NAI Hunneman

From the Research Desk – CoStar State of the Office Market Recap

By Liz Berthelette – Director of Research

Last week CoStar Portfolio Analytics hosted a presentation on the State of the Office Market. Their commentary highlighted trends in both the local and national office markets. Below are 5 key takeaways from the event:

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  1. Boston remains relatively healthy. Expectations are for another two years of expansion before a true recession hits the market.
  1. Vacancy compression in the Boston office market is likely over. Rates are expected to flat line over the next 2-3 years and begin to tick up in 2020 or 2021. This shift in fundamentals will be driven by what some are calling a “demographic cliff.” With the Baby Boomers’ peak year of retirement expected to hit over the next five years, Boston’s working-age population will decelerate and impede office demand.
  1. The flight to quality has been much stronger this cycle. At the metro level, office demand has been concentrated in the Class A market. Despite rising rents, value tenants haven’t been shifting back to Class B assets as in previous cycles.
  1. Rent growth in urban areas will outperform in the near term. While urban landlords will be able push through above-average gains during the first half of the five-year outlook, growth is expected to match the suburban markets on the back end of the forecast.
  1. Investors chasing yield will shift toward suburban assets. Office properties in urban Boston have gotten very pricey. With such low cap rates and a deceleration of rent growth on the horizon, suburban assets (particularly in prime locations like Waltham) might be a better bet over the next 5 years.

Though overall sentiment remained positive for the near term outlook, CoStar’s market experts believe that 2015 was likely the top of the cycle.

From The Research Desk – Weekly CRE Blog Roundup – 2.13.17

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  1. Employer Confidence Rises for 5th Consecutive Month – Confidence among Massachusetts employers rose for the fifth consecutive month during January despite a marked slowdown in economic growth during the fourth quarter of 2016. (Source: Aimnet.org)
  1. The Fenway Catalyzer  – For decades, massive asphalt parking lots dominated the landscape around Fenway Park, punctuated by gas stations, auto-repair shops and a series of national fast food chains. (Source: Buildup.com)
  1.  Four Hot Office Markets to Watch (And Some Up-and-Coming Markets Too!) – Hot office markets traditionally follow cities that have the hottest housing markets, since new home buyers need jobs to make their mortgage payments. (Source: NAI Global)
  1. Real Estate Maps & Census Block Groups – Census Block Group or (BG) are boundary areas that can be displayed in real-
    time are real estate maps.  (Source: Growth-maps.com)

From The Research Desk – Weekly CRE Blog Roundup

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  1. Netflix and Total Returns: Data Center REITs Benefit from Media Consumption – Millennial’s addiction to social media, Netflix, and Candy Crush seems to be finally paying off for some investors. Data center REITs have been the best performing sector over the last two years, posting a total return of 28.36% in 2015, and 26.41% in 2016. (Source: Trepp)
  1. You Can Thank Millennials for These 3 CRE Trends – The largest generation in the workforce, Millennials impact everything from commercial real estate to media, food and more. If you’re not keeping an eye on this demographic, you’d do well to brush up on your research. (Source: NAI Global)
  1. Newton-Needham’s N2 Innovation District is Bringing the Urban Startup Vibe to the Burbs – The Newton-Needham area is home to many of the Bay State’s leading innovators and entrepreneurs.  Yet, over the past few years, the Newton-Needham Regional Chamber has sought to promote these two Boston suburbs as vibrant places to work, not just to live, by attracting cutting-edge companies to the N2 Innovation District (pronounced N-Squared), which runs along Route 128 and straddles the Newton-Needham border. (Source: VentureFizz)
  1. They say nothing beats a home-cooked meal – Comparing price inflation of food at home and away from home. (Source: St. Louis FED)
  1. The Shrinking Office Footprint – Employment growth has been positive for 27 straight quarters adding 15.6 million jobs (12 percent) after losing 8.6 million jobs in the last recession. (Source: Mortgage Bankers Association)

Super Bowl LI Market Matchup

With Super Bowl LI kicking off on Sunday, our Research Department took a look at the tale of tape of Boston vs. Atlanta real estate markets.

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New NAI Hunneman Research Report Highlights Boston’s Middle Market Skyline

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NAI Hunneman’s Research Group is pleased to introduce our new Middle Market Skyline report, which provides insight and floor-by-floor detail on urban Boston’s top Class B office assets. Here are a few key takeaways from this analysis:

  1. The average height of the 28 buildings included in the analysis is 10 floors.
  1. Availabilities in the lower levels of these middle market buildings are slightly higher compared to the upper floors. The total availability rate from the 6th floor and up is just under 14%, while below the 6th floor the rate is 15.3%.
  1. Direct rents are averaging $50 per square foot; ranging from low-$40 to mid-$50 per square foot.
  1. In terms of rent, office space in the Seaport now rivals low and mid-rise space in many Class A, tower buildings in the Financial District.
  1. There is roughly 76,000 square feet of sublease space available as of the fourth quarter 2016.

You can access this skyline report on our website.  To learn more about Boston office availabilities please contact Peter Evans of our Urban Advisory Group

For more information on our reports or market updates please contact our Director of Research, Liz Berthelette

NAI Hunneman’s Capital Markets Group Arranges $19 Million Construction Financing for Ten Essex Street

Press Release: Andrew Kaeyer leads financing team for 46-unit multifamily development in Central Square

Press Contact Dave Finnegan

 

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10 Essex Street | Cambridge

BOSTON—NAI Hunneman, a leading provider of commercial real estate services, recently arranged the construction financing for Ten Essex Street, a new, 46-unit, multifamily development in the heart of Cambridge’s Central Square adjacent to the MBTA Station.

NAI Executive Vice President Andrew Kaeyer and Associate Nick Biondo arranged the $19 Million construction financing with People’s United Bank on behalf of property owner the 3MJ Realty.

“We are excited to be able to arrange this financing that will help create a first-class multifamily project in the dynamic Central Square Neighborhood,” said Kaeyer. “Ten Essex Street is the culmination of more than three years’ worth of planning and permitting and will become the centerpiece of 3MJ Realty’s Portfolio.

Ten Essex Street recently began construction. The project is sutured between MIT & Harvard University and mere blocks from the corporate headquarters for Takeda, Pfizer and Novartis.

 

About NAI Hunneman:

Headquartered in Boston, NAI Hunneman is a leading provider of commercial real estate services to corporations, institutions and the private market. NAI Hunneman is a member NAI Global, the premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide. NAI Global manages a network of 6,700 professionals and 375 offices throughout the world. NAI professionals work together with its global management team to help clients strategically optimize their real estate assets. To learn more about NAI Hunneman and the NAI Global Network please visit www.naihunneman.com.

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NAI Hunneman’s Leasing & Advisory Services Group completes two leases totaling approximately 5,000 SF at Connector Park

Press Release: Boudrot, Gilkie & Allen represent landlord KS Partners in two transactions at 59 Lowes Way within Lowell Office Park

Press Contact: Dave Finnegan

connector-park

59 Lowes Way | Connector Park | Lowell, MA

BOSTON, MA – NAI Hunneman recently completed two lease transactions totaling approximately 5,000 SF at 59 Lowes Way within Connector Park in Lowell, MA. Altranais Home Care a Medicare and Medicaid home nursing organization relocating from Tewksbury leased 2,351 SF on the second floor. Mindleaf a medical technology support services firm which is relocating from Bedford, leased 2,169 SF on the first floor.

NAI Hunneman Executive Vice President Jim Boudrot along with Senior Vice President David Gilkie and Assistant Vice President Michael Allen represented landlord KS Partners and also procured tenant Altranais Home Care. Mindleaf was represented John Webster of Mohr Partners.

“With the recent capital improvements to the lobby, fitness center & lounge, Connector Park checked off all the boxes and was the perfect fit for Mindleaf and Altranais to accommodate their future operations,” said Allen.

Located along the Route 3 corridor in the heart of the 495 North Market, Connector Park is a first-class destination that combines quality space with the finest on-site and area amenities. The park is 25 miles northwest of downtown Boston, and can accommodate a variety of space requirements.

About KS Partners:

KS Partners is a real estate holding company that owns and operates approximately 4 million square feet of commercial property throughout New England.  Headquartered in Woburn, MA with offices throughout New England and a team of approximately fifty employees, KS handles long-term asset strategies and day-to-day operational and maintenance needs.  KS specializes in acquiring multi-tenanted office buildings with ground floor retail amenities.  KS Partners’ platform is to target undervalued income producing properties and systematically add value through leasing, repositioning and identifying redevelopment opportunities. For more information, please visit www.kspartnersllc.com .

About NAI Hunneman:

Headquartered in Boston, NAI Hunneman is a leading provider of commercial real estate services to corporations, institutions and the private market. NAI Hunneman is a member of NAI Global, the premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide. NAI Global manages a network of 6,700 professionals and 375 offices throughout the world. NAI professionals work together with its global management team to help clients strategically optimize their real estate assets. To learn more about NAI Hunneman and the NAI Global Network please visit naihunneman.com.

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Boston’s South End Surge

By Liz Berthelette

This morning NAIOP Massachusetts hosted a panel with representatives from National Development, UDR, Nordblom Company and Leggat McCall Properties presented to a packed-room of real estate professionals on the topic of the South End’s recent transformation from an industrial outpost to a vibrant mixed-use neighborhood.

The South End, sandwiched between the Back Bay and South Boston and book-ended by Tufts Medical and Boston Medical Center, is experiencing an unprecedented commercial construction boom. Comprising four distinct planning areas, New York Streets, SOWA, Back Streets and the Medical Area, much of this new development has been focused along Harrison Avenue and Albany streets. Below are four projects highlighted during the presentation:

  1. Ink Block

    Ink Block

    Ink Block: National Development is moving forward with a second condo building, AC Hotel and a 7-acre park at its 7-building project that includes the former headquarters of the Boston Herald. These additions will join already completed residential and retail, which is anchored by the ever-popular Whole Foods.

  2. Harrison Albany Block: Leggat McCall Properties is also redeveloping a full-city block near Boston Medical Center. The project will include a medical office, two
    harrison-albany-block

    Harrison Albany Block

    residential towers with 300 units each, and another smaller residential building at 575 Albany Street. The developer is also planning to increase public open space and pedestrian-friendly elements.

  3. 345 Harrison

    345 Harrison

    345 Harrison: Across from Ink Block, UDR is underway on a mixed-use development at the former Graybar Electric site, which is slated to open in early 2018. The project consists of two buildings with hundreds of residential units, up to 40,000 square feet of street-level retail and underground parking.

  4. 321 Harrison: One of the newer projects to receive approval from the BPDA is Nordblom’s 230,000-square-foot office building at 321 Harrison Avenue. The site
    321 Harrison

    321 Harrison

    includes the former Teradyne world headquarters and the adjacent parking garage. The site, which is less than a 10-minute walk to both the Orange and Red lines, will also offer private shuttle service to South Station.

The South End’s central location, with proximity to Downtown, the Seaport and Back Bay as well as access to several major employment drivers were the some of the key reasons why developers have been flocking to this area. There is some concern of over building on the residential side, especially given recent softening in Boston’s apartment market. However, all of the panelists remained bullish on the South End.

Liz Berthelette is NAI Hunneman’s Director of Research. For more information on NAI Hunneman’s research capabilities & products please contact Liz at lberthelette@naihunneman.com and follow her on Twitter @liz_berthelette .

NAI Hunneman Releases Q4 Submarket Reports

q4-topbannerNAI Hunneman’s Research Group is pleased to introduce our Q4 2016 submarket reports, providing in-depth analyses of major office and industrial submarkets in Greater Boston. Topics covered in these publications include notable lease transactions, vacancies, rental statistics as well as other market trends.

Here are just a few Fourth Quarter highlights:

  1. While still retaining its title as Boston’s hottest submarket, the Seaport is also becoming a relief valve for biotech companies looking for more space and rent relief from the frothy Cambridge markets. Related Beal is planning a 125,000-square-foot speculative office and lab complex on Tide Street to tap into this potential demand.
  1. With 3.3 million square feet of industrial space absorbed over the last two years, vacancies now sit 260 basis points below their 2014 levels in the South markets.
  1. Route 128 West is becoming a Mecca for shoemaking companies. Early in the fourth quarter Clarks Shoes moved into its new 120,000-square-foot headquarters in Waltham; and more recently Rockport Group relocated from temporary space in Canton to its new headquarters in West Newton.

To access our submarket reports click here

For more information on our reports, market updates and other NAI Hunneman research products please contact Director of Research Liz Berthelette at lberthelette@naihunneman.com .

A conversation with newest Capital Markets team member Elliott White

Elliott White | Assistant Vice President | Capital Markets

Elliott White | Assistant Vice President | Capital Markets

We sat down with the newest member of NAI Hunneman, Elliott White. Elliot, an avid skier, joins the Capital Markets team with a focus on

multifamily housing with a specialty in affordable housing.

NAIH: Where are you from?

I live in Malden with my fiancé, but I’m from Montpelier, Vermont.

 

NAIH: What college did you attend?

Suffolk University, majored in Business Management.

NAIH: What are some of your hobbies?

ewhiteblogimageI’m a very good skier and a very bad golfer. I have an English Staffordshire Terrier and a Boston Terrier, both are insanely spoiled. I blame my fiancé for this, but it’s mostly my fault. And I like work, as silly as that sounds. I like what I do, and plenty of people don’t, so I feel fortunate.

NAIH: Favorite sports team?

Patriots. No question. Watching Roger Goodell hand the Lombardi trophy to Tom Brady this year would put a smile on my face.

NAIH: How do you feel your past experience will contribute to the Capital Markets team?

I have prior Capital Markets experience, I have some deep sales experience outside of real estate, and I’ve started my own business too. There’s a certain edge you develop when starting your own business. You live or die based solely on your efforts, it takes an almost insane level of dedication. I think that’s true if you want to be successful in the Capital Markets arena as well. You have to be able to service your clients and look after their needs, while simultaneously building your own business.

NAIH: What is your focus coming into NAI Hunneman? What are you most excited about?

My primary focus here is multi-family housing, with a concentration on affordable housing.

I am excited to be a part of this firm and its brand. The team here is fantastic and the support systems are second to none. Many places talk about a top-down commitment to excellence, but hardly anyone provides brokers the kind of marketing, research, and analytical support they do here. The talent bench is deep at NAI Hunneman, you can feel it.

The NAI Hunneman brand is another big reason for coming on board. It’s an incredibly well respected company that instills an additional level of confidence in your clients. It gets your phone call returned, even if the person you’re calling doesn’t know you personally.

NAIH: What trends have you seen emerge in your market?

There has been a concerted public/private push to develop more workforce housing in Massachusetts recently. The idea is to create housing for people who are working in communities that they may not be able to afford to live in. You don’t want your teachers, nurses, and police officers having to commute from far away because they feel priced out. The Workforce Housing Initiative aims to help offset some of these costs.

NAIH: With that in mind, what is your outlook for 2017?

Something to pay close attention to in 2017 is the preservation of affordable housing. Many of these properties have been affordable for decades and are now reaching the end of their terms. The goal is to preserve as much of this affordable housing stock as possible of course, but getting that done can be tricky. I expect we will see some interesting approaches to financing, and some strong public/private partnerships moving forward.

NAIH: Why did you decide to join NAI Hunneman?

David Slye. I know this sounds like blatant pandering, but I assure you that’s not the case. I met with several other brokerage firms before deciding on NAI Hunneman. David has all the institutional experience you could ask for, but so do other firms. What stood out from my conversation with him was his vision for NAI Hunneman going forward. David believes in a firm squarely focused on the middle market that delivers client service better than anyone else. It’s a model I believe in, and he made it clear he would do what it took to support me in that pursuit.

For more info on Elliott you can access his bio or follow him on LinkedIn

 

NAI Hunneman adds Elliott White to Capital Markets Team

White joins as an Assistant Vice President focused on Multifamily & Affordable Housing Sales

 

Elliott White | Assistant Vice President | Capital Markets

Elliott White | Assistant Vice President | Capital Markets

NAI Hunneman is pleased to announce that Elliott White has joined the company’s Capital Markets Team as an Assistant Vice President focusing on multifamily sales with a specialty in affordable housing.

“Elliott’s strong work ethic, entrepreneurial drive, problem solving skills and creative deal making abilities, combined with NAI Hunneman’s platform and resources will allow him to service his clients at a higher level,” said NAI Hunneman President & CEO David Slye. “He joins us with an active book of business and a keen focus on building deeper relationships for our capital markets team as well as our firm.”

Prior to joining NAI Hunneman, Mr. White was with the capital markets team at Gibson Sotheby’s in Boston where he worked on the sale of a variety of product types including urban development, suburban industrial and retail, land and multifamily with an emphasis on affordable housing.

About NAI Hunneman:

Headquartered in Boston, NAI Hunneman is a leading provider of commercial real estate services to corporations, institutions and the private market. NAI Hunneman is a member NAI Global, the premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide. NAI Global manages a network of 6,700 professionals and 375 offices throughout the world. NAI professionals work together with its global management team to help clients strategically optimize their real estate assets. To learn more about NAI Hunneman and the NAI Global Network please visit www.naihunneman.com.

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Q4 Market Reports Point to Boston’s Strength and What 2017 Might Bring

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Greater Boston’s commercial real estate markets ended the year on a high-note. In the office market, the suburbs led the way accounting for the majority of the more-than one million square feet of positive absorption. The lab market, particularly in Kendall Square, remains tight and industrial vacancies have reached another new low. While the near-term outlook for Boston remains fairly positive, market performance will likely be more measured than in recent years.

 

There are several macro trends worth keeping an eye on in the coming quarters that could result in up or downside risks to Boston’s outlook. Many marketreport-emailimage-q4-16signs point to a stronger national economic outlook in the coming year. GDP growth was revised up to 3.5% in the third quarter, corporate profits and wages are rising and the labor market continue to impress. Moreover, the new administration’s proposed tax cuts and spending policies could spur beefier job growth as well as bolster GDP growth. However, December’s national job numbers were lower-than-expected and there are concerns surrounding inflation over the next few years.

 

Here are some highlights from our Q4 2016 market reports:

  • The Greater Boston office market posted another positive quarter with more than 1.3 million square feet in net absorption. Build-to-suit construction, including the completion of new headquarters for Clarks and the FBI, helped drive this office demand. Metrowide vacancies fell by almost 100 basis points over the last year to 11.2% in the fourth quarter and direct asking rents inched up to nearly $33 per square foot.
  • The Greater Boston industrial market absorbed more than four million square feet of space in 2016. Vacancies are now sub-8%; reaching levels not seen in more than 15 years. Demand drivers remain vast and varied. E-commerce, housing and building-related firms, drug manufacturing, logistics, breweries and medical marijuana facilities are all bolstering industrial demand in the marketplace. Given such positive fundamentals, industrial landlords have been consistently raising rents in Greater Boston. At the close of 2016 lease rates expanded by 5.5% on a year-over-year basis, averaging $8.42/SF. While modern, quality industrial space continues to garner a premium, in some instances location (particularly in-fill areas) is driving lease rates. Expect conditions to remain positive going into 2017. Increased leasing activity during the second-half of 2016, coupled with more subdued construction, will keep market fundamentals moving in the right direction.
  • The Greater Boston lab market is as hot as ever. Net absorption totaled 340,159 square feet metrowide in the fourth quarter. The completion of the Pfizer-anchored North Building at 610 Main Street accounted for a bulk of activity. Metrowide vacancies are nearing 3% and East Cambridge vacancies are sub-1% as demand for space remains heated. With little new product on the immediate horizon and strong demand for space, look for market conditions to remain tight in the coming quarters.

For more information on our market statistics and other research capabilities please contact our Research Director Liz Berthelette

NAI Hunneman Represents Waverley Oaks Park in Transaction with Alzheimer’s Association

Steve James represents Landlord Duffy Properties in two leases totaling 28,917 SF in Waltham.

 

307 Waverley Oaks Road  | Waverley Oaks Park | Waltham, MA

307 Waverley Oaks Road | Waverley Oaks Park | Waltham, MA

BOSTON—NAI Hunneman, a leading provider of commercial real estate services, recently represented Waverley Oaks Park and its owner Duffy Properties in two lease transactions with the Alzheimer’s Association. The organization is moving its offices from Watertown to 25,833 SF at 307 Waverley Oaks Road; and is also taking an additional 3,084 SF of storage space at 411 Waverley Oaks Road.

NAI Hunneman Executive Vice President Steve James represented Duffy Properties while Robert Fitzgerald and Bill Crean of CBRE represented the Alzheimer’s Association.

“Waverley Oaks Park offers the Alzheimer’s Association a class A location with a top-flight amenity package, while still providing significant rental value, and hands on management by Duffy Properties,” said James.

“We welcome the Alzheimer’s Association and its important mission to Waverley Oaks Park,” said Duffy Properties Principal Steven P. Duffy. “We look forward to being their real estate solution now and well into the future.”

Located just minutes from Rt 128, Waverley Oaks Park is a 1,200,000-square foot office park that includes a corporate headquarters environment, excellent expansion opportunities, established local ownership, efficient floor plans, amazing on-site amenities, and abundant parking.

About Alzheimer’s Association

The Alzheimer’s Association is the leading voluntary health organization in Alzheimer’s care, support and research. Their mission is to eliminate Alzheimer’s disease through the advancement of research, to provide and enhance care and support for all affected, and to reduce the risk of dementia through the promotion of brain health. The Alzheimer’s Association’s vision is a world without Alzheimer’s. For more information, visit www.alz.org.

About NAI Hunneman:

Headquartered in Boston, NAI Hunneman is a leading provider of commercial real estate services to corporations, institutions and the private market. NAI Hunneman is a member NAI Global, the premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide. NAI Global manages a network of 6,700 professionals and 375 offices throughout the world. NAI professionals work together with its global management team to help clients strategically optimize their real estate assets. To learn more about NAI Hunneman and the NAI Global Network please visit www.naihunneman.com.

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From the NAI Hunneman Research Team – Check out our Q4 Market Recap

Our Q4 Market Recap is now available http://bit.ly/2hOqxhs

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A strong Boston economy means more traffic

By Liz Berthelette – Director of Research

Boston consistently ranks among the worst cities for traffic congestion, and it’s no secret that the region’s public transit system has been marred by overcrowding and delays. Not surprisingly, the Census Bureau recently ranked Greater Boston’s average commute the 6th longest in the nation at 31.4 minutes in 2015; representing a 10.6% increase from 2010.

While commuting to work in Greater Boston can be brutal, it may not be all bad news as the market’s congestion could point to a healthy economy. Simply put, more people on the roads and on the trains mean more jobs, shopping trips and tourists.

NAI Hunneman’s research department took a look at our data and the results are interesting. The chart below looks at the percentage of workers traveling 60+ minutes to work in the Boston MSA against the metro’s unemployment rate.

congestion-chart

During times of economic decline (2008-09) Greater Boston’s unemployment rate was on the rise while the percentage of mega-commuters fell. As the local economy began to recover those commuting more than 60 minutes to work increased exponentially.

One could attribute this phenomenon to the urban core’s over-heated housing market which has likely pushed some residents further away from job centers. However, the population base in the city of Boston expanded by more than 13 percent in the last 15 years.

While too much congestion could ultimately become a drag on productivity, the data suggests a strong economy and traffic are connected.

This post originally appeared in the 12/16/16 edition of the New England Real Estate Journal

Hunneman Cares: NAI Hunneman Supports Special Olympics Through Brokers & Beanbags Tournament

NAI Hunneman doesn’t need an excuse to be competitive. So when the company heard that the Special Olympics of Massachusetts was hosting their 1st Annual Brokers and Beanbags Cornhole Tournament—several of our employees decided to participate.

The Special Olympics of Massachusetts is a nonprofit that provides year-round sports training and competition in a variety of Olympic-type sports for individuals with intellectual disabilities. The cornhole tournament is one of the numerous events the nonprofit puts on in an effort to raise money that allows these athletes to train and compete without charging them and their families.

NAI Hunneman’s Downtown & Property Management Groups competed against 19 corporate teams alongside 30 Special Olympians. According to Rachel Dill, Director of Development, roughly 120 people were in attendance, raising a total of $47,500. Dill says that the money raised will go towards supporting 122 athletes to participate in a full year of sports.

Of the 19 teams that competed, NAI Hunneman’s Downtown Leasing & Advisory Services team came in first place. Recently, Dill presented the team with their winning plaque—which they very much look forward to defending at next year’s tournament.

downtownspecialolympics

NAI Hunneman Executive Vice President Peter Evans says, “we were delighted to participate in the tournament; winning was just one of the special memories we will take with us. The real winner is the Special Olympics of Massachusetts, a truly dedicated organization that benefits numerous families. We look forward to participating next year in hopes of retaining our title.”

For more information on upcoming Special Olympics Events, please visit https://www.specialolympicsma.org/

The Green Line: Boston’s Next Brain Train?

By Liz Berthelette – NAI Hunneman Director of Research

The MBTA’s Red Line has already earned the title of “Brain Train;” touting access to top universities, Boston’s CBD and key suburban cities such as Somerville and Quincy. The $2.3 billion Green Line extension, which would result in 6 new T stops and expand the line into Somerville and Medford, could propel the route to a similar status.

While there are numerous benefits to the proposed expansion, increasing connectivity in the region would be key in forming this Brain Train 2.0. The new system would establish and/or bolster links between the following:

  1. Key educational institutions; including Tufts University, Boston College and Northeastern
  2. Tech and life science nodes like Fenway, LMA and North Station
  3. Cambridge, Somerville and Downtown Boston
The Green Line: Boston's Next Brain Train?

The Green Line: Boston’s Next Brain Train?

There are major proposed projects along the new Green Line that are gaining serious traction as well. The City of Somerville recently received several million dollars in grant money to improve infrastructure in Union Square. This project is just part of the first phase of the area’s planned $1 billion revitalization, which is expected to result in 2.3 million square feet of commercial and residential space.

DivoWest/HYM’s Northpoint development also lies in the path of expansion along the Green Line. The site is fully entitled to develop roughly 2.1 million square feet of commercial space in addition to 2.4 million square feet of residential product. With plans to start construction on several hundred thousand square feet of office and/or lab space on the site, Northpoint has the potential to provide some much-needed relief to extremely tight market conditions throughout Cambridge and possibly a new hub for tech and life science firms.

NAI Hunneman’s Leasing & Advisory Service Team Completes 7,193 SF in Lease Transactions at 10 Lincoln Road in Foxborough

Cathy Minnerly & Ovar Osvold represent landlord in two lease transactions for IT services and HR companies

 

10 Lincoln Street | Foxborough

10 Lincoln Street | Foxborough

Foxborough, MA November 14, 2016 –NAI Hunneman recently completed two lease transactions totaling 7,193-square-feet of office space on the first floor at 10 Lincoln Road in Foxborough.

LANConnect Systems, Inc., a full-service information technology firm leased 4,338 SF and is moving its operations from Franklin.  Valiant Solutions, Inc., a leading provider of cloud-based Payroll and Human Capital Management (HCM) solutions, is opening its first Massachusetts franchise in 2,855 SF of space at 10 Lincoln.

NAI Hunneman Executive Vice President Cathy Minnerly and Vice President Ovar Osvold represented the landlord, R & R Realty, in the transaction. LANConnect was represented by Stefan Frey of Commonwealth Commercial Advisors and Valiant Solutions was represented by Ellison Patten of Lincoln Property Company.

“Both tenants were drawn to 10 Lincoln Road as it offers a high-profile location along one of the state’s most heavily traveled thoroughfares, with easy access to major highways, and a wealth of first-class amenities,” said Minnerly.

Located directly off Route 1 and just three miles from I-95, 10 Lincoln Road is a ± 48,095 square-foot Class A office building just south of Gillette Stadium and Patriots Place, which features 1.3 million square feet of shopping, dining, and hotels.

About LanConnect Systems, Inc.

LANConnect Systems, Inc. is a full-service information technology company providing small businesses with long-term, expert, cost-effective IT solutions. Founded by computer consultant Peter Kokinda in 1997, LANConnect Systems has become known for exceptional technical expertise and personalized customer service. For more information, please visit http://lanconnectsystems.com/

About Valiant Solutions

Valiant Solutions, Inc. is a leading provider of cloud-based Payroll and Human Capital Management (HCM) solutions. Our comprehensive, easy-to-use HCM suite of products is designed specifically to meet the unique needs of companies with a large hourly workforce. Clients using our HCM solutions realize verifiable cost savings and margin improvements while automating and streamlining operations, increasing efficiency and implementing best practices across their organizations. For more information about Valiant, please visit us at www.valiant.com

NAI Hunneman:

Headquartered in Boston, NAI Hunneman is a leading provider of commercial real estate services to corporations, institutions and the private market. NAI Hunneman is a member NAI Global, the premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide. NAI Global manages a network of 6,700 professionals and 375 offices throughout the world. NAI professionals work together with its global management team to help clients strategically optimize their real estate assets. To learn more about NAI Hunneman and the NAI Global Network please visit www.naihunneman.com.

 

 

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New NAI Hunneman Research Reports Highlight Greater Boston Submarkets

q3-2016-submarket-webNAI Hunneman’s Research Group is pleased to introduce our new submarket reports, which provide in-depth analyses of major office and industrial submarkets in Greater Boston. Topics covered in these publications include notable lease transactions, vacancies, rent stats and other market trends.

Here are just a few highlights:

  1. Unprecedented growth has legitimized the Inner Suburbs office market. The completion of Partners Healthcare’s 850,000-square-foot headquarters in Somerville accounted for the spike in quarterly net absorption.
  1. The South industrial market continues to impress, with 2.6 million square feet of industrial space absorbed over the last five quarters. Moderna Therapeutics, Amazon.com and Trillium Brewing represent large tenants expanding in the South markets.
  1. The Seaport’s building boom is changing this submarket’s landscape. In the past 10 years, total office inventory has increased by 44%. As a result, Class A assets now account for nearly half of the Seaport office market.

You can access our submarket reports on our website

For more information on our reports or market updates please contact Director of Research Liz Berthelette at lberthelette@naihunneman.com

Hunneman Cares – NAI Hunneman Executive Leads Team on Trail Run for Epilepsy Foundation

The NAI Hunneman trail run team celebrating successful completion of the Thompson Island 4K.

The NAI Hunneman trail run team celebrating successful completion of the Thompson Island 4K.

Help for Today, Hope for Tomorrow; a simple concept that means a great deal to those involved with the independent nonprofit organization Epilepsy Foundation New England (EFNE). Help for Today, Hope for Tomorrow is EFNE’s Vision Statement which is taken to heart by the people the organization benefits and those who volunteer their time, including NAI Hunneman North Team broker Jim Boudrot.

EFNE aims to overcome challenges faced by those with epilepsy and their families by assisting with decision regarding care, daily activities, employment, community participation, and other tasks and responsibilities.

Jim maintains a particular interest in pediatric epilepsy and has been involved with EFNE for many years.  In July of 2016 he was named Chairman of the Board, spearheading the dozens of events EFNE hosts throughout the year.

Most recently, Jim and his family led the charge and recruited other NAI Hunneman employees to participate in the Thompson Island 4K Trail Run. Jim explains, “NAI Hunneman has been tremendously supportive of EFNE in every way.  Team Hunneman has collectively: donated thousands of dollars; helped secure powerful new relationships & sponsors; and physically participated in many of the Foundation’s charitable events.”

Boudrot and team NAI Hunneman raised over $5,000 for this year’s race. This is equivalent to the tuition for 5 kids with epilepsy to go to camp for an entire week next summer, 50 people to get assistance from the EFNE helpline, and 1:1 coaching for people with epilepsy to meet their career goals.

The largest event scheduled is the Candlelight Dinner and Auction held at the Charles Hotel in Cambridge. According to Boudrot this event always sells out and this year they’re expecting over 350 people.

Another highlight of the year is the upcoming Joseph’s Hope benefit concert in Natick on October 22nd. Sponsored by NAI Hunneman, Sage Therapeutics, Alexandria Real Estate Equities; this event features a raffle, appetizers, and a costume contest for children. The live music will be provided by Sage Against the Machine, Tsunami of Sound & Aideen O’Donnell.

For more information on Joseph’s Hope visit http://www.epilepsynewengland.org/josephs-hope

Three Major Industrial Trends Leading to New Construction

Nationally the industrial market continues to impress as outsized demand, coupled with limited supply, is driving extremely positive fundamentals. Boston is no exception with industrial vacancies reaching a 15-year low in the third quarter and asking rents continuing to increase at a double-digit pace.

Developers continue to break ground, but new supply remains moderate. Demand for newer, higher-quality warehouse space has incited construction in the Boston metro. Build-to-suit activity, including projects for Martignetti Companies, New England Ice Cream and Pfizer, dominates. However, developers are willing to begin construction on a speculative basis.

Most recently, ground is being cleared at 45 Panas Road, Foxboro for a 50,000 square foot office/warehouse building with a host of features including; 32’ clear heights, ten loading docks, and ESFR sprinklers. NAI Hunneman south market experts Cathy Minnerly and Ovar Osvold are the exclusive agents for the property which sits in a market where available space remains at a premium. Just up the road Minnerly and Osvold have taken one of the area’s most attractive industrial parks to 96% occupancy, making 45 Panas a much welcome addition to inventory in the market.

 

45 Panas Road - New 50,000 Warehouse/Office Building on Rt 1.

45 Panas Road – New 50,000 Warehouse/Office Building on Rt 1.

 

Below are three major trends we’re seeing in our local market:

  1. Big Box retailers have arrived! Traditionally, large-scale distribution operations have passed over the New England region due to cost and geographic location. However, changes in consumer spending patterns are driving retailers and internet-retailers to locate closer to consumers and stores as well as reduced shipping times.
  2. E-Commerce is changing the game. Not only has internet retailing shifted where distribution centers are located, but it has also changed the type of warehouses being built. According to a recent article in the SIOR report, e-commerce tenants require “800-feet deep with no pass-through,” larger footprints, more workers and parking spaces due to increased automation. Amazon’s new one million square foot distribution center in Fall River is a prime example. Minnerly & Osvold sold the land for the construction of the new facility which offers a premier location off a new $34 million highway interchange on Rt 24 and opened in September.
  3. Modern industrial space is still in vogue. Buildings with 30’+ clear heights, ESFR sprinklers and wider column spacing are top choice among industrial users. Metrowide there are only a handful of buildings that meet this criteria that have 50,000 SF or more of available space. Given the demand for this space landlords are able to garner a rent premium with lease rates in the $6-7/SF range.

Heading into the fourth quarter we expect industrial fundamentals to remain positive. That being said, growth will likely be more measured compared to recent history as we near cyclical peaks.

NAI Hunneman’s Downtown Leasing & Advisory Service Team Brokers 12,008 SF Sublease at 500 Boylston Street

Evans & James represent Cambridge Semantics in relocation within Boston’s Back Bay

 

500 Boylston Street

500 Boylston Street

NAI Hunneman recently completed a 12,008 SF sublease transaction with Cambridge Semantics. The enterprise analytics and smart data management software company is relocating its operations from 141 Tremont Street to 500 Boylston in the heart of Boston’s Back Bay.

NAI Hunneman Executive Vice Presidents Peter Evans and Steve James represented Cambridge Semantics in the transaction, while Anne Columbia of The Columbia Group represented the sub-landlord.

“This move was a great option as it allows Cambridge Semantics to continue with their growth and it provides them true plug and play space,” said Evans.

“We’ve nearly doubled our employee headcount in the last year and it was important for us to find a space that accommodates our continued expansion plans. Peter Evans and the NAI Hunneman team found the perfect space for us. The office layout and the included furniture gives our company more efficient space while limiting any significant disruption in our day-to-day operations,” said Cambridge Semantics VP of Finance & Operations, John O’Sullivan.

About Cambridge Semantics

Cambridge Semantics (CSI), the Smart Data Company, is an enterprise smart data discovery and exploratory analytics company. It enables customers and partners to rapidly build and deploy Smart Data Lake solutions based on its award-winning Anzo Smart Data Platform™ (Anzo SDP).

IT departments and business users gain better understanding and accelerated data value through the semantic linking, analysis and management of diverse data whether internal or external, structured or unstructured. The Anzo Smart Data Lake solutions are delivered with increased speed, at big data scale and at a fraction of the implementation costs of using traditional approaches.

The company is based in Boston, Massachusetts.

For more information visit http://www.cambridgesemantics.com or follow us on Facebook, LinkedIn and Twitter: @CamSemantics.

NAI Hunneman’s Downtown Team

NAI Hunneman’s Downtown Leasing & Advisory Service Team consists of Peter Evans, Jeff Becker, Brooke Blue, Colin Gordon, & Matthew Davis.

NAI Hunneman:

Headquartered in Boston, NAI Hunneman is a leading provider of commercial real estate services to corporations, institutions and the private market. NAI Hunneman is a member NAI Global, the premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide. NAI Global manages a network of 6,700 professionals and 375 offices throughout the world. NAI professionals work together with its global management team to help clients strategically optimize their real estate assets. To learn more about NAI Hunneman and the NAI Global Network please visit www.naihunneman.com.

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Q3 Market Reports Highlight Low Vacancies, Positive Absorption

marketreport-emailimage-q3-16biotech-emailimage-q3-16

Greater Boston’s commercial real estate markets posted positive results in the third quarter. In the office market, the suburbs led the way accounting for the majority of the market’s more-than one million square feet of positive absorption. The lab market, particularly in Kendall Square, remains tight and industrial vacancies have reached another new low. Greater Boston’s near-term outlook remains decidedly positive as continued growth in the local economy bodes well for commercial real estate demand.

Here are some highlights from our Q3 2016 market reports:

  • Office market: The Greater Boston office market posted another positive quarter with more than 1.4 million square feet in positive absorption. Build-to-suit construction, particularly the completion of Partners Healthcare’s 850,000-square-foot office in Somerville, was the driving force behind the majority of this demand. Metrowide vacancies declined by 30 basis points compared to the second quarter and remain 60 basis points below year-ago levels, with a majority of submarkets seeing fundamental improvements.
  • Industrial market: Vacancies in the Greater Boston industrial market have reached another low, ending the third quarter at just 8.3%. Year-to-date, the market has absorbed 3.5 million square feet of industrial space. Large users remain focused on core markets north and south of Boston while redevelopment projects continue to remove infill industrial space from the inventory. Given such positive fundamentals, industrial landlords have been consistently raising rents in the Greater Boston area. As of the third quarter, lease rates expanded by 6.4% on a year-over-year basis, averaging $8.10 per-square-foot. Although leasing momentum has slowed from last year’s rapid pace, demand for modern, high-quality industrial space remains solid.
  • Life sciences market: While the third quarter produced some mixed results, the Greater Boston lab market is as hot as ever. A reshuffling of tenants in the Cambridge markets kept positive absorption below recent historical trends; Infinity Pharmaceuticals’ departure of 51,000 square feet at 780 Memorial and Metabolix’s relocation to Woburn accounted for the lion’s share of negative absorption this quarter. The continued conversion of 50 Hampshire Street and the addition of 80 Guest Street in Brighton also added new lab space to the inventory. With that said, metrowide vacancies are sub-4% and East Cambridge vacancies are still below 1% as the race for space remains heated. Look for market conditions to improve next quarter as there are several deals that are nearing the finish line.

Read our full Q3 office/industrial market report here

Read our full Q3 biotech market report here

Our Q3 Biotech Market Report is now available

biotech-emailimage-q3-16

Four ways to add value to multifamily properties

By Carl Christie

In a competitive real estate market, multifamily portfolios are hotter than ever, but how do new owners add value to their recent investments? Quality multifamily properties are defined by location, size, construction type and amenities; and developments that meet all these standards in these categories do not stay on the market for long. With these portfolios, there is great competition and historic low cap rates, so active buyers need to add value when and where they can.

When we talk to investors about how to add value to their multifamily property, generally they employ one or all of the following:

Renovating and updating

In older buildings, upgrading areas of daily use like kitchens or bathrooms can be an investment with significant added value to the property. Other possible updates include hallway and landscape improvements, as well as having chargeable amenities like parking and storage. Renovating or updating is usually the best way to raise rents in the units, therefore increasing the overall value.

b3Taking advantage of land and excess unit space to expand

Another advantage of some older properties is extra space or land that was unused in the original construction. Owners who take the opportunity to expand can create more units in existing buildings, or might also seek to build an additional unit adjacent to the existing one on the land they purchase. In some cases, a more spacious unit can be expanded to include one or more additional bedrooms. For instance, an older unit may have been constructed with both a living room and dining room, and owners could choose to convert one of those rooms into a bedroom for a value-add.

Simply raising rents

The answer might not be to make changes right away. Owners may choose to raise rents due to the market changing over time. With long-term ownership, many do not keep up with current rents, so a gradual rent increase over a two-year period is generally best. For example, an investor purchased a property from us North of Boston, mid 2015.  He offered all tenants a new lease (as most tenants were tenancy at will) at a modest increase of 10%  as the current rents were close to 20% below market, every tenant stayed.  He has recently renewed all the same tenants at an additional 10% increase and all tenants again stayed on.

Reposition or redevelop a building into multifamily units

A somewhat non-traditional route to finding value in multifamily units is to reposition or redevelop a property that wasn’t originally used for residential purposes. Today, industrial space, offices and even retail buildings are all being redeveloped into multifamily if the building permits. This trend speaks to the current need for housing, but it also gives owners an opportunity to build or design something new. This is a very interesting opportunity for owners because they can design and even brand the new development to attract a specific buyer or tenant. With these insights and control, owners can attract tenants looking for a building with character or a more unique feel. It is important to note, however, that this option is not a fit for every building, and owners need to make sure the structure allows for this kind of redevelopment.

In the multifamily market, demand is so high that often owners are interested in buying properties that don’t necessarily check all of these boxes right away. Developments like these present a great opportunity for buyers to add value while also keeping up with current trends that buyers like to see.

For more information on other major markets, read NAI Hunneman’s Q3 Market Recap here.

Carl Christie is an executive vice president with NAI Hunneman’s Capital Markets Group specializing in the disposition of multifamily assets throughout New England.

NAI Hunneman’s Q3 Market Recap is now available

NAI Hunneman Q3 Market Recap

Access our Recap Report at http://bit.ly/2cEMqRM

A Look at Some of our Successes in the First Half of 2016

First Half Successes – 2016

Jim Boudrot, David Gilkie, Steve James & Michael Allen of our Suburban North Team recently completed 9,057 SF in lease transactions at 130 New Boston Street in Woburn.

130newboston-leasing-tombstone

Evan Gallagher & Matthew Davis of our Leasing & Advisory Service Group recently represented DrugDev in the company’s relocation to Boston’s Innovation District.

Drug Dev Lease

Innovation Drives Leasing in the Financial District

By Liz Berthelette – Director of Research

Boston has seen unprecedented growth in the innovation economy this cycle, which is impacting commercial real estate patterns throughout the downtown markets.

Once the center of finance and professional services, Boston’s Financial District has become a hotspot for young, creative companies. Close to 100 TAMI (technology, advertising, media and information-based) companies; including DataRobot, PayPal and Localytics, now boast a Financial District address.

TechCompanies-Lower-Floors

 

The Seaport (aka the Innovation District), on the other hand, is filling up with more traditional office users like law firms and consulting companies. Goodwin Proctor, PwC and Boston Consulting Group are just a few of the big-name firms that are making the move across the Fort Point Channel. In fact, according to a BBJ article, more than 2 million square feet in professional services, law firms and consultancies have relocated from traditional downtown submarkets to Boston’s hottest neighborhood.

Not only is tenant demand shifting between locations, but also within product types. The influx of these TAMI tenants into the Financial District has led to increasing demand for lower floor office space. With higher ceilings and larger floor plates, these spaces are more flexible and allow firms to customize their workspaces. More affordable rents are an added benefit, especially among tenants being priced out of the Seaport and Cambridge. As a result, office space below the 10th floor has been outperforming in the Financial District with vacancies ending the second quarter at just 8.2%. Conversely, vacancies above the 20th floors were 13.7% at the end of the quarter.

The Financial District has long been the center of activity for the Boston economy, and the movement of tech firms into the neighborhood signals the emergence of the tech industry as a pillar of Boston’s economic future.

A version of this blog post originally appeared in the August 19th issue of NEREJ.

A review of the First Half of 2016: Commercial Real Estate Markets

By Liz Berthelette – Director of Research

With the first half of 2016 in the books – and a month into Q3 –  let’s take stock of Greater Boston’s commercial real estate markets. Below are some of the top market highlights from the first two quarters of the year:

  1. The metro added more than 39,000 jobs during the first six months of the year, which is more than half of the jobs added in all of 2015. The metro area’s unemployment rate also reached a 10-year low during the second quarter.
  2. While venture capital funding (both in number of deals and dollar volume) abated in the second quarter, year-to-date Boston-based companies have raised $2.5 billion in funding.
  3. The local lab market is tighter-than-ever with metro-wide vacancies at just 2%. However, the lack of available space is hampering deal volume.
  4. Conditions in the office market held steady through the beginning of the year, but fundamentals are beginning to slow down as sublease availabilities are on the rise.
  5. The industrial market continues to outperform, with year-to-date net absorption surpassing the office and lab markets combined.

2016-MidYear-Stats

Mixed signals in the marketplace have led to an uncertain outlook for the remainder of 2016. Below are some market trends we expect to see in the next four months.

  1. Short-term leases will likely gain more traction. Young tech companies and startups seeking flexibility as well as firms exercising more caution in the face of economic uncertainty will drive these types of deals.
  2. M&A activity is solid. Nationally deal flow has been more measured following the blockbuster years of 2014 and 2015. However, several MA-based companies are reportedly ripe for acquisition.
  3. Rent growth will remain positive; however, with rates nearing cyclical peaks we expect more modest gains going forward.
  4. The recent Brexit vote could result in an uptick in foreign buyers looking for U.S. assets, and Boston has long been a target for foreign capital.
  5. Demand will remain strong for modern, high-quality space in both the office and industrial markets.
  6. Continued strength in the local lab market will drive more landlords to consider building out lab space in office and industrial buildings.

NAI Hunneman Intern Spotlight – Kevin White

White_1Up next in our Intern Spotlight is Kevin White, intern with our Research Department (no relation to the former Mayor of Boston). See what a typical day of running numbers and market write-ups is all about for this Worcester native and University of Puget Sound junior.

NAIH: Describe a typical day in the research department?

KW: I spend my day helping Liz Berthelette (Research Director) update our Microsoft CRM database to reflect the current state of the metro Boston real estate market. I also provide help to brokers with market write-ups, building information, and various in-depth maps.

 

NAIH: What’s your background (school, hometown, hobbies)?

KW: I was born and raised in Worcester, Massachusetts, and attended Saint John’s High School in Shrewsbury. I attend the University of Puget Sound, where I’ll be a junior in the fall and I’m double majoring in economics and a specialized discipline called International Political Economy (IPE), a major carried by a few, select schools. My hobbies focus around sports, playing intramurals basketball and softball at school and closely following the Red Sox and Bruins. I am also a sports correspondent for the school newspaper.

 

NAIH: Why did you pursue an internship at NAI Hunneman? What do you hope to take from the experience?

KW: I believe it’s the type of job that an economics major could expect once graduating. I wanted to experience how to exactly apply my knowledge outside of the classroom. I hope to glean the workings of the commercial real estate industry, as well as learn how to be a productive member of a workplace.

 

NAIH: How have you been able to apply your skill set to your job and what kind of an impact have you made here so far?

KW: I’ve always been skilled at analyzing documents, so I have easily been able to comprehend and summarize various documents related to the Real Estate market, saving the research department time and man-power on going through the articles themselves. I am also an efficient, and have been able to quickly work through updating various aspects of the CRM database, including rents, building owners and building addresses.

 

NAIH: What skills have you been able to acquire?

KW: I have begun to learn the different software used by NAI Hunneman’s Research Department and worked on my writing skills, which will help hone my skills as I begin to look for a job after college.

 

NAIH: Why are you interested in Real Estate?

KW: From what I have seen of commercial real estate, I like how easy it is to develop relationships. Everyone knows one another, and these types of connections are important in any industry. The ease with which such connections can be forged makes working in Real Estate ideal. While friends back home may be delivering pizza, I’m helping deliver the 25th floor of a class A office building, something worth hundreds of thousands of dollars. I really enjoy being involved in something so significant.

 

NAIH: How’s the relationship with the other interns?

KW: Pretty good, Billy and I met during the company softball games, which was a nice icebreaker. Nick has been a good cubicle neighbor, although I do feel bad, because I sometimes listen to stand-up specials like John Mulaney & Mitch Hedberg and I can’t help but laugh sometimes, so he either thinks I’m crazy and is weirded out or he thinks that research is a hilarious time and he’s jealous he isn’t doing it too.

 

NAIH: What’s the favorite part of your job so far?

KW: The free lunches are pretty cool. But throughout the past few weeks, I have enjoyed different meetings, especially with groups like Compstak. Also, I enjoy using the mapping software to develop different maps for the brokers. Gaining proficiency in this software is one of my goals for the summer. I really like writing and analyzing articles for the blog-it’s helping me improve my reading and writing skills.

 

NAIH: What do you see for your future? Has it changed since starting the internship?

KW: I have considered many different paths for when I graduate, oftentimes split between working in the government sector or as a businessman. I always thought that I would join either financial or consulting services, but after working with NAI Hunneman, an opportunity to sign on with a close-knit commercial real estate company like this has been added to the list.

 

NAIH: What’s your favorite part of Boston? Favorite building?

KW: Working in the Seaport has given me an affinity for the neighborhood, but I truly enjoy walking along Newbury Street in the Back Bay the most. As for my favorite building, it has to be Fenway Park, but if that doesn’t count, Old City Hall is a close second.

Cathy Minnerly & Ovar Osvold of our Leasing & Advisory Service Team recently completed a 10,042 SF lease transaction at Walpole Park South, Bldg. 2 in Walpole, MA

WalpoleParkSouth - DynamicMedical - Tombstone

Q&A with Sean Hannigan: NAI Hunneman Grows Industrial Team

Sean H Blog Photo

NAI Hunneman is excited to welcome recent Bentley University graduate Sean Hannigan to his new full-time position as an associate on the industrial team. Having worked as an intern with both our downtown and industrial teams over the past two years, Sean has had the opportunity to learn from our team members across different industries. One of the reasons Sean knew he wanted to join NAI Hunneman full-time was his positive experience during the internship program, in which he was a true member of the team working toward a larger end goal to enhance the level of service as a firm. Here’s what Sean had to say about his new role:

NAIH: What did you learn as an intern at NAI Hunneman that has helped you transition into your new role?

SH: The internship was extremely hands-on, which made my transition to my current role a lot easier. While I was an intern, I was able to shadow Peter Evans and get a feel for different office spaces and properties. I was also able to work with a brand new CoStar database as well as the new NAI Hunneman database which is something I work with frequently in my current position. The team at NAI Hunneman does a fantastic job of allowing the interns to actually experience what the commercial real estate industry is like.

NAIH: Tell us more about your experience at Kraft Sports Group – how did that experience prepare you for this role?

SH: During my sophomore year at Bentley, I worked for Kraft Sports Group as a game day and events intern. Working games for the Patriots and the Revolution was always fast-paced, so it taught me a lot about how to think on my feet and make quick yet informed decisions. This role definitely helped prepare me for the fast pace of the commercial real estate industry.

NAIH: What made NAI Hunneman the right choice for you as you begin your career in CRE?

SH: I knew NAI Hunneman was the right choice for me because during my internship, I was always treated like a valued member of my teams. The interns sit in on all team meetings, and are always encouraged to share their opinions as well. I remember, in only my fourth or fifth week at the firm, Peter Evans had me speak on behalf of the downtown team in a big development meeting. That moment really made me feel like I was an essential team member, and is a large part of the reason why I wanted to continue my career at NAI Hunneman. The commercial real estate industry is often stereotyped as competitive and independent, but here you really get the feeling that we are all in this together.

Additionally, when I met with David Slye, he impressed upon me that he didn’t care who I knew or what college I had attended, he was looking for people to that were the right fit to join the team. When I joined the team, I knew it was because he thought I was a good fit, which I took as a true compliment and really helped begin my growth at NAI Hunneman.

NAIH: What is it like being a millennial in CRE?

SH: As a millennial in commercial real estate I think I feel more comfortable using new technology – like our new database system at NAI Hunneman, which I work with often. But specifically at NAI Hunneman it is encouraging to see people close to my age like Ovar Osvold in leadership roles because it shows the younger people like myself that hard work pays off.

NAIH: You have a leadership background from your time at Bentley University. How has that helped in your career thus far?

SH: My past leadership roles as well as my education at Bentley were instrumental in my career thus far. Bentley requires all of its students to take foundational business courses, so even though it wasn’t my focus I took some marketing and accounting classes that have already helped in my new role. The leadership programs that I took part in were incredibly important with networking and practicing for job interviews. Bentley’s career services program actually help set up the interview that eventually led to my internship at NAI Hunneman, so I always felt like the school really had my back.

NAIH: Who will you be working with on the Industrial team?

SH: In my role on the industrial team, I will be working with Cathy Minnerly, Ovar Osvold and Glenne Bachman. I will be doing a lot of shadowing of Ovar, as well as assisting with showings and deals and keeping our database up to date. For example, earlier today I canvassed a few properties with the team, which is great exposure to both the landlord side and the tenant side. I look forward to learning more about the industry, and am really excited to continue on my journey with the NAI Hunneman team.

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June Employment Numbers Exceed Expectations

By Liz Berthelette – Director of Research

The June employment numbers were released Friday July 7th and the data significantly exceeded expectations. After May’s poor numbers, concerns over a possible economic decline grew as May saw only 11,000 jobs added to the workforce. In June, employers added 287,000 jobs, well above the projected 175,000. This represents the strongest month of job growth since October 2015. These June numbers helped lay to rest the concerns of economic downturn inspired by the poor May numbers.

The unemployment rate did rise to 4.9% in June, from 4.7% in May. However, experts look at the increase in unemployment as an indicator of people re-entering the workforce, which is a benefit for the economy in the long-run. The employment market may be on the cusp of vigorous competition, as wages rose 2.6% over the course of the cycle, the largest growth since 2009.

Employment Chart

The June data has been tied to the largest economic stories this month along with Brexit and the Federal Reserve’s ongoing discussion of raising interest rates. The return to steady job growth in June is welcome amidst the unrest over Brexit. While the aftermath of the decision did cause losses in the stock markets, it hasn’t led to a deeper economic recession within the U.S.

As for the Fed’s position on interest rates, these recent numbers lead experts to believe that rates won’t be raised this month. There is, however, a possibility of a rise later in the year, potentially as early as September. Traders of US short-term interest rate futures are projecting a 24% chance of a rate-hike by the end of the year, double what was projected prior to the release of the report, and a 35% chance by next June. The Fed will likely remain in wait-and-see mode to ensure that the United Kingdom’s decision to leave does not have any further impact on the economy.

The specific impact on Boston is yet to be seen, but may not be significant. The city is below the national unemployment average as it is, and is approaching full employment. The Bureau of Labor Statistics reports that the industries showing strong growth include healthcare and financial services, signaling a potential of job-growth within Boston. The healthcare industry added 59,000 jobs in the month of June, while the financial and information industries added another 50,000 jobs nationwide. Boston may not have seen much of a change in employment data, good news for the nation can only mean good news for the city.

NAI Hunneman’s Q2 Greater Boston Market Report is Now Available

Greater Boston’s commercial real estate markets posted varied results in the second quarter. While the lab market is tighter-than-ever and the industrial market continues to impress, absorption was flat in the office market and investment sales volumes are down across the board. Global economic conditions, BREXIT and the upcoming presidential election are some of the concerns weighing on business sentiment. With that said, Greater Boston is still on solid footing and the recent rebound in domestic job growth (287,000 jobs were added in June) could provide a boost to activity as we move into the summer doldrums.

Click Image to Access the Report

Click Image to Access the Report

Here are some highlights from our Q2 2016 market reports:

  • Conditions in the Greater Boston office market were relatively flat in the second quarter – recording roughly 27,000 square feet of positive absorption. Rising sublease inventory, consolidations and corporate relocations were largely responsible for the lack of movement. While office vacancies are 70 basis points lower than year-ago levels, they have inched up by 20 basis points since the first quarter. Landlords have been able to push through additional rent gains as fundamentals are still positive. However, the pace of growth is slowing and some landlords are beginning to ease on asking rents. While it is still too early to call for widespread weakness in the office market, we may see a turning point in the cycle this year.

 

  • Vacancies in the Greater Boston industrial market have fallen to a 15-year low; ending the second quarter at just 8.7%. Year-to-date the market has absorbed 2.3 million square feet of industrial space. Given such positive fundamentals, industrial landlords have been consistently raising rents in Greater Boston. As of the second quarter, lease rates expanded by 11.3% on a year-over-year basis, averaging $8.26/SF. Although leasing momentum has slowed from last year’s rapid pace, demand for modern, high-quality industrial space is solid.

 

  • The Greater Boston lab market posted another positive quarter with net absorption surpassing 465,000 square feet and vacancies reaching record lows at just 2%. Cambridge is still the epicenter of activity as demand for space continues to outstrip supply by a wide margin and vacancies declined to just 0.9%. This scarcity of space is driving tenants to execute forward lease commitments, consider build-to-suit construction and seek out quality space outside of Cambridge in the Longwood Medical Area and along the Route 128 belt. Fundamentals are expected to remain positive in the coming quarters, but the second-half of 2016 will be pivotal as macro headwinds may be on the horizon.

NAI Hunneman Intern Spotlight – Bill Rand

We’ve hired a group of bright, hardworking students to serve as summer interns. Over the next few weeks you will get to know them in our Intern Spotlight. Up first is Bill Rand, intern with our Capital Markets Team.

NAI Hunneman Intern Class Summer 2016

NAI Hunneman Intern Class | Summer 2016

 

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Bill Rand |Capital Markets Intern | UMass Amherst

NAIH: Describe a typical day?

BR: My day usually begins by getting settled in and saying hello to everyone. Surprisingly people often respond to my “Good Morning”, with “Good, you?”… I then start my work for the day, due to confidentiality agreements I can’t disclose too much about what I actually work on, but what I can tell you is that it’s like really really important and cool.

NAIH: What’s your background (school, hometown, hobbies)?

BR: I am from Andover, MA and attend UMass: Amherst. My hobbies include playing club lacrosse, intramural sports, and hanging out with friends.

NAIH: Why did you pursue an internship at NAI Hunneman? What do you hope to take from the experience?

BR: I pursued an internship here because I have a strong interest in finance and real estate. Since I’m already an expert in capital markets, I hope that I can take away a better understanding of the brokerage, property management and marketing aspects of real estate.

NAIH: How have you been able to apply your skill set to your job and what kind of an impact have you made here so far?

BR: I feel that my skill set revolves around getting to know people and creating a network. I don’t think I’ve made too much of an impact though, because when I wished one of the partners a happy birthday and he asked me what my name was.

NAIH: What skills have you been able to acquire?

BR: Though I already knew how to use excel before starting here, I would say that it is the skill that I have been able to enhance the most.

NAIH: Why are you interested in Real Estate?

BR: Isn’t it obvious? For the girls.

NAIH: How’s the relationship with the other interns?

BR: I think we all get along very well. We’ve been here about a month so it’s not like I have their phone numbers or anything, but they’re good guys.

NAIH: What’s the favorite part of your job so far?

BR: Lunch-time, because it’s the best time of the day to meet and get to know people around the office.

NAIH: What do you see for your future? Has it changed since starting the internship?

BR: When I first began interning here I was pretty set on going into investments and working with the stock market, but now after starting the internship I am more interested in the principal side of real estate and building a portfolio.

NAIH: What’s your favorite part of Boston? Favorite building?

BR: I don’t have a particularly favorite part, but I feel like the best answer is to say here at NAI Hunneman. My favorite building is the PWC building in the Seaport, I park there and they are opening up a Chipotle on the ground level in the Fall.

 

 

David Ross, Gina Barroso, Henry Lieber & Patrick Grady of our Capital Markets Team recently completed the sale of 333 Turnpike Road in Southborough, MA

333 Turnpike Tombstone

NAI Hunneman’s Q2 Biotech Market Report is now available.

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NAI Hunneman’s Q2 Market Recap is now available.

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Cathy Minnerly & Ovar Osvold of our Leasing & Advisory Service Team recently completed a 10,436 SF lease transaction at 40 Robbie Road in Avon, MA

NAI Hunneman completes 10,436 SF lease at 40 Robbie Road |Avon

Robert Tito & Gina Barroso of our Capital Markets Team recently completed the $3.26 Million sale of 466-472 Broadway in Chelsea, MA

466-472 Broadway Sale

3 Reasons You Should be Talking About the Class B Market in Downtown Boston

As we explored in our Q1 2016 market report, Downtown Boston’s Class B office market continues to attract investors. Since 2014 we’ve seen nearly $3 billion in transactions with sales volume surpassing $700 million during the first half of 2016 alone.

Class B Office Sales : Downtown Boston

Class B Office Sales : Downtown Boston

With this rising demand for Class B office properties in Boston, sales prices have skyrocketed. On an annual basis the median price-per-square-foot topped $450 in 2015 and has averaged more than $400/SF in the first half of 2016. Cap rates have also compressed by nearly 300 basis points from 2011 to 2015.

Class B Office Pricing: Downtown Boston

Class B Office Pricing: Downtown Boston

We can attribute these market conditions to three core factors:

  1. Limited Class A properties for sale: There is a limited number of Class A properties for sale in the Downtown market. Many of the city’s trophy office towers have already traded in this current cycle and a majority of these new owners tend to hold assets for 10 or more years.
  2. Increased appetite for risk: As the expansion cycle continues in Boston investors are willing to move further out along the risk spectrum, bolstering demand for non-core buildings.
  3. Tight fundamentals: Increased leasing activity, below average vacancies and rising asking rents have made Class B assets more desirable to potential buyers.

The following examples illustrate just how frenzied pricing is in this segment of the marketplace.

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While it may be a great time to be a building owner, office tenants are facing severe ‘sticker shock.’ The aggressive underwriting accompanying these hefty price tags continues to put upward pressure on Class B office rents. “Demand for Class B space in Boston continues to rise and so are prices. 33-41 West St., a 38,000-square-foot Class B building in Downtown Crossing just sold for $16 million – which more than doubled its previous sales price,” said Bob Tito, EVP, Capital Markets Group.  “We don’t see this increased appetite for Class B properties slowing down especially with limited Class A space available.” As a result, smaller, price-sensitive firms may have to look outside of the core downtown area for value options.

Check our blog and market reports in a few weeks for an update on market activity in Q2.

Class A office space available in strategic Route 1 (Norwood, MA) location. Contact Ovar Osvold or Cathy Minnerly for details.

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NAI Hunneman Carl Christie, Robert Tito & Dan McGee of our Capital Markets Team recently sold Planet Fitness Plaza in Stoughton, MA – $4.9 Million

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Ben Sutton & Peter Evans of our Downtown Leasing & Advisory Service Team recently represented Zagster in its relocation to 25 First Street in Cambridge.

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Ovar Osvold & Cathy Minnerly of our South Leasing & Advisory Service Team recently represented Claris Vision in relocating their operations to 7,879 SF at 175 Paramount Drive in Raynham

Claris Vision-Just Signed

As Venture Capital Retreats Nationally, Boston Remains a Bright Spot

Venture capital funding is holding steady in the Boston market amid broader concerns of a bursting tech bubble. As reported in the Felder Report last week; overvalued startups, reduced funding, a non-existent IPO market and increasing layoffs are becoming more commonplace — particularly in startup hubs like Silicon Valley, Seattle, Denver and Austin. Though trends in venture funding should be monitored closely in the coming quarters, it’s not time to hit the panic button in Boston yet.

After 2015’s banner year, over $1 billion in venture funding flowed into the Boston market during the first quarter of 2016. While this does represent a 20% decline from last year’s blockbuster first quarter, it is well above the fourth-quarter low of $724 million. The thriving life science industry continues to account for a large share of funding in Greater Boston with more than 60% of total volume in the first quarter. Comparatively, funding for life science companies in Silicon Valley was less than 25% of the total. The outlook for growth in life sciences and healthcare is bullish, which could minimize risk and bolster the market’s already healthy demand for lab space in Boston.

Total Funding Chart

The metro area also saw an increase in Series A funding compared to year-ago levels. This bodes well for demand growth from local startups as their commercial real estate needs tend to expand following early funding events.

Funding by Series Chart

As the U.S. enters into the later stages of this expansion cycle frothiness in tech economies is a growing concern. Boston is not devoid of risk, but conditions in the local startup market are favorable as venture capital investors continue to favor the biotech sector.

To see more cutting-edge analysis from the NAI Hunneman Research Department, check out the 2016 Q1 Market Reports.

NAI Hunneman is pleased to announce the newest member to its Leasing & Advisory Services Team

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95 Acres of shovel ready, biomanufacturing sites available at the SouthCoast Life Science & Tech Park on Rt. 24 in Fall River

Contact mdigiano@naihunneman.com  or cminnerly@naihunneman.com for more details.

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NAI Hunneman News: @NAIHunneman

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