Friday, September 18, 2009

Congratulations to the Brokers Getting it Done in Boston

It's been a busy couple of months, and it's time to hand out a few kudos to the people who make the city move--quite literally--my colleagues in Boston brokerage. In no particular order, sending kudos to:

Tom Ashe at RBJ who represented Carlin Charron Rosen in a relocation and expansion from 60 State into 15,000 rsf at 125 High Street.

Ben Heller at JLL for the Mass. Bankers 8,000 rsf lease at One Washington Street.

The CB team of Andy Hoar, Tim Lyne, Dave Fitzgerald, Bill Crean, and Jessica Berkey and Bill Barrack of JLL for the 115,000 renewal of Sullivan & Worcester at One PO Square. CB for the tenant. JLL for the landlord, Equity Office.

Peter Farnum of DTZ/FHO for the KNF&T renewal of 6,000 rsf at Three PO Square.

John Hennessey at GVA Thompson Hennessey who represented ITG in its pending relocation from Farnsworth Street to 72,000 rsf at the newly renovated 100 High Street.

Deb Stevens at The Stevens Group for the relocation of Netversant into 19,978 at the Schrafft's Center in Charlestown.

Barry Hynes of DTZ/FHO for bringing Joe Fallon his lead tenant, Fish & Richardson to One Marina Park at the Fan Pier in a lease of 90,000 rsf.

Ryan Hurd of RBJ who represented Ironshore Holdings into 22,000 rsf at 75 Federal.

JLL's Bill Motley and CBRE"s Chris Cuddy, Lauren Lipscomb, and Andy Hoar for the 326,000 rsf renewal of Bank of New York Mellon at One Boston Place.

Dave Richardson of McCall & Almy for Putnam's 300,000 rsf renewal at One PO Square.

Tim Lyne of CB who represented First Wind in the leasing of 36,000 rsf at the newly renovated 179 Lincoln Street.

Over at 177 Huntington Avenue, where DTZ/FHO did a fantastic job representing the landlord, First Church of Christ, Scientist, in bringing the property to full occupancy:

Steve Rich of T3 for the Altus lease of 8,000 rsf and the one pica lease of 8,000 rsf.
Tom Ashe of RBJ for the major deal in the property--a 48,000 rsf lease to CSN Stores.
Gil Dailey of Cushman & Wakefield for the Carbonite lease of 16,000 rsf.
Bryan Sparkes for the 16,000 rsf lease on behalf of The Alliance Companies.
Roger Breslin for the Pile & Company lease of 8,000 rsf.

Ogden White for the renewal of the Handel & Haydn Society lease of 6,000 rsf at 300 Mass. Ave.

Ric Lowe of Cresa Partners for the 17,000 rsf relocation of Merrill Corporation into 179 Lincoln Street.

Bob Cleary at UGL Equis for the Raymond James extension and expansion into 25,000 rsf at 225 Franklin Street.

Leigh Freudenheim of Colliers Meredith & Grew for the relocation of Altman Vilandre into 16,000 rsf at 53 State.

There are more kudos to come from the folks in the trenches on the product side in a future blog. Apologies if I left anybody out of any deal or missed a big one. Great work all around.

Tuesday, September 15, 2009

Boston Brokers Weigh in on Boston Office Outlook

I had the pleasure over the past 2 weeks to speak with 20 of Boston's finest commercial real estate brokers. My purpose was simple: to get a subjective and, a bit of an objective, opinion on where they see the Boston office market headed in the next 6 months as compared to the prior 6.

Each was asked to give their opinion on 3 typical components of the market:

1. Gross Leasing Activity: This is the total square footage of all transactions, regardless of whether the individual transaction represents growth, decline, renewal, or relocation. It's also referred to as velocity and is a way of seeing how much action there is on the street.

2. Net absorption: This is defined as the change in occupied space. If net absoprtion is up (or "positive"), it is a sign of growth in the market.
3. Rental rate: Exactly what is says.
The results by percentage of the respondents follow.
                                                 Up            Down           Flat        % Decline
Gross Leasing Activity:               41%          37%            18%
Net Absorption                          13%           63%            25%          
Rents                                          0%            80%           20%            -7%
In short, brokers feel a sense of higher activity but do not see much, if any, growth in occupied space. And nobody is looking for rents to increase over the next 6 months.
The commentary was equally interesting. The following were culled from various comments.

1. There is pent up demand, not to grow, but to transact. Tenants have been waiting to the last minute to take full advantage of what they continue to see as a declining market.

2. We need to get by the amount of sublease space still on the market before we see improvement in rents. Sublease space always undercuts the direct space market.

3. Owners are more pessimistic than brokers as they project conditions deteriorating for 12-16 months.

4. There has never been a wider variance of "asking" rents for similar space among buildings. There has never been a wider variance between "asking" and "taking" rents in the Class A market. Some landlords have bit the bullet and dropped rates 25% over the past 2 months. Others are holding high face rates but completing deals at a 25-30% discount.

5. The business community has adapted to the larger financial environment. A year ago, gross leasing activity was dropping precipitously and actually came to a virtual halt by November 2008. Companies can at least make decisions.

Finally, a personal note of thanks to all of you that participated. I have always felt that the best economists are real estate brokers. They deal with companies making future plans, and they deal with real people in real time. Hug your local commercial real estate broker.

Graphic depiction of the state of the Boston Office Market