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Boston Commercial Real Estate

REIT ROYALTY

At a time when cash is king, REITs are leading the royal entourage. Three of them—Alexandria Real Estate Equities, HRPT, and Equity Residential— talked shop before the standing-room-only crowd attending NAIOP's breakfast at the Seaport Hotel Thursday.
We snapped moderator Goodwin Proctor's Ettore Santucci with Alexandria's Tom Andrews, HRPT?s John Mannix, and Equity Residential?s Greg White. Ettore noted that REITS have money in the bank as well as access to capital, structural flexibility, and depth of management. He asked if cash will continue to rule the day: John said that it will because those selling in this credit constrained economy want certainty that prospective buyers can close. Greg said that in the transactions he's closed over the past few months, Equity?s liquidity gave it an edge competing against 20 to 30 bidders. ?Sellers tended to go with us for that very reason.?
Talk about certainty: Tomsays that when Alexandria received its final permits from Cambridge on Tuesday to build a 1.7M SF lab complex ?you get over a hurdle like that and it takes away any doubt.? As the meeting broke up, he told us Alexandria still faces a brief appeal period but after years of permitting, Cambridge and Alexandria have found common ground. Having approvals in hand will help as he seeks a build-to-suit tenant, he says, adding he won't build on spec. But in one to three years, he expects construction to be underway on the first of five lab/office buildings. The complex (aka Binney Street Project) will also include about 220k SF of housing and 20k SF of retail.
Greg calls multifamily in the next two years ?all good.? If the economy and jobs picture improves, the Echo Boomers will drive demand like never before. Given Boston's three- to five-year approval process, he says this is the time to develop. On the sale side,John says there's much more capital than nine months ago but still a scarcity of core assets, and few fire sales. On the buy side, REITs are active and private REITs the most aggressive, he says.

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