s CRE members, who enjoyed a building boom under Walsh's pro-development legacy.
“Developers will work with her, I’m sure, promise what they can do, but once they see any new proposed regulations to come out of City Hall, we’ll see what their attitude is,” said Norm Stembridge, a former banker and co-chair of the BPDA’s Roxbury Strategic Master Plan Oversight Committee who supported two mayoral candidates other than Wu in the race.
The CRE industry needs to support Wu despite prior allegiance to or against her because of the industry’s close relationship to City Hall, industry players told Bisnow. An anti-business sentiment toward Wu has softened since her election, and the mayor has put development issues behind her first priority, solving a homelessness and drug crisis at the Massachusetts Avenue and Melnea Cass Boulevard intersection known as Mass and Cass.
JLL Managing Director Barry Hynes of the firm’s downtown Boston leasing team said he didn’t support Wu during the campaign but wished her the best because of their intertwined relationship.
“I’m certainly supporting all her efforts because we need it, the city needs her attention,” he said. “Real estate, they’re supporting Michelle and they’re wishing her the best. It’s a partnership with City Hall.”
Developers during the mayoral race gave more than $38K to mayoral runner-up and City Councilor at large Annissa Essaibi George, who ran on a moderate platform, while Wu raised less than half that amount from the same sources, a New York Times analysis found. But developers, including executives from life sciences firms investing in Boston, did donate to the Wu campaign in the election’s final month, according to campaign finance records.
Wu took aim directly at developers in the spring, pledging early in her campaign to raise linkage fees on developers, the Boston Business Journal reported. The fees on new projects 100K SF and larger were last raised in March by 42% to $15.39 per SF in one of the final acts of Walsh’s development-friendly administration.
The new mayor continues to call for a revitalization of shuttered downtown storefronts and office buildings amid the coronavirus pandemic, emphasizing the need for childcare to entice remote workers. Wu has called for directing $200M of an incoming $500M in federal coronavirus aid to affordable housing preservation and creation and, in a more controversial stance, advocated for rent control, currently banned statewide.
Boston-area multifamily developers took issue with the rent control stance while speaking at a Bisnow event shortly after her election earlier this month. Wu, a proponent of a Boston Green New Deal, takes over City Hall months after former acting Mayor Kim Janey signed into law an updated building emissions reduction ordinance to push buildings 20K SF and larger to achieve carbon neutrality by 2050.
WinnCos. CEO Gilbert Winn questioned aloud how the carbon-reducing goals aligned with multifamily development.
“How in the world are we going to invest in the buildings and not raise rents?” Winn said regarding carbon-reducing building upgrades. “On existing buildings, I do think it’ll take some subsidy, one way or another.”
Mount Vernon Co. founder and Chairman Bruce Percelay said he wasn’t worried about rent control because Gov. Charlie Baker has voiced opposition to changing the law, and Percelay emphasized Boston’s heavy reliance on property tax revenue, which accounts for approximately 73% of the city’s annual revenue in fiscal year 2022.
“You don’t want to kill the goose that lays the golden egg,” Percelay said at the event. “If you kill the landlords, you kill the revenue sources.”
Experts were upbeat about Wu’s goal to increase equity in the development process, which so far has focused on updating decades-old zoning to align more closely with community needs for housing, open space and transportation.
Developer Richard Taylor, who is working with more than two dozen minority contractors on his Nubian Square Ascends project in Roxbury, said he was hopeful Wu would increase development inclusion through a new Article 80 BPDA development review process for private projects larger than 50K SF. Taylor, in a recent Boston Globe op-ed, wrote that policymakers could employ strategies like reserving small, low-rent space for diverse retail or keeping linkage investments for housing directly near the new development.
“In order for DEI in real estate to be transformative, it must move beyond the public sector to include all large private projects as well,” Taylor said. “I think Mayor Wu has an opportunity to actualize that change.”
