The panel included experts from Synergy Investments, ADD Inc., CV Properties, Tishman Speyer, Goulston & Storrs and McGladrey.
This is some of what we heard:
• Sam Schaefer (Tishman) - has seen rent growth in low and mid-rise buildings, but not as much in high-rises.• Frank Litwin (Goulston) - says the cost of construction in Boston is limiting supply.
• Schaefer - political constraints are hindering growth as well; however, tenant growth is good.
• Fred Kramer (ADD Inc.) - tenants are looking for office space in areas favorable to their employees because this will help retain employees in the long run.
• David Greaney (Synergy Investments) - businesses are moving from the suburbs to the downtown area because they’re able to attract better talent downtown.
• Greaney - says urban areas are better for attracting startups or companies that require “younger talent”.
• Dick Galvin (CV Properties) - growth of startups in Boston is in large part due to the proximity to great schools like MIT.
• Greaney - startups have “organic growth” - they begin a lease wanting a small floor plate but three years into the lease they want to move to a 20,000 sf floor plate.
• Litwin - growth in Boston is also coming from expansion of education and medical industry in the region.
• Kramer - new development occurs when a tenant explicitly voices a need.
• Schaefer - building amenities are key in the market. At 125 High Street, Tishman installed a gym and conference center for their tenants.
• Galvin - says buildings need to foster a collaborative work environment, provide sustainability/green initiatives, and accommodate unusual work hours to attract tenants.
• Kramer - amenities in the suburbs are also important, however, the types of amenities needed are different (i.e., bringing in retail and food options at a suburban office park).
• People want to live in downtown Boston but more housing is needed for the middle class.
• Galvin - the city needs to find a way to retain talent from area colleges. For example, Mark Zuckerberg left Boston for San Francisco.
• Greaney - it’s tough to put leases together as companies increasingly want flexibility; for example, a five year lease might not fit into a startup’s business plan.
• Schaefer - finding well-leased assets with good cash flow is very challenging in today’s market.
• Greaney - lending in Boston is very strong right now, this is good for both the landlord and the tenant.
• The price per square foot of Boston office space is still relatively cheap compared to other global cities.
• Greaney - the general profile of a Boston landlord has changed from what it used to be; there are more large institutional players and foreign investors.
