Schrafft’s City Center launches

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A project launch, reception and presentation of the bold changes underway at Schrafft’s City Center was held at the redefined business campus in Charlestown. The four-building complex is now undergoing several capital improvements.

The vision and inspiration of owner/developer The Flatley Company, JLL, and CBT Architects was showcased at the event held in The Powerhouse Building. Many guests arrived via the yacht Beacon from Rowes Wharf.

“Our vision is to unify the campus and create a dynamic corporate environment for a variety of demographics,” said CBT’s Haril Pandya. “The product will be a celebration, and transformation of the nostalgic candy factory to a cool and energized place revitalized for today’s tenants.

“The objective,” continued Haril. “is to unlock the campus’ potential, provide connectivity to the exterior and interior spaces, and greatly improve the arrival and public space experience.”

According to Flatley CEO John Roche who also spoke at the affair: “Schrafft’s City Center is iconic with a long history of sustained occupancy. This project will further our leasing success and the Center’s footprint in Charlestown.”

Schrafft’s City Center is the largest city campus in Boston’s urban ring. JLL represents The Flatley Company in the leasing and marketing.

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JLL Perspectives 2014 event

September 17th marked our Annual JLL Perspectives event at the The Institute of Contemporary Art (ICA) in Boston.  More than 225 clients, colleagues and friends joined us for an evening of thought leadership followed by outdoor cocktails.

This year Ben Breslau, JLL Americas Director of Research, discussed in his presentation –Workplace vs. Workforce – the battle between fact and fad and the impact of each on people, place and financial capital in today’s changing real estate landscape. Ben was welcomed by our New England Market Director, Jim Tierney and followed by Colin Dyer, our JLL CEO, who gave his perspective from an international standpoint as someone who sees all influences across geographies.

 

Thank you to all who were able to join us for this gathering – and for those of you who missed the evening – we look forward to seeing you at our next event!

Global dollars landing in Boston

Petz_Frank_Color_Casual_HiResFrom Frank Petz
Managing Director, Boston Capital Markets Lead
 

JLL Boston hosted a lunch for Investor clients last week featuring a presentation given by Lucy Fletcher, Director of JLL International Capital Group for Asia and Canada and Stephan von Barczy, Head of French JLL Capital Markets Group for Europe and Middle East, with a global investor perspective also given by Colin Dyer, our JLL CEO. We all know international capital is more relevant, but the JLL presentation detailed the underpinnings and established the durability of global investor appetite.

JLL's Lucy Fletcher and Stephan von Barczy giving their global capital perspectives to our local investor clients.

JLL’s Lucy Fletcher and Stephan von Barczy giving their global capital perspectives to our local investor clients.

 

As we have seen, Boston has become a target for foreign capital this year and it was still interesting to see that the metro area catapulted into 2nd position with regards to foreign inflows, up from 8th just a year earlier. Both Oxford Properties (Canadian) and Norges Bank (Norway) purchases, in large part, lead to the high ranking, but behind them are many other foreign entities that are, of late, considering Boston a real and important investment target. In all, foreign capital was behind the purchase of 19 properties and the $3.3 billion in Boston, through August 31st, 2014.

Global flows have reached 2006 levels, and if allocations towards direct real estate continue to rise, the dollars that will be looking for real estate can easily grow by trillions.

How long will this last?  We don’t know for sure, but we do know that it feels as though Boston has reached the global stage. Many new landlords – both local and foreign – are bringing with their ownership exciting plans to revitalize a building or a corridor, or a neighborhood. This increase in investor appetite and trades has created not only an evolving ownership landscape but an evolution of our streetscapes.

Are happy employees good business?

BestBob
From Bob Best
Executive Vice President
 

More organizations seem to be addressing issues like employee happiness and well-being. There is even a “Wellness Building Standard” that organizations are using to design and operate their workplaces in a more employee-supportive way. It may be nice that employees like their employers, but is to good business?

Apparently so.

In an 8/6/14 article in Triple Pundit, Raz Godelnik provides a great overview of recent research that suggests a very strong connection between employee satisfaction and financial performance. She cites a study by Alex Edmans and Chendi Zhang that found “employee satisfaction is associated with positive abnormal returns in countries with high labor market flexibility.” These same researchers have compared firms noted as “best places to work,” and found significantly higher stock returns.

It appears that investing in employee happiness through programs and workplace improvements is more than good-hearted …

It’s good business.

Spec development at 4 Burlington Woods

4BurlingtonWoodsPrimaryRendering 1085CUB Burlington Woods, View02 Sept910PM,2014The Gutierrez Company has begun construction on 4 Burlington Woods, a new 100,000-square-foot LEED Certified first class office building designed for end user flexibility in Burlington. As leasing agents, JLL teamed with Gutierrez to launch the project with an event at Keurig’s innovative new world headquarters overlooking 4 Burlington Woods’ five-acre site.

As reported in the BBJ, 4 Burlington Woods features efficient and open floor plates maintaining connectivity, a two-story lobby, five acres of landscaped grounds, and direct highway access. The new four-story building off Route 128 will also include interconnecting stairways, floor-to-ceiling windows along the main façade and 6’6” throughout the rest of the space, high ceilings, and energy efficient systems. The site has parking for up to 350 cars. Development is scheduled for completion in Q1 2015.

“The delivery of 4 Burlington Woods will be great for the Route 128 market,” said JLL’s Chris Decembrele. “Given the flexibility and uniqueness of the project, we are seeing users of all types and sizes show interest in becoming the first tenant. In the Burlington market, where large blocks of vacant space are getting scarce, this will be a great option for growing tech companies.”

According to Gutierrez VP of Operations Doug Fainelli, who spoke at the breakfast event: “We’re confident that top quality new construction in amenity rich areas that allow employers to retain and attract talent will prosper. 4 Burlington Woods will be just that type of development.”

Joining Chris on the leasing and marketing team for JLL is Managing Director Matt Daniels, Senior Vice President Andrew Whipple, and Senior Vice President Stephen Steinberg. The architect is CUBE 3.

Tug o’ war between Boston and the ‘burbs

Ardente_Nate_Color_Casual_LoSmall

From Nate Ardente
Research Analyst 

Decisions, decisions. It is what many tenants and landlords are facing now in the Greater Boston commercial office real estate market. Where should they locate their office or lab facility? Where should they invest? Is it better to be located in the city or the suburbs? The debate between office versus suburban locations is alive and well. Which side is winning in this tug of war?

In yesterday’s NAIOP of Massachusetts event, a panel of some of Boston’s most respected local commercial real estate professionals discussed the various factors that come into play. The consensus after deliberating for an hour at the Westin Waterfront in the Seaport District was: both.

The event was moderated by JLL’s Frank Petz, Managing Director of Capital Markets, and included Tom Alperin of National Development, Bryan Koop of Boston Properties, Andrew Majewski of CBRE, and David Martel of Cushman & Wakefield.

The event was moderated by JLL’s Frank Petz, Managing Director of Capital Markets, and included Tom Alperin of National Development, Bryan Koop of Boston Properties, Andrew Majewski of CBRE, and David Martel of Cushman & Wakefield.

 

That being said, one topic that garnered a lot of attention was the strength of what we refer to as the “Fortress Market” – defined by cities along the I-95/Route 128 corridor and the Waltham/Burlington corridor. This area has and continues to increase its prominence as a premier place for many firms to locate. In fact, as of second quarter, the Fortress Market displayed a lower vacancy than downtown Boston for the first time since 2001.

Historical vacancies

Tenants base their location decisions upon many factors such as talent, amenities, cost and access. The balance between these factors is what separates each market, and depending on how tenants weigh each factor results on where they will end up. In the end, Greater Boston offers a variety of settings in which a firm can meet its growth objectives, and the suburbs continue to hold their own in this tug of war.

JLL High-tech Outlook ranks Boston second in sector employment

Greater Boston ranks second in total high-tech employment, and fourth in high-tech venture capital funding among major U.S. markets. This is according to our 2014 U.S. High-tech Office Outlook, a national ranking of top cities for high-tech companies. The ranking, just released and reported in the Boston Business Journal, shows the impact of the sector on neighborhoods, employment, housing prices and amenities.

“Tech companies are looking for new locations for many reasons, not just for intellectual capital, or venture capital funding but other factors such as standard of living,” said Julia Georgules, co-lead of JLL’s Technology Research group. “In our research, we call this ‘market dynamism.’ We have looked at different lifestyle factors for each of the 34 tech hubs including proximity to transport and walkable amenities.”

While the high-tech industry’s growth is driving employers to find new locations for both talent and real estate, traditional high-tech cities are not exactly struggling. Long-standing hubs continue to function as the industry’s economic engines. In fact, seven traditionally high-tech-centric markets represent more than a fifth (21.7 percent) of the 65.4 million square feet of office space under construction across the country. Together, 14.2 million square feet of office space is under construction in Boston, the Bay Area, New York’s Midtown South, Seattle, Portland and Austin.

“High-tech employment continues to be a driving force for the Boston economy and real estate market,” said JLL New England Senior Research Analyst Jordan Yarboro. “Boston ranks second trailing only Silicon Valley in total high-tech employment. In fact, Greater Boston experienced a 4.3 percent growth in high-tech jobs over the year.”

As rents escalate and space becomes scarce in mainstay markets like San Francisco, Silicon Valley and Manhattan, the lure of more affordable prices have high-tech companies seeking talent and real estate elsewhere. The savings potential is huge. Downtown Palo Alto, considered the heart of Silicon Valley, has seen such high demand that the office market is just 3.6 percent vacant with average asking rents at $86 per square foot compared to the national average of $30.

This even tops New York City’s Plaza District at $85 per square foot. And rents in smaller markets can be less than half that figure. “High-tech’s growth is not exclusive to traditional high-tech markets anymore,” said Cara Trani, co-lead of JLL’s Technology brokerage group.

“Here in Greater Boston, we see growing high-tech clusters in the suburbs, Cambridge and CBD. Companies both large and small are competing for top talent, and office space is one of the ways they can use to recruit and retain,” concluded Jordan.

Our 2014 report features the top 34 high-tech markets across the country. It digs deep into what makes a market “cool” or “livable” with a new Market Dynamism index.

To get a copy of this report contact us here.

 

Office trends: 5 questions with JLL’s project management team

O'Connor_Tom_Color_Casual_smallWe sat down with Tom O’Connor, Senior Vice President of JLL’s Project and Development Services (PDS) group to understand some of the trends affecting office space usage in the Greater Boston market. The 35-person PDS team serves as project managers and advisers for many of our clients as they design fit-out and move into their new office space.

Q: What stands out to you as different in this cycle compared to the last tech cycle (the dotcom era)?  The hunt for talent!  The difference today is that Boston has become home to companies like Amazon, Ebay, Twitter and Google.  These high-tech giants were not in Boston in the year 2000. Having them here has stepped up the hunt for talent and has elevated the playing field.

Q: How has having these tech giants active in our market affected real estate decisions? Small to midsize firms are competing with large tech firms for talent. These large firms offer benefits such as free breakfast/lunch/snacks and offer great work environments.  Small to mid-size firms are taking more interest in choosing office space that reflects their culture and their brand. They want to create a destination and a work environment that is appealing to their employees and gives the employees a sense of pride and loyalty in the firm and space in which they work.

Q: Everyone has been talking about how firms are increasing their space utilization and putting more people in less space. What are your clients doing today?  Yes. It’s true. We did for some time really see a trend towards increasing space efficiency.  And high- tech firms were at the cutting edge of the trend, bringing in benching and shrinking personal space. Today, the trend towards efficiency is less a focus. The trend is more about reallocating the use of the space.  Firms are still shrinking personal space but providing more collaborative space in exchange.  Employers are asking to build various types of space that allow for different type of work. So lounge space, heads down space, collaborative space, and social room/game room space are a few examples of what we are building out. In all, the total square footage may remain the same, but how employees use the space continues to evolve.

The continued evolution of office space use reflects the generational changes and push for efficiencies that are affecting the workforce.

The continued evolution of office space use reflects the generational changes and push for efficiencies that are affecting the workforce.

Q: Is benching still “in”? Benching continues to be a good alternative for technology firms. Having walls that separate personal space gives a false sense of acoustic privacy. And today’s younger workers are used to getting stimuli from a lot of places while they work. They also like to see what’s going on around them and feeling that they are a part of something. We are seeing this trend continue to be sticky with our clients at the moment.

Q: Speaking of the younger workforce, while the millennial generation is expected to make up 50% of the workforce by 2020, there is still another 50% of the workforce with differing expectations with whom organizations need to be in tune. How are firms accommodating the differing needs of multiple generations?  Firms need to remember not to focus on just one segment of the workforce, especially if they want to be in the space long term and they want to be holistic in their approach to employee retention. Many firms need to take a hard look at their employee profile. Do they want to groom young workers and hope they stay for years? Do they expect to see high turnover and always draw from a young workforce/recent graduate pool?  Do they expect to grow over the next few years? Are they already inter-generational? Answers to these questions will guide firms in making space design issues that reflect their generational profile and workforce goals. We worked with one firm that conducted an internal survey to answer these questions. LevelUp asked its employees questions about the type of space they would like to be in. But the employees were only allowed to answer the questions with pictures. We were able to identify what the employees find relaxing, inspiring, motivating and what type of space they feel would help them best do their jobs.  The findings will be used as they build out their new space.

 

 

JLL Research releases Q2 North America Industrial Outlook

JLL National Research just released its Q2 North America Industrial Outlook. It is reporting that industrial vacancy is now below a prior cyclical low, and will trend toward 7.0 percent by year-end. Rents are increasing as new development continues to play catch-up after 2010-13 marked a 50-year delivery low.

Rent growth is pronounced in those regions with vacancy rates well below the national average. Southern California, the Northwest and Southwest lead in year-over-year asking warehouse rent increases. Gains are expected as market fundamentals tighten in the Midwest, Northeast, Mid-Atlantic and Southeast.

But how is Boston doing?

  • The Greater Boston industrial market experienced its strongest leasing quarter of the year, posting 235,061 square feet of positive net absorption
  • Sales activity continues to expand in the sector
  • Q2 saw 24 industrial sales transactions from properties over 30,000 square feet
  • The development of build-to-suit projects in Greater Boston is becoming more prevalent
  • The 495/Mass Pike submarket continued to be one of the best preforming industrial markets in the region

Q2IndustrialDrivers

The outlook is good for the Greater Boston market. Build-to-suit projects are beginning to materialize as predicted in the previous quarter, due to the great market conditions and the region’s antiquated supply. We are experiencing the start of a new industrial development cycle with market conditions not seen since the early 2000’s! We expect to see investor activity and more build-to-suit deals in the near future.

View our Boston Industrial Highlights – Q2 2014 research report for more details on Greater Boston’s Q2 performance.

Sailing in Newport

Our Mass Pike/Route 128 and South Brokerage teams, and clients took to the high seas for a thrilling day of sailing out of Sayer’s Wharf in Newport, RI.

We chartered two classic 12 Meter-class yachts, the Columbia and Heritage, both of which competed in past America’s Cup challenges. After racing practice with captains and crews, a spirited one hour race ensued.

Following the competition guests enjoyed a post-race cruise around beautiful Narragansett Bay, cocktails, and a walking tour of Newport. Above are some photos from an invigorating day.