Breaking records


JLL’s Jess Hughes speaks at NAIOP/SIOR’s Annual Market Forecast


Boston set an all-time high in commercial sales pricing this year. According to Jessica Hughes, who spoke at yesterday’s NAIOP/SIOR Annual Market Forecast, cap rates are at historic lows for core Downtown office buildings. International capital is pouring in from investors like Norges and Oxford.

“I expect office sales to slow in 2015 due to a lack of supply,” said Jessica, “but oversees investors will continue to put their money to work in Greater Boston.”

“2015 will be different. A lot of the money coming in for development is going to be speculative, and much of it will come from China and other Asian markets. This is across sectors, everything from residential and condos to new spec office development.”

This year Boston emerged as a true global gateway city. There is a huge discount to buying here compared with markets like New York, London and Hong Kong. Jessica added that we also have the most balanced economy in the country.

“Boston has a premium lending environment. Although I don’t expect further cap rate compression, real estate value will continue to be driven by great fundamentals.

“Factor in all of the new development that’s underway,” she concluded, “and the atmosphere for investment here is supercharged.”


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Skanska raises the bar at NAIOP Gala

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Shawn Hurley with his colleagues from Skanska


Winston Churchill said: “We shape our buildings, thereafter they shape us.”

These words  opened the video honoring Skanska USA at NAIOP’s annual Distinguished Real Estate Awards Gala held last night at the Weston Boston Waterfront Hotel.

Skanska’s Boston Regional Manager Shawn Hurley, who oversees the development of 101 Seaport and Watermark Seaport, began by lauding his team. “We have people that are extremely passionate about what they do. They have the right combination of research and insight to back up their talent.”

Skanska has the unique ability to self finance which allows them to deliver quickly. “When Pricewaterhouse Coopers moves into 101 Seaport next year,” said Shawn, “the building will be delivered in 26 months. That’s an incredible achievement.”

The event, attended by over 1,000 industry leaders, included a moment of silence for the late Mayor Menino. “The growth and momentum here didn’t happen by chance,” Shawn said. “We would not be here without Mayor Menino. Nobody has played a greater role in shaping and making the Innovation District what it is today.” At this event one year ago Menino was honored by NAIOP with a special Excellence in Public Leadership Award.

John and Mary Fowler received this year’s Edward Linde Pubic Service Award for their long standing commitment to giving back. His interest in helping people is legendary. Charles River Realty Investors’ Brian Kavoogian described them as “the epitome of philanthropy.”

“It is an honor to be mentioned in the same breath as Ed Linde,” John Fowler said.

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JLL’s George Gregory, Steve Steinberg, Matt Sherry, Heather Brown, Ben Hux, and Rob Mahoney


Carbonite’s new HQ feels like home

O'Connor_Tom_Color_Casual_smallWe sat down with Tom O’Connor, Senior Vice President of our Project and Development Services (PDS) group, to discuss the innovative design of Carbonite’s new headquarters offices at Lafayette City Center Boston.

Q: Please describe the space for us. They wanted it to be comfortable, like working out of a very cool living room as startups often do. The idea was to design the space to be as comfortable as your home, but more efficient and productive than working from home. I believe we succeeded.

Q: How does it reflect Carbonite’s corporate culture? Their culture is open and very collaborative. We designed a space that lets all the natural light from the Common seep in. Most of the walls are glass and 98% of the space is designed to be used by everyone.

Interestingly the company’s name Carbonite comes from material in the movie Star Wars that Han Solo is frozen in. Meaning the stuff you backup with carbonite will be frozen forever too. They wanted to incorporate that into their design. We used reclaimed metal and over-sized studs to border the entire space in order to create the effect of freezing the office. The effect was even better than we anticipated.

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 Q: What were the challenges? Carbonite’s management team had a clear vision for the space but they didn’t want it to be corporate-imposed. They involved tons of their employees. The design became a bottoms up process. The result speaks for itself, but it was challenging at times with all the different inputs. The team hired by Carbonite to execute the build-out was responsive, flexible and completely invested in the process.

Q: What do they like most about the way the space functions and its location? What they are most excited about is the upgrade in conference space. Prior to their move 250 people were working out of 7 conference rooms and it just wasn’t working. They now have more than 30, of varying sizes, which has allowed them to be much more productive.

If you were to ask them though, I think they are also pretty excited about all the comfortable furniture spaced out in the office. There are many places to have impromptu business conversations. They also love Downtown Crossing, all the restaurants and pubs and having the Boston Common so close.

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Q: How will it help them in recruiting? It already has been a big draw for top talent. In fact I heard that every candidate they’ve extended an offer to since moving has joined their ranks. When you ask someone to spend sometimes up to 14 hours at work, you better believe where they are spending their time is going to factor into their decision.

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Awarding real estate excellence

Last night marked CoreNet’s 2014 Awards of Excellence Gala, an annual program recognizing global and regional real estate projects and professionals whose accomplishments and results distinguish them from their peers. Several projects, individuals and teams were honored at the special program emceed by Liz Brunner, former news anchor for WCVB-TV NewsCenter 5 in Boston.

John Duffy accepting his Global Service Provider award

John Duffy accepting his Global Service Provider award


We were proud to see our own John Duffy awarded the 2014 Global Service Provider. In his acceptance speech John touted his 1,886,852 miles in airline travels to complete a significant amount of work, mainly for adidas, including transactions in 58 counties, ground construction for over 6 million square feet of distribution centers in 11 countries, and major office projects in Amsterdam, Delhi, Tokyo, Shanghai, Toronto, Moscow and Sao Paulo.

With this international resume, it is a well-deserved honor! Congratulations to John and all of the 2014 CoreNet Award of Excellence winners. Your extraordinary talent and accomplishments are inspiring to our real estate industry.

JLL's John Duffy, Abigail Kruchten and John Linell celebrating the occasion.

JLL’s John Duffy, Abigail Kruchten and John Linell celebrating the occasion.


CoreNet Winners 2014

Congratulations to all of the Excellence winners!


Shippers, e-retailers preparing for the ‘Christmas Crunch’


By Matt Dickerson
Senior Vice President
JLL Indianapolis

With the holiday shopping season looming, e-retailers and their shipping partners are gearing up to prevent a repeat of last season’s epic delivery fail.

While the vast majority of online purchases “guaranteed” to arrive by Christmas Eve were indeed delivered on time, those many successes were largely overshadowed by the highly publicized backlog of late deliveries. The images of angry parents and sad children on Christmas Day are still burned into the minds of consumers.

According to a recent story in Supply Chain 24/7, this year, both Fed Ex and UPS are working to to solve the “Christmas Crush” of online shoppers by:

  • Hiring more workers — More than 145,000 seasonal employees have been already been hired, up 15% over last year
  • Investing to increase capacity — So far, $1.5 billion in system upgrades have been made between the nation’s two largest carriers to boost capacity

Those improvements notwithstanding, neither UPS nor FedEx is willing to double the size of their existing operations to handle a once-a-year spike … shippers simply won’t build a new church to handle a three-day surge.

A better solution for both e-retailers and their shipping partners is to better manage the consumer. Both parties are making plans to spread the shopping and delivery timelines this year with earlier cut-off dates to hit a guaranteed Dec. 24th delivery. The load will then be spread more evenly and consumers will know how to manage the clock.

Ultimately, if online shoppers fail to get in front of the deadlines set by, or, they’ll need to get in a car and pick up the item in person. This should give traditional bricks-and-mortar retailers a leg up inside the 48 hours before Christmas as shoppers look to finish at the buzzer.

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


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


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


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.