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June 23, 2010
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A Solid Core
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| Boston CRE is holding up compared with other major markets, and doing better than it did in the prior two recessions, said panelists at NAIOP’s Mid-Year Market Trends breakfast last week at the Seaport Hotel. That’s good and bad news. It reflects controlled supply and steady demand but also a slow-growing population. |
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| In his economic overview, PPR's Hans Nordby (here with CBRE's Paul Donahue) said in the critical jobs arena, Boston lost fewer (5%) than the nation as a whole (6%), whereas in the last two recessions the city was on “the sharp end of the stick.” It lost banking and defense jobs in ‘90-‘91 and later, crashed during the “tech wreck.” This time, there’s work in healthcare, life sciences and custodial banking; less home pricing volatility and less population growth. But it’s a problem, Hans says, “few people want to move here.” Boston also shares the nation’s albatross: debt rising to perhaps 80% of GDP by 2020, putting the US in league with Italy, a place rarely “associated with sound fiscal policy.” We’ll get back to Paul but first … |
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| We snapped Richards Barry Joyce’s Michael Joyce who sees some confidence coming back into the Boston office market with more companies relocating, not just renewing and little sublease space. He expects rising Back Bay rents to push more tenants to the Financial District. With little new supply being built, and 12M SF of Class A tenant requirements coming up by 2014, the market should do well. Meanwhile, Paul says the outlook for multifamily is “very positive” with limited stress from foreclosure, tight supply and rents growing, investors are back with more buyers than sellers. Paul expects rents to rise up to 7% by 2012, which “will do wonderful things for sale prices.” Meanwhile, he doesn’t expect loan maturities to pose serious issues. |
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| Here’s EOP’s John Conley in a quiet moment after the breakfast where he delivered the good news that in the suburban office market’s negative absorption is easing and recovery will happen “faster than expected.” Interest rates will stay low, stimulus money will continue to flow, and businesses are generating or holding cash they want to spend. Also, with landlords rolling back concessions, tenants are more eager to lease and there are pockets of growth. Eastdil Secured’s James McCaffrey says the “big deal” is back because money has been raised and the credit market revived. Jones Lang LaSalles’s John Osten says the Cambridge office/lab market has weathered the downturn better than most because of its strong tenant base in tech, life science, and education. |
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| Longfellow Fix-up |
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| The 102-year-old Longfellow Bridge joining Boston and Cambridge (cousins who don’t kiss) has been an architectural treasure for decades and now is being restored and improved as part of the state’s $3B Accelerated Bridge Program, said Gov. Deval Patrick who officiated at Monday’s groundbreaking. Site prep is underway and construction will start after July 4th on Phase I of the $260M project. Phase I will be completed in early 2012 and phase II by fall 2016, with Jacobs Engineering Group leading the consulting team. The DOT will manage and oversee the design and construction in which historic features will be restored, the structure upgraded and brought into compliance with the ADA. |
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| Pepperoni or Sausage? |
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| Something supercharged this Building Impact group yesterday, perhaps the all-meat pizza they devoured before cleaning the Chelsea Boys & Girls Club—inside and out—as part of BI’s year of CRE industry community service. In just 2.5 hours, they weeded and collected trash. Inside, they scrubbed the kitchen, vending machines, art center, and teen room. The crew includes: (front) Building Impact’s Sarah Gudernatch, Mass General’s Meghan Dunn, her father TRO Jung Brannen’s Matt Dunn. (Back) Paradigm Properties’ Josh Johnson, Stacey Karcz and Jocelyn Keith, TRO’s Ellen DeNooyer, Paradigm’s Marcella Barriere and TRO’s Dave Pires. |
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| TRAVEL MONTH! |
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| Hearing there was unrest in Greece, our journalistic instincts kicked in, and we recently dispatched our investigative unit (aka our publisher and his supply of coffee) to the island of Santorini to see for ourselves. We looked up the beach and down the beach and can report no signs of problems. Which just goes to show you that you can’t believe what you read in newspapers. Meanwhile, we have designated June as Travel Month, sponsored by Nemacolin Woodlands Resort, in the Bisnow newsletters and would love your travel photos. Please send to curtis@bisnow.com. Feel free to provide captions, or let us run wild. |
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| Send ideas to Susan Diesenhouse, susan@bisnow.com. |
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This newsletter is a journalistic news source which accepts no payment for featured interviews. It is supported by conventional advertisers clearly identified in the right hand column. You have been selected to receive it either through prior contact or professional association. If you have received it in error, please accept our apologies and unsubscribe at bottom of the newsletter. © 2010, Bisnow on Business, Inc., 1323 Connecticut Avenue, NW Washington, DC 20036. All rights reserved.
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