Developers Chasing Attractive Live-Work-Play Spaces For Boston's Growing Workforce
Greater Boston developers, riding the hottest real estate market in the country, are now focusing on supporting the workforce needed to propel the thriving economy.
Demand for employees will come from every sector of commercial real estate, including the booming life sciences market that alone will require approximately 40,000 net-new workers by 2024, according to the Massachusetts Biotechnology Council. Sky-high e-commerce demand will generate thousands of jobs, with Amazon this month announcing more than 1,000 corporate openings in Massachusetts. Urban and suburban developers are fitting out public spaces and hospitality projects with local residents in mind in a play to create new live-work-play destinations.
CRE players need to create attractive hospitality, food and beverage offerings, and a more social environment for the incoming workforce. CRE players also need to support affordable housing amid a lack of inventory, panelists said Tuesday during Bisnow’s Boston State of the Market event.
“As you think about investing in the industrial space, think about where your workers will live and invest in those spaces,” MassDevelopment CEO and former Lawrence Mayor Dan Rivera said.
Investors’ appetite for Boston real estate has exploded in the past 12 months, pushing the metro past Manhattan as the nation’s busiest for investment in commercial assets including offices and labs. Developers are converting and tearing down offices to make way for in-demand life sciences and industrial assets. Private equity giants are salivating at Boston’s growth, throwing hundreds of millions at swanky residential complexes across Boston, while the inner suburbs are enjoying their own rent growth.
The coronavirus pandemic has forced placemaking, the effort to tie developments to the public realm, to the forefront, and new developments are angling to capture their neighbors’ attention. The massive 1,054-room Omni Boston Hotel in the Seaport, which opened earlier this month, includes seven restaurants and a sports bar, offerings that hotel operators hope will draw Boston residents alongside convention and leisure travelers.
“How do I make a convention center hotel a destination for the people who live there and work there?” Manfredi said. “Create a mix of tenants, all the food and beverage, that will attract people like me to go there for lunch. Would you go to the New York Hilton, if you were a New Yorker, for dinner?”
The hotel is exceeding pre-pandemic business expectations, Omni developer and Spot On Ventures CEO Robin Brown said. The sports club at the hotel, which opened last Thursday, generated $200K in food and beverage revenue over its first weekend, exceeding the hotel’s projections, he said.
“We have to continue to create social experiences where people want to be with each other,” Elkus Manfredi CEO and founding principal David Manfredi said. “The pandemic caused us to focus on the important — creating experience.”
The placemaking and live-work-play mindset has expanded to Boston’s suburbs, where developers are making investments in projects like streetscapes. Spurred by the pandemic, cities are doubling down on open space and outdoor dining, all in an effort to create entertainment around the clock.
MassDevelopment’s Commonwealth Places program, established in 2016, offers funding for placemaking projects across the state to draw foot traffic downtown and extend local business hours on select nights. In December, MassDevelopment announced $390K in a round of funding related to the pandemic.
“People are home, they’re becoming more and more familiar with their downtowns and their communities,” Rivera said. “What do you do when you’re downtown? You go downstairs and you have lunch. But if you’re in downtown Attleboro and when you’re not working, where do you go?”
Retail weathered a gut punch from the pandemic and experts said demand for space has increased in the past three months. Top-tier malls are seeing a foot traffic renaissance while smaller, older shopping centers are being reinvented with new tenants like health and coworking offerings. Mixed-use developer Gazit Horizons CEO Jeff Mooallem said he’s heard around the market of nonrefundable lease deals under contract, a deal structure not commonly seen since the early 2010s.
The state’s housing crisis is going to present a challenge to local businesses, whose employees face among the highest rents in the nation and home prices in Boston exceeding $800K. The city of Boston is aiming to produce 70,000 units of affordable housing by 2030, and it has introduced municipal pilot programs to open more avenues of living spaces, to mixed success.
Workforce housing, or living spaces offered at 100% of area median income, and affordable housing offered to AMIs as low as 30% are full and face little turnover. Tenants, typically essential workers, are able to pay their rents while affordable housing communities have endured less turnover during the pandemic than other tiers of housing, experts said.
“If we don’t address low, moderate and workforce housing, we are not going to be able to support the lifestyle and the business community that we've grown to really benefit from,” developer and Meredith Management Corp. CEO John Rosenthal said.
President Joe Biden’s American Jobs Plan will deliver $30B to the Housing Choice Vouchers program, which will help more tenants in deeply affordable housing pay for living spaces. While landlords are hesitant to accept vouchers among their portfolios, investments will pay off when the U.S. Department of Housing and Urban Development delivers the vouchers, Rivera said.
“The money that you're going to make investing in housing will be worth it,” he said. “No one will love you more than one of those places that’s been trying to get that one building downtown that’s trying to get housing. Permitting will be very quick.”