NAI Hunneman Q2 Market Recap Now Available

Posted on: Thursday, July 20th, 2017, under Commercial Real Estate, Guest Authors, Research.

Bob Samiiby Liz Berthelette, Director of Research NAI Hunneman. Liz is a seasoned CRE researcher with a penchant for maps, graphs & data; providing insights on the local Boston market and beyond.
While build-to-suit activity propped up absorption, Greater Boston’s commercial real estate markets ended the second quarter with mixed results. Overall market conditions remain positive, however, growth has slowed to a more moderate pace.

Pharma R&D

  1. In the office market, vacancies were flat compared to last quarter as both the Downtown and Cambridge markets posted negative absorption. Biogen’s vacant sublease at 105 Broadway, Whole Foods’ relocation to Marlborough and the demolition of 145 Broadway led to higher vacancies in Cambridge. In the suburbs, the delivery of SharkNinja’s new headquarters in Needham and two large owner-user sales helped the office market post more than 400,000 square feet of demand. Despite a softening in fundamentals asking rents continued to increase; surpassing $33/SF metrowide in the second quarter.
  2. Given how tight Greater Boston’s lab market has been, any movement in either direction can impact fundamentals. This quarter, positive absorption in East Cambridge was driven by the delivery of the fully-occupied 50-60 Binney Street. Takeda’s now vacant space at 26 Landsdowne Street and former BIND Therapeutics space at 325 Vassar contributed to negative absorption in Mid Cambridge. In terms of construction Alexandria broke ground on 399 Binney Street and King Street Properties is moving forward with a speculative lab building at 828 Winter Street in Waltham.
  3. Overall demand remained positive in Greater Boston’s industrial market, with build-to-suit construction and owner-user sales bolstering absorption. That said, modest speculative construction and negative absorption in the north markets kept vacancies elevated compared to last quarter. In one of the largest deals of the quarter, 47 Brand purchased the 465,000-square-foot 140 Laurel Street in Bridgewater and plans to occupy the space, which has been vacant since 2009. Asking rents are nearing $9/SF metrowide, with Flex/R&D space within the Route 128 belt garnering top dollar from tenants.

Click here to access Market Recap.

Buying Commercial Real Estate? Here are 3 Advantages to Property Management’s Involvement in the Due Diligence Process.

Posted on: Thursday, July 20th, 2017, under Commercial Real Estate, Guest Authors, Real Estate Investing, Thought Leadership.

Bob Samiiby Liz Berthelette, Director of Research NAI Hunneman. Liz is a seasoned CRE researcher with a penchant for maps, graphs & data; providing insights on the local Boston market and beyond.
Purchasing a commercial property can be challenging; sometimes requiring a significant amount of due diligence in a short period of time. During this truncated timeframe, the new buyers need to complete a detailed investigation of the property to determine whether or not they remain satisfied with the asset and all its systems before closing the transaction.

Buyers can easily be overwhelmed and get lost in the details. NAI Hunneman’s COO & Director of Property Management, Steve Prozinski, looks at three key advantages to enlisting the assistance of a property management team during the due diligence period in order to ensure all the details are covered.

Pharma R&D

    1. Create A Property Budget: With years of operating budget experience under our belt, our Property Management team is able to provide buyers with an unbiased budget based on expected asset performance. This has proved to be an invaluable tool as the buyer can review it against the proposed budget in the Offering Memorandum (OM).


    1. Thoroughly Review Leases: Our team performs an extensive analysis of all tenant leases; looking for any terms or options that could present a problem prior to closing the sale or upon assuming new ownership. We also review all leases and amendments to confirm the accuracy of information presented in the OM — ensuring the marketing materials represent reality. Finally,
      our team examines the effects of certain decisions, such as future operating costs vs. capital costs and how these decisions could impact the on-going escalations from the tenant.


  1. Examine Physical Conditions: Conducting an extensive review of a property’s physical conditions involves reviewing specific areas or building systems (i.e., HVAC or roof conditions) with third-party consultants and experts to help identify any hot button issues. Then our Property Management team creates a capital plan for the asset, which provides the buyer with detailed information on potential repairs required on the building.

Over the years, NAI Hunneman’s Property Management team has saved new owners millions of dollars by identifying discrepancies in property OM’s, as well as discovering capital items that need to be addressed prior to the close of sale.

Our team can act fast, especially within the tight time constraints of the due diligence process, and our clients have benefitted tremendously.

Steve Prozinski is NAI Hunneman’s Chief Operating Officer & Director of the Company’s Property Management Division, which oversees a portfolio in excess of 7 million square feet. For more information on our property management services visit our website.

A Breakdown of NAIOP’s Mid-Year Market Roundup

Posted on: Thursday, July 20th, 2017, under Commercial Real Estate, Guest Authors, Research.

Bob Samiiby Liz Berthelette, Director of Research NAI Hunneman. Liz is a seasoned CRE researcher with a penchant for maps, graphs & data; providing insights on the local Boston market and beyond.
This morning NAIOP Massachusetts hosted its annual Mid-Year Market Roundup. The expert panel presented to a packed-room of real estate professionals; covering topics related to the economy, local and national property markets as well as capital markets. A common theme throughout the presentation was “slower, but not slow.” Below are just some of the key takeaways from today’s event:

Pharma R&D

Putting their heads together to boost productivity

Economic Overview – Hans Nordby

  1. In terms of a recession, it’s not if but when. Leading real estate forecasting and analytics firm; CoStar Portfolio Strategy, is predicting a recession will occur within the next three years. However, the impending downturn should be much milder than the Great Recession of 2009.
  2. Several economic indicators remain positive. Corporate profits have been positive in the last three quarters, the unemployment rate is at a 17-year low and real wage growth (accounting for inflation) is as good as it was in the previous two cycles.
  3. CRE prices are bobbling at new peaks. While prices are not rising, they aren’t necessarily falling either. Locally, the tide is going out very slowly in Boston so values should remain pretty solid.

Pharma R&D

Cambridge/Lab Market – Evan Gallagher

  1. Biotech has seen a renaissance and Cambridge is the new Florence. Moreover, the epicenter of biotech (Kendall Square) is shifting and expanding to meet the needs of tenant demand.
    The market is seeing some consolidation in the pharmaceutical industry; as one company expands another contracts. Other challenges include the soft IPO market, FDA scrutiny and lack of talent.
  2. The Cambridge office market is cooling and the breakneck pace of rent growth is likely behind us. Tech companies have gotten squeezed by the lack of space and rising rents; leading tenants that remain in Cambridge to downsize by 20-35% upon renewal.
  3. While there has been some success in the suburban lab market, one major roadblock remains: hiring. The lack of amenities and transit, compared to Cambridge, make recruiting difficult.

Pharma R&D

Retail – Andrea DeSimone

  1. Is this the death of retail? One might think so given the store closure watch list continues to grow, but it may not be time to hit the panic button yet. Leases will happen; they may just take longer and require more creativity.
  2. E-commerce continues to thrive, as its share of total retail sales remains on an upward trajectory.
  3. Innovative experiences, fitness, the restaurant scene and food halls are active retail sectors right now.

Pharma R&D

Downtown Office – Ben Heller

  1. Over the last 10 years, the office market has experienced disruptive changes – driven by technology and changing workforce demographics.
  2. How has Boston evolved in the past decade? The city is now on the global HQ map, premium locations have shifted and the definition of core product has changed.
  3. Downtown office asking rents are 11% above the previous peak and vacancies are still near 15-year lows.

Pharma R&D

Multifamily – Sue Hawkes

  1. The Boston multifamily market is still seeing price appreciation, but the pace of growth has slowed.
  2. Transit is hugely responsible for the success of multifamily product in more tertiary markets (i.e., Somerville and East Boston).
  3. Amenity wars are alive and well while some tenants are moving every year in order to take advantage of concession packages offered in the newest buildings.
  4. Affordability is a major factor in Boston; lack of affordable housing will most likely impact Boston’s labor market.

Pharma R&D

Capital Markets – Edward Maher

  1. The capital markets are not as quiet as you think. While sales volume is down 18% year-over-year in Boston, these levels are still solid compared to previous years.
  2. Foreign investors perceive Boston to be one of the best places to do business. However, there is very little inventory available for purchase.
  3. The buyer pool is thinning and overall pricing is flat in Boston.
  4. Looking to the future, the action will be concentrated in the suburbs. With that said, the suburbs remain untested waters. Moreover, foreign capital remains “snobby,” and likely won’t stray too far from core, downtown assets.

Overall consensus on the Boston market was still positive despite some risks to the near-term forecast.

Massachusetts’ Big Pharma Cluster and Its Impact on Commercial Real Estate

Posted on: Wednesday, June 28th, 2017, under Commercial Real Estate, Guest Authors, Research.

Bob Samiiby Liz Berthelette, Director of Research NAI Hunneman. Liz is a seasoned CRE researcher with a penchant for maps, graphs & data; providing insights on the local Boston market and beyond.
Massachusetts, anchored by Cambridge, is home to one of the largest biotech clusters in the world. With many of the leading “big pharma” firms maintaining a presence here, this industry has become a key driver of commercial real estate demand throughout the Bay State. In fact, 16 out of the top 20 pharmaceutical companies investing heavily in research and development operations lease and/or own space in Massachusetts. In looking at the potential future demand for office and/or lab space these heavy investors will likely play a key role, especially if their current presence in the marketplace is minimal.

The chart below highlights each firms’ research and development investment dollars in the fiscal year 2015-16 and its estimated real estate footprint in Massachusetts. Novartis ranked first in the European Commission’s 2016 EU Industrial R&D Investment Scoreboard and occupies more than one million square feet in Greater Boston. Due to its MA-based headquarters operations, Biogen boasts one of the largest footprints in the market despite ranking among the bottom of this list for investment dollars.

Pharma R&D
*Occupied by Roche subsidiary, Iquum.
Sources: EU Scoreboard 2016 (World 2500), Costar, NAI Hunneman Research

There are a handful of firms that made the list that have little to no real estate presence in Massachusetts such as Roche, Eli Lilly, Johnson & Johnson and Bayer. With that said, many are planning to expand in Cambridge or are already collaborating locally:

• Reportedly, Eli Lilly and Johnson & Johnson have fairly large requirements out in the Cambridge market.
• Novo Nordisk has been collaborating with MIT on next generation drug delivery devices since 2015.
• Bayer is opening its East Coast Innovation Center in Cambridge.
• Boehringer Ingelheim’s venture capital arm opened in Cambridge in 2013 in order to invest in early-stage biotech companies.

One of the area’s largest pharmaceutical companies, Shire PLC, has continued to expand and currently occupies more than two million square feet in Greater Boston. However, the Lexington-based firm only invested $872 million in research and development last year; ranking the company 30th on the list. With that said, Shire recently agreed to lease 343,000 square feet at the Genzyme Center building in the heart of Kendall Square; establishing a hub for the research and development of rare diseases. This new innovation hub will house roughly 1,000 workers by 2019 ― after Genzyme relocates to its new headquarters nearby. One would expect Shire’s investment dollars to increase once this new R&D facility is operational.

Looking at revenues as opposed to R&D investment in the chart below, 14 out of the top 20 global pharmaceutical companies maintain a real estate presence in Massachusetts. Interestingly Johnson & Johnson, Bayer and Roche top this list as well. Other major pharmaceutical firms lacking a Massachusetts address include Sinopharm Holdings, Medipal Holdings and Alfresa Holdings. Could one of these companies be the next to set up shop here?

Pharma Revenue
*Occupied by Roche subsidiary, Iquum.
Sources: EU Scoreboard 2016 (World 2500), Costar, NAI Hunneman Research

While growth from companies currently located in Massachusetts will remain an important driver of commercial real estate, firms not-yet established here likely offer greater potential for future demand.

Greater Boston Property Markets Start Year on a Positive Note

Posted on: Wednesday, June 28th, 2017, under Commercial Real Estate, Guest Authors, Research.

Bob Samiiby Liza Berthelette

Positive absorption was seen across all property types in Greater Boston. Metrowide office absorption totaled more than 300,000 square feet with the suburbs leading the charge. The lab market, particularly Kendall Square, remains as-tight-as ever. And fundamentals continue to improve in the industrial market as vacancies have reached new lows.
The New Year has brought continued uncertainty in the marketplace. However, many signs are still pointing to a stronger macroeconomic outlook in the near term. In January, the International Monetary Fund revised its U.S. growth forecast up slightly for both 2017 and 2018. A more solid economic outlook would likely bolster the commercial real estate property markets. There are still several trends worth keeping an eye on in the coming quarters that could result in up or downside risks to Boston’s outlook. Proposed budget cuts to NIH funding and concerns surrounding inflation are two to watch.

Below are some highlights from NAI Hunneman’s Q1 2017 market reports:

The Greater Boston lab market remains hot. Net absorption totaled 219,492 square feet metrowide in the first quarter, with the Cambridge markets accounting for roughly half of this space. Metrowide vacancies are nearing 3% and East Cambridge vacancies are just a mere 0.2% as demand for space remains heated. With little new product on the immediate horizon and strong demand for space, look for market conditions to remain favorable in the coming quarters.

The Greater Boston office market posted another positive quarter with more than 300,000 square feet in net absorption. Results were mixed with East Cambridge, Route 128 West and the Back Bay posting some of the strongest absorption. Metrowide vacancies inched down to 11.2% in the first quarter and direct asking rents grew to nearly $33 per square foot.

The Greater Boston industrial market absorbed more than 500,000 square feet of space in the first quarter of 2017. Vacancies are sub-8%; reaching levels not seen in more than 15 years. Demand drivers remain vast and varied. E-commerce, housing and building-related firms, drug manufacturing, third-party logistics, breweries and medical marijuana facilities are all bolstering industrial demand in the marketplace.

Access our Office & Industrial Report

Access our Biotech Report

10 Tips to Choosing a Property Management Company

Posted on: Friday, May 19th, 2017, under Guest Authors.

Contributed by Century 21 Everest

If you’re new in the real estate business and thinking of investing in a rental property, choosing a reputable property manager should be one of your top priorities. To ensure that, familiarize yourself with these tips below. They will help you pick the best company in your locality.

10 of the Best Tips for Choosing a Property Management Company

1. Start by Interviewing Several Property Managers
As a property owner, you have to interview your tenants to ensure that you won’t have any issues later on. You should also practice this when hiring a property manager. This would allow you to compare and find out which among them is the best. Aside from that, by interviewing a couple of property managers, you can pinpoint who among them is really capable of doing the job. You’ll have the ability to determine who among them has the knowledge and experience when it comes to handling a rental property.

2. Does He Have a License and Certification?
In most places, it is required to have a broker’s license and a property manager should have a certification coming from trade organizations. These organizations provide a certification after the completion of their training program. Keep in mind, a property manager that has spent some time to complete this training can be a good indication that he will be dedicated to his job.

3. Ask for References
As you interview the property manager it’s important that you ask about their management experience and references from owners of previous buildings they managed. Likewise, to ensure that they are really qualified, it’s important that you check their portfolio as well. Remember, this company would be in charge of your investment, and so, you have to ensure that they can handle the responsibility quite well.


How your Office Culture Generates Success

Posted on: Thursday, May 18th, 2017, under Guest Authors.

How your Office Culture Generates Success

Peggy ScottContributed by Peggy Scott, and the CBI Austin Team

Does your workspace reflect or enhance the office culture you desire? More than likely it reflects an office culture, but does it reflect the one you want? Walk into someone’s home and you probably get a good idea of what they are like, you probably get a good sense of their interests, their passions, what is important to them. Most of us put careful thought into how we design and organize our house to reflect our personalities and what we love, our design impacts how we feel about our home. We spend just as much time if not more at work, but often times our office is not given the same consideration.
A workspace ought to reflect what the organization cares most about, and be designed in such a way that it complements how the people work individually and as a team. When an office is designed with the needs and opinions of the employees and the clients in mind, creativity, productivity, collaboration, engagement, health and happiness all increase and significantly improve morale and ROI.


3 Reasons Every Commercial Property Should Have a Strong Online Presence

Posted on: Wednesday, May 3rd, 2017, under Guest Authors, Marketing.

3 Reasons Every Commercial Property Should Have a Strong Online Presence

Bob Samiiby Bob Samii, Founder and CEO at SharpLaunch

Are you taking advantage of the most powerful resource in your commercial real estate marketing arsenal?

The digital presence of each one of your properties has become critical to help attract and convert potential tenants and investors and we know that at least 80% are already starting their search online.

Just how much has online search grown in CRE? Since 2008, the number of searches has increased 60% and today, nearly 60% of people surveyed perform their own research, even if working with a broker.

There are several ways to build a digital presence that you “own” and can leverage to build your brand online. This includes CRE Tech tools that allow you to take the development process into your own hands and cost effectively manage your property’s online presence.

You can also tap into the expertise and resources of a specialized agency for branding and web development.

Whichever direction you take, there are three important reasons your property needs to have a strong web presence, and a lot of specific benefits you’ll gain by building one.


The Nation’s Top Marketplace – Austin’s CBD

Posted on: Sunday, November 20th, 2016, under Guest Authors, Uncategorized.

Sullivan Johnston Guest Post by Sullivan Johnston, Research Coordinator at Avison Young Commercial Real Estate
As in quarters past, Austin’s CBD submarket continues to entice an array of office tenants, despite some reports illustrating downtrends in occupancy and rental rates. Austin’s favorable business environment has emerged as a worthwhile investment, with companies such as Kuka Robotics, Samsung, and Indeed relocating and expanding to the Central Texas metro, showing little obstinance to the high cost of occupancy.


Though Class A vacancy in the CBD increased from 4.74% in Q2 to 5.46% in Q3, demand remains unfettered with the CBD waging the highest rate of leasing activity for the quarter at 381,649 sf. The average Class A gross asking rate in the CBD for Q3 was $51.71, with some buildings commanding rates upward of $61. While the North/Domain and East submarkets may be at the mercy of potential downturns in the tech sector, the diverse office culture the CBD touts shields office use and thus, demand.


Women Leaders in CRE & Tech: Part I with Diane Danielson

Posted on: Friday, November 18th, 2016, under Guest Authors, Marketing, Thought Leadership.

Analisa Goldblattby Analisa Goldblatt, Marketing Manager at RealMassive
As a woman in a historically male-led industry, I’m in constant pursuit of inspiration and growth opportunities. I’ve found that there is a wealth of resources and networks to help me build a career and ultimately become a leader in both real estate and tech. For my first in a series of “fireside chats” with established female leaders, I was honored to chat with Diane Danielson, COO of SVN Global. We originally connected with Diane to capture her insights on trends shaping the modern Retail #CREcosystem. Please feel free to share her amazing insights with your network and stay tuned for future spotlights.

What first attracted you to commercial real estate?

It was a combination of factors that attracted me to commercial real estate. First, I grew up in one of the premier planned communities, Columbia, MD. Designed by James Rouse in 1967, our community had carefully planned neighborhoods that were inclusive of all races, incomes, interests and religions. That was a living lesson in how real estate matters. Later on at Boston College Law School, I earned a place on the Environmental Law Review and further developed my interest in how we use land in a sustainable and sensible way. Commercial real estate tells the story of a community. It touches all we do and it changes as we change. It’s a key driver in our economy and I wanted to be involved.