Boston’s CRE Leaders Predict What’s To Come In 2020
It is a new year, a new decade and a fresh start for one of the hottest commercial real estate markets in the U.S.
Boston spent the last 10 years recovering from the Great Recession and turning itself into the world’s hub for life science and one of its most expensive cities in which to live. Developers broke ground on new skyscrapers, the Seaport transformed into one of the city’s hottest construction zones and the MBTA was reliably unreliable.
But as Beantown enters 2020, the city’s real estate community is looking for ways to continue the development momentum while addressing the burgeoning problems that threaten future growth.
Developers are pushing ahead with new towers at Winthrop Square, South Station and Government Center. But urban planners, neighborhood activists and the development community stress the city and region have to do something about improving mobility to get workers and residents to and from all the new projects.
From the Four Seasons One Dalton to Millennium Tower and over to Fan Pier, plenty of luxury condo developments were greenlighted in the last decade. But more neighborhood groups and housing advocates are calling for denser, more affordable housing developments to make Boston a place where people at all income levels can call home.
Bisnow reached out to local real estate leaders to get their predictions on where the city is heading in the new year and decade. From housing legislation to a working transit network to a long-awaited market correction, these are their forecasts. Answers have been edited lightly for clarity.
National Development Managing Partner Ted Tye
"My prediction is the unprecedented economic growth in Boston generally will continue, led by the life sciences, which will fuel growth in South Boston, Allston and Watertown.
Housing growth is critical to our economy in keeping up with increased employment and population growth, but it is highly susceptible to increasingly thin margins that could be threatened by regulation and challenged by changes in interest rates. The retail market will continue its rapid evolution with smaller, more activated retailers better positioned than larger stores and restaurants — with very limited new development opportunities.
Political changes at the national, state and local levels should be carefully watched and could produce uncertainty at any time."
Inquilinos Boricuas en Acción CEO Vanessa Calderón-Rosado
"There are some crucial regulations under consideration by the State House that could substantially move the needle for affordable housing this year. Toward the end of 2019, Mayor [Martin] Walsh signed two home rule petitions that had critical support from local advocates.
The first would create a transfer fee on commercial and residential transactions over $2M, which could generate close to $200M a year for affordable housing and ensure that the building boom in Boston benefits all residents.
The second seeks to increase the [Inclusionary Development Policy] rate and linkage fees in Boston, expanding upon pre-existing legislation that requires that new construction projects contribute to a fund for affordable housing developments. As momentum continues to build in support of both proposals, we’re confident that their implementation would provide the resources needed to preserve and promote equity in our communities.
On the state level, I’m hopeful that Gov. [Charlie] Baker’s Housing Choice Bill will pass in the legislature in 2020. Third time’s the charm!"
WS Development Senior Vice President Yanni Tsipis
"Regardless of how many new buildings break ground next year, one thing we do know is that a true sense of community, the authentic, the unique and the unexpected will grow ever more scarce, and yet ever more important as the development industry continues to consolidate and homogenize."
Lendlease General Manager of Boston Development Nicholas Iselin
"2020 is the year more developers will focus on their climate resilience. When developing on the Boston waterfront, there is a complex tangle of regulatory and environmental reviews that must be navigated in addition to the rigorous planning and neighborhood processes. Various city, state and federal regulatory agencies have purview over setbacks, building heights, public amenities, wildlife, waste site cleanup, flood plains and more.
Many of the regulations are created by looking at historical data versus predicting what may happen in the future. The Federal Emergency Management Agency, for instance, is a rearview-looking statute, setting flood zone data based on historic events. However, with sea levels continuing to rise and the frequency of storms defying expectations, more and more waterfront developments will set out to follow Clippership Wharf's example and create projects that aren't just compliant, but that will be sustainable for decades."
Sasaki Principal Elizabeth von Goeler
"2020 will be a year of change in how companies view their workplace. With real estate dynamics shifting in response to coworking’s now uncertain future, simply leasing extra space to house employees isn't as simple anymore. In fact, for a large organization, having many people work in a third-party coworking space can cause issues with culture, exposure to competition and office rules that may not be beneficial to the company renting space. My prediction is we will see an investment at the company level in enlarging or creating real estate teams, designing spaces for their company and a reinvestment in their real estate portfolio."
Global Property Developers Corp. CEO Steve Callahan
"2019 marked a momentous year for the esports industry, as it surpassed $1B in revenue. This is up 27% from 2018, and I expect the industry will continue to grow through 2020 and beyond. This presents a tremendous growth opportunity in real estate, as major competitions require significant event space. I believe in 2020, real estate developments will continue to seek out ways to incorporate esports into their mixed-use developments, further promoting projects as entertainment destinations."
Finard Properties CEO Todd Finard
"As development in Boston continues at a strong pace, I expect many developers will continue to pursue opportunities outside the city in other major urban areas. Worcester has seen a great surge in redevelopment, with $3B invested in mixed-use development in recent years. Fueled by thoughtful real estate projects and exciting announcements such as the WooSox, I anticipate 2020 to be a year where additional gateway cities benefit from redevelopment from investors and owners seeking opportunities."
Skanska Executive Vice President of Commercial Development Russ DeMartino
"We expect to see more creative innovations in the tenant amenities space and look forward to pushing the envelope further in that regard through the technology we are enabling at Two Drydock in 2020. We expect the real estate community as a whole will continue to deliver designs that consider climate resiliency and future technology, such as the elevated parking on floors two to four at Two Drydock, that allows for potential future repositioning. Boston’s core will also continue to expand and take new shape as its surrounding areas are tapped for new development."
CBT Principal Phil Casey
"One of the major changes we see on the horizon for 2020 is going to be Boston’s reaction to the severe transportation and housing crises that we’re experiencing. As space for housing around transport hubs in the city is at a prime, and as ride-sharing systems mature, parking lots and parking garages will become the next focal points for creating more housing (or even office, hotel [and] retail) within city limits. Modular units and temporary housing solutions on under-used surface parking areas could alleviate the traffic arriving from outside Boston. The once-necessary massive parking garages that sit largely empty today will continue to be transformed to create mixed-income housing options."
Redgate Principal Greg Bialecki
"Here are some signs of change to look for in 2020 and beyond as these communities around Greater Boston continue to evolve: new corporate headquarters (like Puma North America in Somerville), new tech startups (like drone maker Kiwi Technologies in Malden), high-rise construction (like The Caldwell Apartments in downtown Lynn) and destination restaurants (like Dryft on Revere Beach). Politically, the market interest in both residential and commercial development in these communities will help local governments to support the growth and change."
Skanska Executive Vice President of Building Operations Bryan Northrop
"Based on our experience working with numerous leading life science and healthcare institutions in Greater Boston, we anticipate 2020 will bring more pharmaceutical manufacturing, and that the life science community will increase their focus on cell and gene therapy and personalized medicine. We also expect to see Greater Boston’s surrounding neighborhoods begin to transform into new hubs for healthcare and life science, and construction leaders, especially within Skanska, continue to prioritize safety to ensure best practices and essential equipment are inclusive and accessible to all.”
Rhode Island Commerce Corp. Executive Vice President of Business Development Hilary Fagan
"Not only is it getting expensive for startups and midsized companies to find office and lab space, but companies also have commute time and transportation challenges around the Boston metro. Another interesting data point is growing job fill-times and higher churn.
Smaller cities, like Providence, offer an interesting option for company growth and expansion: 23-minute average commute times, quicker fill-times for open positions, as well as lower churn rates — which equates to real dollars for growing companies.
I expect in 2020, that we will continue to see companies looking beyond the traditional innovation hubs for their expansion projects."
WiredScore Head of Boston Dave Miller
"Technology will continue to play a monumental role in shaping workplace environments in 2020, and companies more than ever will need to ensure their buildings are future-ready to stay ahead of the digital curve. We expect cybersecurity and data privacy will be deciding factors in office leasing and design; 5G connectivity will be a crucial feature in every office once it arrives; and intelligent buildings will further redefine how we experience the workplace as the [Internet of Things], tenant engagement apps and AI become industry-wide standards."
Skanska Vice President of Civil Operations Paul Pedini
"2020 is poised to bring more creative solutions to the transportation challenges we face as a growing city and thriving hub for new business.
We are hopeful that more public-private partnerships like the one that led to the creation of Boston Landing will emerge, bringing opportunities for increased efficiency and collaboration through design-build work to the market. We also expect to see more creative and sustainable best value procurement infrastructure solutions such as Northeastern’s new ISEC Pedestrian Bridge, which was designed targeting Envision verification and now serves as a vital connection between the university’s facilities on the south side of five MBTA and Amtrak rail lines that separate it from the main campus."