Why Investors Are Flocking To Boston
At the Boston State of the Market event in September, speakers highlighted the strength of Boston’s real estate market. We chatted with real estate investment firm Bentall Kennedy VP Phil Down about what’s spurring investor interest here in Beantown, and why it’s unlikely to taper any time soon.
Bisnow: What’s driving real estate investment in the Boston area?
Phil: Boston is a hotbed for innovation, well-positioned for sustained growth in the shift to a digital economy. With strong economic fundamentals, and a diverse, educated population offering continuous opportunities for employers to attract talented workers, we are optimistic about the market for the long term.
We see a lot of momentum in the Boston market, with strong prospects for occupancy and rent growth. Right now the city has one of the lowest office vacancy rates among major US markets. Boston’s 11.9% office vacancy rate in Q3 is well below the national average of 16%.
Bisnow: With so much capital chasing deals, how do you maintain your competitive edge in Boston?
Phil: Our willingness and ability to uncover value through development, redevelopment and asset repositioning opens up the market for us, allowing us to pursue properties with high potential for growth and sustainability. That readiness, combined with a strong commitment to the market and local relationships, gives us an advantage.
As fiduciaries for our clients, it’s important to us to always make investments where we can make a difference and achieve above-market returns, while following our responsible investing approach.
Bisnow: Can you give us an example of a time when development experience proved advantageous?
Phil: In 2015, we invested in a two-story office property above a parking garage in the Seaport District because we saw the opportunity to redevelop the building in this growing, innovation-driven market.
We’re expanding the building to four stories and updating it with amenities that will attract high-growth companies that want to be surrounded by talent and emerging ideas.
For a tenant seeking 50k or 100k SF, the property offers the ability for building name recognition, a truly unique space and skyline views in a work/live/play market.
Bisnow: Do you focus on office exclusively, or do you have other asset classes in the mix?
Phil: We’re also interested and involved in multifamily, medical office, parking garages and mixed-use opportunities, as our other recent investments in Boston show.
The medical office building market is hot right now and Bentall Kennedy has been investing in that space for some time. We acquired a medical office portfolio in the South End adjacent to the Boston Medical Center in 2015 that includes two fully leased medical office buildings and two acres of land for potential multifamily development.
Bisnow: On to more important matters: When not working in Boston what do you do to unwind?
Phil: I have two daughters, two years old and seven months, so you could say things are a little hectic. Watching Frozen on repeat has become the new Saturday.
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