Boston's Biggest CRE Stories Of 2017
No matter the Bisnow event in 2017, chatter inevitably pivoted to what economic inning Boston developers felt the city was playing in this real estate cycle. Those conversations wound up with the same verdict: A national crash is inevitable, but Boston’s strong market fundamentals keep it in a better postion than other cities. As we move into what is expected to be a strong 2018, Bisnow reflects on the top stories of the year from the Hub of the Universe.
10. Rhode Island Renaissance
The leadership in the Ocean State is hoping to take it from worst to first in terms of business friendliness, and it is off to a roaring start.
Gov. Gina Raimondo’s administration touted at Bisnow’s The Future of Providence and Rhode Island event in October how it had netted 17 corporate relocation or expansion deals in as many months, including wellness technology company Virgin Pulse and a Johnson & Johnson health technology center. Although the state lost the bid for General Electric’s relocated headquarters to Boston, it still landed GE Digital as a consolation prize.
The state’s 4.3% unemployment rate was also lower than the national average, three years after it was the highest in the country. But this does not mean the hard work is over. The lights remain off in the Superman Building, Providence’s tallest tower. Former Providence Mayor and Paolino Properties Managing Partner Joseph Paolino Jr. told Bisnow in September the big thing his city needed was to find a tenant for the building. Reports emerged in early December that Paolino’s company was partnering on a proposal to tear it down in favor of a new Hasbro headquarters skyscraper.
9. Edison Power Plant Redevelopment
A hulking, salmon-colored power plant in South Boston could give way to 2M SF of mixed-use development at the gateway into Southie from the Seaport.
Redgate and Hilco Global revealed in May how they are partnering on a proposal that could take 10 to 15 years to bring residences, retail, a boutique hotel and a food hall to the Edison site.
The proposal’s location on the neighborhood’s western edge left some to question its impact on the area’s notorious traffic, but there is always the chance of a nearby gondola.
8. Cambridge Becomes Lab-Dominant
Greater Boston’s life science cluster ranks top in the nation by JLL, and it is easy to see why.
The region gets over $2B each year in National Institutes of Health funding, and it is most evident in Cambridge, which became a lab-dominant market in Q2. The city’s lab inventory has grown by 94% since 2000, and it does not seem to be enough. Asking rents in East Cambridge hit the $80s/SF in Q3. Relief is far in the distance, as DivcoWest’s Cambridge Crossing and MIT’s Volpe redevelopment are years away from delivery.
7. Allston/Brighton Rise As Boston’s Life Science Alternative
Life science and tech companies looking for room to grow or lower-cost alternatives to space-constrained, premium-priced Kendall Square have begun to venture across the river into Boston.
Harvard is at work on continuing its Allston expansion, which many see as the city’s next innovation and technology hub. NB Development’s Boston Landing in Brighton has also emerged as a sports-influenced life science and tech center. A series of deals over the fall will bring Bose and Mass Innovation Labs to the same development as the Boston Celtics and Bruins.
6. Millennium Tower 2.0 Picks Up Steam
Millennium Partners was heralded as the savior of Downtown Crossing when it took over a hole left by Vornado in 2013 and turned it into the luxury condo Millennium Tower.
The developer did not get the same red carpet treatment when it made a play for a nearby city eyesore. Millennium won a bidding process in 2016 to transform a city-owned parking garage in Winthrop Square into a 775-foot, mixed-use tower. It agreed to pay $153M to the city for the garage, but its proposal ran into swift opposition.
While the legal battle over its leaning San Francisco tower was heating up on the other side of the country, Millennium faced opposition in Boston from the FAA, which led to the proposal shrinking to a Logan Airport-friendly 725 feet.
Park advocates also turned out in droves to zoning hearings to protest new shadow they claimed the tower would cast on Boston Common and the Boston Public Garden. Deals were struck to provide funding to parks and curb future shadow-casting, high-rise development. Demolition work has since begun on the parking garage for the new tower.
5. G.E. Breaks Ground On Boston HQ ... And Slows It Down
GE announced in early 2016 it was leaving its longtime home in Fairfield, Connecticut, for Boston. The company broke ground in May on its new $200M headquarters on the Fort Point Channel waterfront with the intention of completing it in 2019.
GE Vice President of Boston Development and Operations Ann Klee said the project was “not your grandmother’s headquarters,” and then-CEO Jeff Immelt said his company was going to play a vital role in a Boston renaissance on the global level.
Immelt announced a month after the groundbreaking that he would step down from the company at the end of 2017. He ended up leaving two months early in October, and new CEO John Flannery has been on a mission to cut costs, including ambitious real estate projects.
Klee sent a memo to Boston employees in August that headquarters construction would be broken up into two phases, with the full project to be completed by 2021.
4. Women On The Rise In Construction
With Boston’s growing backlog of projects and shortage of construction workers, some are beginning to realize the solution to the labor problem is female.
Women increasingly account for project hours at some of Boston’s biggest construction sites, including the $2.4B Wynn Boston Harbor in Everett and at projects on several University of Massachusetts campuses.
Groups like the Policy Group on Tradeswomen’s Issues are pushing for women to account for 20% of the state’s construction workforce by 2020.
3. Boston Fights For Amazon HQ2
Amazon announced in September it was looking for a new city to house its second headquarters, a project expected to bring 50,000 employees to a $5B, 8M SF complex.
The bidding process turned corporate wooing into a civic bloodbath, as cities and states around the country offered Amazon everything from towering cacti to private island naming rights to $7B in incentives. While city leaders have stressed they are not keen on offering financial incentives for HQ2, Boston has still made the cut on most projected short lists (the official one is expected to be announced in early 2018).
The city pitched the soon-to-close Suffolk Downs in East Boston as its official site selection for HQ2. While some were not keen on the property due to its distance from tech hubs like Kendall Square and the Seaport, leaders emphasized its Blue Line transit connectivity and it being the only area with open land under a single owner (HYM Development Group) in the urban core.
Other sites around the city, including a combination of properties in the Seaport with connectivity to South Station, are also being considered.
2. Battling Construction’s Silent Killer
While most national construction companies did not want to speak to Bisnow in its reporting on the opioid epidemic and the impact it has on their industry, Boston-based Suffolk CEO John Fish said his company was committed to finding a solution by doubling down on its Roxbury headquarters mere blocks from the unfortunately named “Methadone Mile.”
Fish and Boston-area union leaders said changing the stigma is the first step in tackling the disease, but they were among the few to admit there was a problem that needed to be addressed. Officials from 17 construction companies and workers at 27 construction sites nationwide declined to speak to Bisnow about the deadly matter.
1. Smashing The Lavender Ceiling
CRE is an industry of many voices, but it can sometimes feel as though only one type gets heard.
Bisnow profiled 12 LGBT leaders in CRE over the summer, in what is widely seen as an industry first, to hear their stories of struggle, outreach and acceptance. While reader feedback to the story was overwhelmingly positive and those profiled recognized how far the industry has come, Federal Realty Investment Trust’s Bryan Furze was among those who still see plenty of work to be done.
“Women certainly have an issue getting paid 78 cents on the dollar, but for many LGBT people it is zero cents on the dollar, because it becomes a question of whether or not you can even get hired in the first place,” he said.
