Happy Halloween!

BOO!!! Sorry, did we scare you?

In celebration of Halloween, we were joined by family and friends on Thursday for trick-or-treating and festivities in our office. Check out a few of our spooky and not so spooky guests below.

Thank you to everyone who joined us and we look forward to seeing more great costumes next year!

Happy Halloween!

Industrial absorption soars

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From Rick Schuhwerk
New England Industrial Lead

The third quarter saw the highest absorption of the year in the New England industrial market, totaling over one million square feet. Large lease transactions included: Amazon leasing all 332,676 square feet at 1000 Technology Drive in Stoughton, EMC Corp. renewing their 192,000-square-foot space at 109 Constitution Boulevard in Franklin, and Restoration Hardware leasing 118,555 square feet at 480 Sprague Street in Dedham.

Real estate fundamentals are improving steadily. Total vacancy is now at 7.5 percent and average direct rents at $5.54 per square foot NNN. High demand for the small supply of quality space will give landlords more leverage in lease negotiations, furthering the rent increases.

As a result of the improving market, investors are increasingly looking to industrial properties to take advantage of the growing upside of higher yields and growing market conditions.

The third quarter of the year saw 31 industrial sales transactions from properties larger than 30,000 square feet for a total sales volume of over $202 million. This is a significant increase from the $129 million of sales transactions seen during the second quarter of 2014.

With the limited availability of quality space, the emergence of build-to-suit projects is expected to continue as there are many currently in the negotiation and permitting process. There is even some speculative development rumored to be in the works. We’ll monitor this for a future post.

JLL Law Firm Perspective reports Boston is rightsizing

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Space reduction continues to guide the office strategy for the U.S. legal sector, with firms giving up an average of 17 percent of their space upon relocating in 2014. Office leasing transactions for the sector have seen a consistent trim this year as 15 of the top 17 U.S. law firm leasing transactions were rightsizing moves, according to JLL’s newly released Law Firm Perspective.

But the influence of rightsizing has started to slow, with a new challenge on the horizon – supply shortage. It’s an obstacle that may offer a great opportunity for the industry. Law firms battling supply constraints and the war for talent may finally start to mimic workplace strategies of their corporate peers.

“Lawyers have always needed their own space, and the industry, as a result, has held on to very traditional workplace needs and strategy,” said Elizabeth Cooper, co-lead of JLL’s Law Firm Practice Group. “However, you have to be creative with your office strategy when the model changes. The industry is dealing with fee compression, a rapidly changing workforce and changing work styles. The workplace has to evolve, and it is changing to meet these challenges.”

According to a story in the BBJ based on our report, the health of law firms speaks volumes for the health of commercial real estate. Boston firms currently occupy about 10 percent of office space in the city, and they are continuing to rightsize in step with the nation.

“Here firms are facing the same forces that are driving other professional service firms to be leaner and meaner,” said New England Research Manager Lisa Strope. “As Boston area law firms are reconfiguring offices to be more in line with trends in the industries they serve, they are looking for flexible, more efficient spaces. Many are considering moves from more traditional and suburban locations.

“Across Massachusetts legal employment is still down nearly 2,600 jobs from prerecession peaks,” Lisa continued. “In Boston, we have seen a modest decline in legal employment over the past year. However, the intellectual property and corporate law sectors are growing, spurred on by the area’s rise in the high-tech and life sciences fields.”

Revenue for law firms is up by 4.4 percent, according to The American Lawyer, but that growth must now contend with rising rents. A JLL study predicts 77 percent of North American cities will see a rise in rents due to scarcity of available office product. This means law firms will no longer look solely at trophy or Class A office space in central business districts when they move or expand. Secondary locations are the next option.

Law firms, as per our findings, are beginning to reach the limits of what efficiency can offer. A review of the top 35 U.S. law firm markets indicated that market-by-market 55 to 90 percent of law firms have already devised substantial efficiency measures in new or restructured leases.

Rightsizing will reach a plateau in the next couple of years, so the industry will be forced to try different approaches to location strategy.

For more news, videos and research resources on JLL, please visit the firm’s U.S. media center.

Blazing the trail at NAIOP’s Marketing Conference

JLL's Linda Swain

JLL’s Linda Swain

JLL was front and center at NAIOP‘s Trends + Technology Marketing Conference, as real estate marketing experts discussed their latest strategies, newest ideas and deliverables used to drive decision making. Our Senior Director Linda Swain moderated a panel on the convergence of technology and marketing. Panelists including Tina Snyder of The Bulfinch Companies.

“The future isn’t about mobile it’s about mobility,” Tina said. “At the end of the day real estate is a fast paced relationship business that requires a dialogue. We must put our colleagues in the best position to transact.”

Real estate companies and marketing agencies are creating memorable campaigns to stay ahead of the competition. Samuels & Associates’ Tom Bloch and Sabrina Sandberg opened the program with a presentation on brand building.

Sabrina, a self described  consumer goods brand marketer by trade, comes to real estate image making from a different perspective. “You have to sell the dream. In this business we don’t have the benefit of instant gratification. At Samuels we’re beginning to change the conversation.” Sabrina presented a glimpse at their high impact campaigns for the residences at 1330 Boylston, the Fenway Triangle Trilogy, and The Verb Hotel.

Conference attendees took part in a real time poll. Nearly half of the respondents said that mobile devices are more important than social media and video in their marketing plans. GoPro and drone video were identified as two exciting new tools for marketing property and services. The jury’s out on drone video pending FAA approval.

Bulfinch Companies’ Tina Snyder with Linda Swain

 

Ryan Enright on the new Downtown dynamic

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JLL’s Ryan Enright is the newest senior member of the Downtown Boston team

The Downtown Boston office market playing field is changing dramatically. The ownership mix is shifting. Tech-based companies are migrating from the Seaport, Cambridge and the inner suburbs in record numbers. Ryan Enright, the latest addition to our fast growing Downtown Brokerage team, shares his insight into this volatility.

“There’s a lot of turbulence right now,” he said. “A tremendous amount of international capital is coming into Boston. These investors are teaming up with local partners. Oxford is now a major player here controlling over 9% of the Class A CBD.

“They have come in with a strong business model, commitment to Boston, and long-term perspective,” he continued. “They’ll rely heavily on third party brokers with a deep knowledge of the markets.

“At the same time, growing tenants are looking for service providers that ‘get it.’ You have to be able to speak their language and understand their culture. Think like they do. These companies are on a rapid upward trajectory and you must be on the same wavelength.”

JLL is ramping up for these rapid changes with an increasingly strong Downtown presence.

Safety is sustainable

BestBobFrom Bob Best
Executive Vice President

What does “safety” really mean? Is it part of the effort to make buildings more “sustainable?”

The traditional view of green buildings is that they have less of a negative impact on the environment as measured by such things as greenhouse gas emissions, waste sent to landfills and water consumption. There is growing interest, however, in making buildings more supportive of the people that work inside of them. This includes making buildings safer.

Beyond building hardware like annunciation systems, sprinklers and defibrillators, company’s are looking at safety training and awareness campaigns. It’s not just about safety in the workplace. These efforts are addressing employees at home, play, and at work. It’s one way to show employees that the organization in concerned about their complete well-being.

 

It’s an important and powerful message: “We care about the environment and we care about you!”

A pretty sustainable idea.

 

JLL tackles Crohn’s & Colitis

JLL participated in The Crohn’s & Colitis Foundation of America (CCFA) annual flag football tournament at Gillette Stadium in Foxborough. The spirited 7v7 touch football competition raised over $83,000 for the CCFA, which provides research, education and patient support for those living with Crohn’s and Ulcerative Colitis disease.

More than 20 teams of corporate executives, football fanatics and CCFA supporters were on hand to play, watch, and cheer. Patriots tight end Mike Hoomanawanui stopped by to meet and greet.

The JLL team, playing in the event for the second straight year, was sponsored by MARIC President, Foundation Board Member and client Mark Rubin. The team, coached by Alex Dauria, was comprised of nine members from our Brokerage and Capital Markets groups. The tourney was won by the high flying Mass Flag All Stars.

Left to right: Alex Dauria (Coach), Nate Ardente, Chelsea Garvey, CJ Kodani, Jennifer Hearn, Jordan Yarboro, Joe Fabiano, DJ Goldberg, Charlie Luce, and Colin Fortier

Tenants continue to expand

strope_blogFrom Lisa Strope
Manager, New England Research
 

Economic momentum is picking up, and tenants are continuing to expand. As a result, tenant leverage is dwindling heading into 2015 and landlords continue to push rents.

Demand persisted in the third quarter in Greater Boston as the market recorded a record absorption of 1.2 million square feet. In fact, Boston was in the top 10 markets nationwide for absorption in the CBD and the Suburbs.

Greater Boston direct asking rents rose 3 percent over the quarter, breaking the $30.00 barrier. This represents an increase of 8.8 percent year over year. While still off peak levels, rents are now approaching 2008 levels. The vacancy rate also dipped by 60 basis points reaching 13 percent, only 2 percentage points over the long run average.

Still, new construction remains limited at least in the speculative space. This dearth in new supply over the next 12-24 months is anticipated to create a squeeze on the market and drive rents at an accelerated pace. That being said, speculative is lurking, in the form of renovation/rehab projects. New deliveries are not anticipated for some time.

This quarter, the capital markets heated up in the CBD with a couple of large portfolio transactions – in particular on behalf of foreign capital. In the third quarter alone, building ownership in part or in total by foreign capital amounted to $4.3 billion and 6 million square feet of commercial real estate space amounting to 8 percent of the CBD and Cambridge markets.

Economically, Greater Boston had a strong quarter, adding almost 5,000 office-using jobs. The metro area hasn’t seen this level of quarterly growth since second quarter 2012.

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Roger Breslin brings Downtown expertise

Boston is hot and so is our Downtown Boston Brokerage team. Our client services have been significantly bolstered with the hiring of seasoned leasing expert Roger Breslin.

As reported in the BBJ, this is part of our expanded coverage throughout Greater Boston. Roger will help lead the Downtown team. He’ll specialize in representing tenants and investors in the leasing of office space throughout the city and surrounding markets.

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JLL’s Roger Breslin joins the Downtown Boston team

Roger comes to us from Colliers where he executed lease transactions for the city’s leading corporate occupier clients. Some examples include: helping Manulife Financial with their regional and national requrements, representing CIBC at 100 Federal Street, McNamara Silvia at 101 Federal,  and most recently Lathrop & Gage at 28 State.

“I love a number of things about the job,” said Roger. “Every day is different. Whether I’m working with a landlord or tenant, clients look to me for creative solutions.

“What really excites me are the challenging transactions with twists and turns. At the end of day, its about providing the highest level of service so I’m front of mind when a client has future needs.”

According to Managing Director and NE Brokerage lead Bill Barrack: “Growing market share and adding top talent is our top priority. Roger’s 14 years in the business, keen market insight, reputation, professionalism and strong relationships will make an even stronger presence for us downtown.”

Roger is a Holy Cross grad and former assistant men’s basketball coach. Today he coaches youth basketball in the Hopkinton Metro West Youth League.

Watch for other senior additions to our Downtown team as we continue to assemble the best talent in the industry.

 

 

Workplace vs. workforce: A powerful dynamic

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From Lori Mabardi
New England Director of Research

 

JLL recently hosted its annual Perspectives Event for the New England commercial real estate community at the ICA in Boston’s Seaport District. Our keynote speaker this year, Ben Breslau, Director of Research for the Americas, challenged us all to think about the tug between workplace and workforce.

It is true that millenials are a driving force in our economy today. The average age of the millenials is 24, hence, many of them are recent entrants into the workforce. By 2020, 50% of the workforce will be millenials. In a live poll of the audience, we learned that 61% of them felt that the millenial generation is the most significant demand driver in workplace design and use.

With this result, Ben reminded us that it is not youth that is the most prevalent trend in America and the world, in fact, is aging. The average American worker is 42.5 years old, over 36% of CEO’s are over 55 and each year, and the retirement age keeps creeping up more and more.

When you look across traditional industries, they are multigenerational.  With financial services, the split is 26% Millenials, 45% Gen-Y and 29% Baby Boomers.

When you look across traditional industries, many are multigenerational. Financial Services, the split is 26% Millenials, 45% Gen-Y, and 29% Baby Boomers.

 

When employers focus entirely on creating a work environment for one generation, they may be alienating a significant portion of their workers. What one generation values the other does not –  and often, it’s quite the opposite!

Now, yes, many high tech firms are young and have embraced benching and highly dense environments because most of the workers are in their twenties. But even in the youngest firms, we have seen the pendulum swing too far towards the collaboration side in the “concentration-collaboration” spectrum and in those cases, absenteeism rises significantly, putting a damper on the anticipated collaboration and innovation.

Firms need to strike a healthy balance in order to maximize productivity and create a space where workers do their best work without sacrificing culture, brand and overall employee satisfaction. The conversation has moved from an economic one to a socio-economic one.

As it relates to the hot topic of downtown Boston vs. Boston’s suburbs, what became clear is that both office locations can win. Buildings, whether in the city or in the suburbs, that have a sense of place, are those that are likely to be desirable and well-leased. Buildings that are vibrant while providing a quality of life and access to amenities outperform the rest, no matter where they are located. And while Millenials are living downtown longer, they too find that as they age, they will choose the suburbs to raise their children.

So, as commercial real estate professionals, investors, CEO’s and city planners, we must remember to take a longer view of things and not to get caught up in the buzzwords and headlines. Don’t assume the trends will work for your people, think about your employee base and ask them what they need out of a workplace to strike the right balance for all.

To view Ben’s full presentation from our Perspectives: Workplace vs. Workforce event please click here.