Before we attack the largest industry employer in the city of Boston—the mutual funds industry—let’s remember that the tax breaks referenced in the recent decision of Fidelity to vacate its space in Marlboro were granted to all mutual fund companies. The mutual fund industry alone occupies over 35% of the Class A office market in Boston and vendors to the mutual fund industry are a major source of occupancy and employment as well. Mutual funds drive the Boston economy.
And the mutual fund industry in Boston is a proven success. We are not talking about subsidies and incentives to unproven or unstable industries. The Evergreen Solar debacle is the best example of the latter.
If we are going to provide tax breaks or subsidies at all, and I often question that wisdom, the least we can do is to make them available to all of the companies within a target industry. And we should begin by making sure we work with our successful industries first. The success of many other industries depends on the success of the core industry of a region.
Showing posts with label "Boston mutual fund office leasing". Show all posts
Showing posts with label "Boston mutual fund office leasing". Show all posts
Friday, March 18, 2011
Monday, December 21, 2009
Geez, more bad vibes and now someone wants me to move to Houston!!
Hello all,
In reply to what I thought was a simply stated opinion of the importance of the health and education industries to our economy, and particularly to our commercial office space market, I received another bad vibe letter from one Scooby Doo. Now you know I don't have too much time for the bad vibes people. They tend to live by the creed "if it ain't broke, break it."
Now, I will take my lickings from someone debating the relative merits of our cities, be it New York, Chicago, LA, or Altoona. Each has its own style, its own strength. But please don't challenge Boston against any city when it comes to healthcare and then don't finish your bad vibes point by shooting yourself in the foot complaining about Boston's mutual funds industry. That's like me, a 5' 11" washed up hockey player, taunting Kevin Garnett to "show me whatcha gut 'fore I embarass your a..s" Not smart.
Anyway, this is what Scooby Doo wrote verbatim:
"Scooby Doo has left a new comment on your post "The Influence of Educational Institutions on Bosto...":
Whose going to pay the taxes ? The Medical and Educational sector are usually non-profit.
When i travel thru the Longwood Medical Area i cringe - Boston really needs to get it's act together and coordinate the planning for the entire medical area. Pedestrians can barely cross the street, traffic lights are not coordinated. Have you ever been to the Texas Medical Center in Houston. Send some of the planning genius's down there to learn something. I am tired of business as usual here in Boston, one day we will wake up and Fidelity will be headqurtered in Providence !!
And hear is when I decided to bring in not only a few drones but, what the hell it is Texas right, the full artillery. There was no need for detention centers. I think I left no survivors. Enjoy.
Scooby Doo,
I am not sure what you mean with regard to taxes. If you are referring to property taxes, it is true that non-profits do not pay tax on their property. However, in Boston, all of the major health institutions reach agreements with the City to pay "in lieu of taxes" when, by purchasing a private property, removing the property from the real estate rolls.
If you are talking about income taxes, you are also correct. However, by law, non-profits do not distribute profits to private individuals. All money is returned to the balance sheet.
What you truly fail to see is that the explosive growth in the Boston medical world, and the growth has always been explosive, has resulted today in over 385,000 jobs in the healthcare industry, the bulk of which are in Boston.
I do admire the Texas Medical Center. It reminds me a bit of NASA. Lyndon Johnson made sure Texas "won" the big prize for location but then NASA staffed the entire operation with MIT professors, students, and related companies. Read the details on Apollo 11. The guys coming up with a way to make a vent out of toilet paper, a rubber hose, and a white sock were all from Cambridge.
In 1900, Galveston was destroyed and Houston was, more or less born. By 1905, after Spindletop, Houston's population had reached a whopping 44,600. In 1900, the population of Boston was 620,000 with a metro population of 1,196,000. Mass. General Hospital was celebrating its 99th anniversary. Of course, Harvard Medical School was celebrating its 122nd.
My point is simple. The reason Longwood drives you crazy is because it is organic; it grows in and around itself. So does Mass. General, Tufts Medical Center, and Boston Medical Center. These were already dense neighborhoods when tumbleweeds rolled down the streets of Houston. We never got a chance at a master plan. Please keep your Texas geniuses in Texas.
But let's get to the heart of the matter. Boston has 227,000 employees in the healthcare industry. With a metro population of 5.7 Million, that's a ratio of 1 healthcare employee for every 25 people.
Houston not only has fewer health employees, at 219,000 but, considering Houston has a metro population of 9.8 million; there is 1 healthcare employee for every 45 people. Not quite the coverage one gets in Boston.
Let's look just at physicians and surgeons. Boston alone has 6,380 physicians; Houston has 4,530. Ratios: Boston: 1 per 897 residents; Houston: 1 per 2,177. I know where I want to live when I have a heart attack.
The average healthcare professional in Boston earns $78,770 per year. In Houston, the figure is $65,630. You know what they say about money and talent. Now do we really want to count the number of students in medical school? Do we really want to count the pure scientific medical research community, such as the Joslin Diabetes Center? Trust me we don't.
My point, Scooby Doo, is that income taxes generated by the sheer number and wages of Massachusetts health care workers eliminate whatever concern you have about taxes.
I see you mentioned Fidelity. I know them well. Boston, after only London, is the 2nd largest city IN THE WORLD in assets under management. I'm in real estate so I'll use real estate as my reference. Sticking with Fidelity, let's consider the mutual funds industry. First, Fidelity can move its headquarters anywhere it wants to. The problem is that none of its analysts will go there. They'll just walk down the street and work for any of the 25 other mutual funds in Boston. Ned just likes to make what he thinks is a scary threat every few years while he dines with his daughter daily right on Water Street, after he steps out of the same office as his father did.
Back to the facts, the mutual funds alone occupy 37% of the Class A market. That translates to over 14 million square feet of occupied space. Fidelity occupies 1.9 million square feet. They are smaller than State Street Global at 2.6 million square feet. If Fidelity packed up all its bags and left, Boston would still be the largest city in the U.S. in assets under management.
Sometimes business as usual is the envy of many, many cities. But you can always try Providence!
In reply to what I thought was a simply stated opinion of the importance of the health and education industries to our economy, and particularly to our commercial office space market, I received another bad vibe letter from one Scooby Doo. Now you know I don't have too much time for the bad vibes people. They tend to live by the creed "if it ain't broke, break it."
Now, I will take my lickings from someone debating the relative merits of our cities, be it New York, Chicago, LA, or Altoona. Each has its own style, its own strength. But please don't challenge Boston against any city when it comes to healthcare and then don't finish your bad vibes point by shooting yourself in the foot complaining about Boston's mutual funds industry. That's like me, a 5' 11" washed up hockey player, taunting Kevin Garnett to "show me whatcha gut 'fore I embarass your a..s" Not smart.
Anyway, this is what Scooby Doo wrote verbatim:
"Scooby Doo has left a new comment on your post "The Influence of Educational Institutions on Bosto...":
Whose going to pay the taxes ? The Medical and Educational sector are usually non-profit.
When i travel thru the Longwood Medical Area i cringe - Boston really needs to get it's act together and coordinate the planning for the entire medical area. Pedestrians can barely cross the street, traffic lights are not coordinated. Have you ever been to the Texas Medical Center in Houston. Send some of the planning genius's down there to learn something. I am tired of business as usual here in Boston, one day we will wake up and Fidelity will be headqurtered in Providence !!
And hear is when I decided to bring in not only a few drones but, what the hell it is Texas right, the full artillery. There was no need for detention centers. I think I left no survivors. Enjoy.
Scooby Doo,
I am not sure what you mean with regard to taxes. If you are referring to property taxes, it is true that non-profits do not pay tax on their property. However, in Boston, all of the major health institutions reach agreements with the City to pay "in lieu of taxes" when, by purchasing a private property, removing the property from the real estate rolls.
If you are talking about income taxes, you are also correct. However, by law, non-profits do not distribute profits to private individuals. All money is returned to the balance sheet.
What you truly fail to see is that the explosive growth in the Boston medical world, and the growth has always been explosive, has resulted today in over 385,000 jobs in the healthcare industry, the bulk of which are in Boston.
I do admire the Texas Medical Center. It reminds me a bit of NASA. Lyndon Johnson made sure Texas "won" the big prize for location but then NASA staffed the entire operation with MIT professors, students, and related companies. Read the details on Apollo 11. The guys coming up with a way to make a vent out of toilet paper, a rubber hose, and a white sock were all from Cambridge.
In 1900, Galveston was destroyed and Houston was, more or less born. By 1905, after Spindletop, Houston's population had reached a whopping 44,600. In 1900, the population of Boston was 620,000 with a metro population of 1,196,000. Mass. General Hospital was celebrating its 99th anniversary. Of course, Harvard Medical School was celebrating its 122nd.
My point is simple. The reason Longwood drives you crazy is because it is organic; it grows in and around itself. So does Mass. General, Tufts Medical Center, and Boston Medical Center. These were already dense neighborhoods when tumbleweeds rolled down the streets of Houston. We never got a chance at a master plan. Please keep your Texas geniuses in Texas.
But let's get to the heart of the matter. Boston has 227,000 employees in the healthcare industry. With a metro population of 5.7 Million, that's a ratio of 1 healthcare employee for every 25 people.
Houston not only has fewer health employees, at 219,000 but, considering Houston has a metro population of 9.8 million; there is 1 healthcare employee for every 45 people. Not quite the coverage one gets in Boston.
Let's look just at physicians and surgeons. Boston alone has 6,380 physicians; Houston has 4,530. Ratios: Boston: 1 per 897 residents; Houston: 1 per 2,177. I know where I want to live when I have a heart attack.
The average healthcare professional in Boston earns $78,770 per year. In Houston, the figure is $65,630. You know what they say about money and talent. Now do we really want to count the number of students in medical school? Do we really want to count the pure scientific medical research community, such as the Joslin Diabetes Center? Trust me we don't.
My point, Scooby Doo, is that income taxes generated by the sheer number and wages of Massachusetts health care workers eliminate whatever concern you have about taxes.
I see you mentioned Fidelity. I know them well. Boston, after only London, is the 2nd largest city IN THE WORLD in assets under management. I'm in real estate so I'll use real estate as my reference. Sticking with Fidelity, let's consider the mutual funds industry. First, Fidelity can move its headquarters anywhere it wants to. The problem is that none of its analysts will go there. They'll just walk down the street and work for any of the 25 other mutual funds in Boston. Ned just likes to make what he thinks is a scary threat every few years while he dines with his daughter daily right on Water Street, after he steps out of the same office as his father did.
Back to the facts, the mutual funds alone occupy 37% of the Class A market. That translates to over 14 million square feet of occupied space. Fidelity occupies 1.9 million square feet. They are smaller than State Street Global at 2.6 million square feet. If Fidelity packed up all its bags and left, Boston would still be the largest city in the U.S. in assets under management.
Sometimes business as usual is the envy of many, many cities. But you can always try Providence!
Thursday, November 19, 2009
Unemployment, Re-Employment, and the Boston Office Market
And the unemployment rate DROPS from 9.3 % to 8.9 % in Massachusetts in one month. So much for the bad vibe folks who enjoy predicting bloodbaths in commercial real estate or the addition of 65,000 to the unemployment lines. Yes, if you have read any local paper, especially those that cover the real estate business, you have read these articles as recently as 3 days ago. After all, the "experts" said so.
Bu this drop is no surprise to me. I have frequently referred to the impact that the steady and large net inflows into Boston's mutual funds industry would have on the office market where they and their affiliated industries account for over 47% of the Class A market. As early as August, one could pick up the heavier level of activity in the market. As I projected then, we would and did see higher demand and net positive absorption in the 3rd quarter.
And today's announced unemployment drop, I believe, is evidence of the Re-Employment taking place in Boston.
My estimates of gross demand--the total square footage of tenants actively in the market seeking space in a defined time period--have increased. At the end of the 3rd quarter, I saw this cumulative demand in 2010 and 2011 at roughly through 2011 at roughly 6.1 million square feet. Today, the gross demand number has reached 8.6 million square feet. The chart below breaks out gross demand by calendar year, numbers of tenants, and their median and average size.
The initial surge of a recovering market, which first evidenced itself in late summer, has caused every tenant to examine their alternatives in light of what their competitors are doing. It is the class second stage of recovery and I simply refer to it as the "snowball" effect. Stage 3, which we will see my mid March is a very happy stage for landlords! Stay tuned.
Market Demand 2009 through 2011
Typical Tenant
Year # of Tenants Gross Demand Median Average
2009 143 2,900,000 16,700 29,000
2010 154 3,800,000 16,600 33,200
2011 110 4,800,000 24,600 56,000
Bu this drop is no surprise to me. I have frequently referred to the impact that the steady and large net inflows into Boston's mutual funds industry would have on the office market where they and their affiliated industries account for over 47% of the Class A market. As early as August, one could pick up the heavier level of activity in the market. As I projected then, we would and did see higher demand and net positive absorption in the 3rd quarter.
And today's announced unemployment drop, I believe, is evidence of the Re-Employment taking place in Boston.
My estimates of gross demand--the total square footage of tenants actively in the market seeking space in a defined time period--have increased. At the end of the 3rd quarter, I saw this cumulative demand in 2010 and 2011 at roughly through 2011 at roughly 6.1 million square feet. Today, the gross demand number has reached 8.6 million square feet. The chart below breaks out gross demand by calendar year, numbers of tenants, and their median and average size.
The initial surge of a recovering market, which first evidenced itself in late summer, has caused every tenant to examine their alternatives in light of what their competitors are doing. It is the class second stage of recovery and I simply refer to it as the "snowball" effect. Stage 3, which we will see my mid March is a very happy stage for landlords! Stay tuned.
Market Demand 2009 through 2011
Typical Tenant
Year # of Tenants Gross Demand Median Average
2009 143 2,900,000 16,700 29,000
2010 154 3,800,000 16,600 33,200
2011 110 4,800,000 24,600 56,000
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