The IPO effect: prepare for the next phase

In anticipation of an IPO, a firm’s real estate needs expand as headcount is added and the firm gets prepared for the next phase in its life cycle. Check out what the IPO effect has had on successful Boston-based high tech firms and the multiplier demand it has on workplace space requirements.

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Playing chips for fun…and charity

JLL hosted a Casino Night at the top of One Post Office Square last Thursday, April 10th. Clients, friends and colleagues joined together for an evening of cocktails and mingling, as well as poker, blackjack and roulette.

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Marcos Rocha from ViralGains (left) pictured with JLL’s Bobby Jangro.

The tables were played all night, and one JLL employee even beat the dealer! As the evening came to a close, Marcos Rocha from ViralGains won the largest pot at poker. His winnings were donated on his behalf to the charity of his choice – The Greg Hill Foundation – supporting 26 runners in their mission to turn this year’s Boston Marathon into a “celebration of life and love for our city.”

Thanks to all of you who joined in the fun, and a special thanks to Pretty Instant for documenting the fun evening.

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Iron Mountain team wins with high performance workspace

The winning team with JLL's Alex Dauria and Sherie Heywood (far left)

The winning team with JLL’s Alex Dauria and Sherie Heywood (far left)

The project team for Iron Mountain’s new global headquarters at One Federal Street Boston received the New England Women in Real Estate (NEWiRE) Achievement Award for Networking. JLL’s Alex Dauria, Brad McGill and Sherie Heywood represented the storage and information management leader in the lease. Iron Mountain moved into their new 130,000 s.f. offices in February.

Having outgrown their previous space at 745 Atlantic across from South Station, Iron Mountain sought a collaborative, state-of-the-art office environment to support an increasingly mobile workforce. With the move to One Federal, they adopted an innovative,  high performance workspace strategy and launched a mobile workforce program called “mobile mountaineering.”

Featuring an open, flexible, and efficient floor plan with individual workspaces, fewer offices, technology-supported conference and collaboration rooms, the new high performance workspace promotes collaboration, sustainability, and global branding. The headquarters is expected to achieve LEED certification.

The project was spearheaded by our client Iron Mountain Senior Vice President of Global Real Estate Sarah Abrams. “An office design project of this size and complexity – and executed within a tight time frame –required a skilled team of real estate, design, and construction professionals,” said Abrams. “The success of this project is a direct result of the proven collaboration and commitment of each of these contributors.”

The team for the relocation also included:  Margulies Perruzzi Architects, McCarter & English,  Fort Point Project Management, and Structure Tone.

Now in its 16th year, the Networking Award recognizes a commercial real estate networking experience that embodies the goals and purposes of NEWiRE. JLL is a sponsor of the awards.

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Class B rents are pushing Class A in Boston

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From Lori Mabardi
Boston Research Director

JLL’s spring Skyline Review reports that the city of Boston is undergoing a large-scale transformation through its expanding innovation, growing amenity base, ongoing urbanization, and tightening office fundamentals.

While a few Skyline towers face challenges with large vacancies, on the whole, the Skyline tower set continues to be healthy. All boats are rising and rents are up 6.8 percent year-over-year. The diversity of tenants wanting to locate in the city continues to spur healthy leasing activity overall. From large credit to small start-ups, Boston now appeals to all kinds.

Year-over-year rent change in Boston

Year-over-year rent change in Boston overall

Downtown, the tower subset continues to experience strong leasing activity. A number of large blocks of space swayed the data, pushing the vacancy and availability rates up by 0.6 and 4.5 percentage points year-over-year to 13.4 and 21.3 percent respectively. The 4.5 percentage point rise in availability can be attributed to three large blocks of space that are now listed on the market as future available. Most notably, Goodwin Procter listed 415,000 square feet at 53 State, and will relocate to 360,000 square feet at 90-100 Northern Avenue in the Seaport.

Low-rise buildings exhibited most of the gains, with rents rising 10 percent. As the Class B space has leased up, and pricing gap between low-rise and Class B spaces has narrowed, low-rise space has become attractive again. The leasing of this space has increased. The vacancy rate for this subset is now down to 11.7 percent.

The Class B market has been the beneficiary of current conditions. As the Class B space has leased up, and the difference in pricing to low-rise has narrowed, low-rise space has become attractive again. The leasing of this space has increased with the vacancy rate now at 13.7 percent.

The Downtown market is currently undergoing a boom in construction of new multifamily and retail developments. This new growth, combined with the city’s expanding innovation economy, has continued to draw non-traditional office users to the Downtown neighborhoods.

The Back Bay maintains its status as Boston’s tightest tower set with a vacancy rate of 4.0 percent. The market’s availability rate of 14.5 percent, however, could point to a potential softening of fundamentals in the near future. Market pricing in Back Bay towers remains the highest in Boston’s CBD. The average Skyline asking rent grew to $63.40 per square foot gross.

With only 1.6 million square feet of existing tower space, the Seaport District continues to be air tight with a vacancy rate at 9.6 percent compared to 13.4 percent Downtown. The submarket showed a $3 increase year-over-year reflecting the growing demand from established firms looking to be part of the surging neighborhood.

Build-to-suit projects account for most of the ongoing office construction activity across Boston’s CBD. In the Seaport, construction for PwC’s build-to-suit at 101 Seaport Boulevard is underway, and Goodwin Procter’s at 90-100 Northern Avenue is scheduled to begin in April 2014. While the Seaport remains Boston’s  frontier for new development, the past six months have seen proposals for large-scale developments in both Downtown and the Back Bay.

2013 marked Greater Boston’s strongest year in office sales in the last six years. With nearly $5 billion of sales volume in 2013 alone, both the Boston CBD and suburbs continued to gain interest from both institutional and foreign investment funds. The Boston CBD saw a number of high profile trades in the last half of 2013.

Boston is enjoying a large-scale transformation. With tightening fundamentals in the premium Class B segment will come a further tightening in the Class A sector for at least the next 12-24 months.

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Play ball at Penn Place

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JLL’s Rob Mahoney and Phil DeSimone are third and fourth from the right.

After a long cold winter, baseball season is finally upon us. What better way to celebrate opening day than to have a Fenway Park themed event at Penn Place in Framingham.

Last week JLL and RMR West teamed to host brokers from the Metro West market for an open house inspired by the beloved ball yard and our world champion Boston Red Sox. Brokers toured the building while soaking in an authentic Fenway experience complete with a Green Monster scoreboard, ticket booth, sausages from Yawkey Way, championship bunting and more. Baseball was in the air.

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On-line banks brew up new way to reach customers

Are bank branches dead? It seems the continued evolution of on-line banking has indeed outmoded the need for personal interactions, with smartphones giving us the ability even to make deposits without the warm smile and assistance of a teller.

We have become comfortable fitting our banking around our busy schedules, trading the security of brick-and-mortar bank branches for the convenience of a mobile lifestyle. In fact, recent Pew Research/Federal Reserve research found that 81% of those of who manage household finances banked online at least once in the last twelve months, and a startling 56% of consumers use on-line bill pay at least once in a month.

Our changing habits have definitely had a profound impact on the retail banking industry as banks close branches and rethink their real estate holdings. The bank branch isn’t dead; it is being reborn into something that will allow them to reinforce their brand, drive foot traffic and entice their customers to buy more complicated services such as lending and investment management.

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Capital One 360 is one organization intent on turning our notion of a bank branch on its head. The Virginia-based, on-line only bank is unveiling several Boston marketing offices that resemble coffee shops more than banks. Each of the planned branches will incorporate a full-service Peet’s Coffee and Tea store, and while they do have an ATM, they don’t have any tellers. The stores are designed as a space for Capital One 360 customers to socialize and connect with bank associates who can assist them with more complex banking needs—a physical space to support their on-line, mobile banking platform.

For their first café on Tremont Street in Boston, Capital One 360 partnered with JLL Construction for the fit-out.  The space includes a full-service coffee bar, LCD video walls incorporated into an all glass façade and a warm and inviting ambiance. Venetian plaster, faux brick walls and a wood slat ceiling define the space and polished concrete floors are intricately inlaid with an elliptical reclaimed wood floor product. The café will offer music and Wi-Fi to customers, as well as information on Capital One services via multiple LCD displays throughout the space, all the while hiding the inner workings of a fully functioning café in the background.

In addition to the Tremont Street location, Capital One 360 will be opening cafes in Back Bay (the Boylston Street location is already open), Coolidge Corner, and Harvard Square. These stores will make Boston the first city in the country to have multiple 360 cafes.

“Boston is a vibrant, digitally savvy city with residents who embrace innovation and ingenuity, and the city is an ideal place for us to expand and build upon the success of our 360 Cafés,” said Capital One’s head of direct banking, Jim Kelly, in a prepared statement. Once again, Boston’s tech community is leading a national effort.

What does this trend mean for other changing consumer-based industries? How does the need for physical connections impact e-commerce giants like Google? How do mobile technology firms help connect us to more sophisticated financial services? These are questions best answered in a comfortable couch with a very real cup of coffee.

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Change toward a low carbon economy

SabastianFrom Sebastian Ljungwaldh
Sustainability Services EMEA

The Intergovernmental Panel on Climate Change (IPCC) recently published the first of three reports to assess the impact of climate change and global warming. The IPCC concluded that fossil fuels are behind the majority of the increase in CO₂ concentrations, and this is largely due to human activities. The global community recognizes that it will need to take action.

The non-profit organization Carbon Tracker Initiative (CTI) brought the concept of stranded carbon assets to the fore. The CTI scrutinizes fossil fuel reserves held by publicly listed companies globally, and challenges the value associated with them.

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In their report ‘Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble?’ the CTI estimated that if all proven oil, gas and coal reserves were exploited, an alarming five times the carbon budget would be released into the atmosphere.

This leaves approximately 80% of these assets technically unburnable, and they will therefore remain in the ground for now.

In the current situation, the oil, gas and coal companies who explore and exploit these reserves are funded largely by institutional investors. This relationship has been a loyal one for decades. Without clear regulatory pressures or economic opportunity, the majority of institutional funds are unlikely to divest in historically rewarding sectors like coal or oil.

The carbon bubble is beginning to draw the attention of investors. A group of 70 global investors who manage more than $3 trillion recently wrote to 45 of some of the world’s largest oil and gas companies explaining the financial impact this could have on their business.

Pension funds, which typically have long-term investment horizons, are re-evaluating their hydrocarbon investments, or have already diversified their portfolio to reflect lower carbon risk exposure. For example Storebrand, a Norwegian pension fund, has already divested thirteen coal and six oil companies from their portfolios.

Whether or not global leaders come to settle a binding agreement at the annual climate summit in Paris in 2015, a shift to a low carbon economy model will be needed to avoid dangerous climate change and to stay within the carbon budget.

If we begin to see more institutional funds like Storebrand divest and reallocate large amounts of capital in low carbon investments, it could have a significant impact on the needed change towards a sustainable and low carbon economy.

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Running for all the right reasons

Bobby Jangro running the Boston Marathon in 2012.

Bobby Jangro running the Boston Marathon in 2012.

At the 118th Boston Marathon – Monday, April 21st – Robert Jangro, an Associate with our JLL downtown Boston Brokerage team, will be running his 2nd marathon for the 2nd year in a row.  Bobby ran his 1st marathon last year, only to cross the finish line moments before the tragic events.  As the world knows, this year’s race is sure to be a memorable one and we will be cheering him on towards his approach to the finish line supporting MassGeneral Hospital (MGH) for Children. After a conversation with Bobby, we hope that you will be a supporter as well:

Why did you decide to run a marathon?

My initial reason was for a physical challenge. As I became more involved with MGH for Children, it became more rewarding to run for the cause versus trying to compete with myself. I had never been a serious runner, so preparing for a 16 mile run in the middle of February  – with a foot of snow on the ground  – was a lot easier knowing that patients in need count on my fundraising.

How did you get involved in your charity?

My mother has been affiliated with MGH for a long time. Her involvement was not with the Pediatric Hematology and Oncology unit, but I remember making trips to the hospital when I was very young. The doctors, nurses and staff were very good to my family, so it was an easy decision to get involved with the MGH Marathon Team when I pursued charities.

You just finished the marathon last year before the tragic events that took place.  How is that effecting your running this year?

It is going to be a very special year to run the marathon. Last year’s events were definitely something I will carry with me for the rest of my life. My mother, who was a spectator at the finish line last year, will be running the marathon with me this year. It will be a special day for the City of Boston and I am looking forward to it very much.

How is your training going?

This has been a much tougher winter to train compared to last year. Early morning runs around Castle Island are far less enjoyable when you’re hurdling snowbanks and trying not to injure yourself on ice. I learned a few things from training last year that have helped significantly this year.

Please visit Bobby’s donation page for MassGeneral Hospital (MGH) for Children Marathon Team to pledge your support for MGH, children, a Boston tradition, the sport of running…and of course Bobby and his Mom!

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Get your game face on with NEWiRE

Heywood_Sherie_250wBlogFrom Sherie Heywood, JLL National Director, Corporate Solutions

It’s that time of year. There are numerous real estate award galas on the spring calendar. Personally I love them. There’s CoreNet, NEWiRE, and the BBJ Real Estate Awards to name a few. It is the perfect opportunity to tell some stories about buildings, developments, negotiations and network.

It seems that the men outnumber the women by at least 5:1 at most of these events. The NEWiRE Achievement Awards is an exception.

NEWiRE (the New England Women in Real Estate which goes by CREW in almost every other city), is a Boston-based, private, non-profit organization that promotes the advancement of women in the commercial real estate industry. NEWiRE’s more than 450 members represent all segments of commercial real estate. They include developers, lawyers, architects, managers, brokers, entrepreneurs, financiers and other professionals from the region’s largest firms, public agencies, as well as women-owned businesses. NEWiRE offers a vast networking resource that many women might not have in their own workplace. Even in larger firms like ours, it may be difficult to find a female peer or mentor.

I’m the only female National Director in JLL Boston who does what I do, so having a resource like NEWiRE is vital to my career satisfaction and development and I’ve been a NEWiRE member for several years.

This year, not only is JLL a Gold Sponsor of NEWiRE, but we are also a proud sponsor of the NEWiRE Achievement Awards. The gala is coming up at the Fairmont Copley Plaza on April 9. Our attendees will include JLL’s NEWiRE members, members of the JLL’s Women’s Network New England Chapter, and our Iron Mountain move team which is being honored with a Networking Award. I hope to see you there.

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Brendan Callahan on Bloomberg Radio

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Bloomberg Radio’s Bill Gross and Carol Massar of Taking Stock sat down with Brendan at Junior Achievement’s Boston Business Hall of Fame event to discuss his work with JA.  

Q: How did you first get involved with JA?

A: It started almost ten years ago after moving here from Manhattan. I had experienced JA as a young student. As I learned more about them I realized that their fundamentals jived well with my own business experience.

Q: What do you remember about that experience?

A: Commercial real estats is chock full of entrepreneurs and young people. For me the mentor piece was a huge part. I was fortunate to have great mentors. The financial skills that JA delivers in its curiculum are second to none. They’re bullet proof. Its the personal and professional experiences with the teachers that really resonate with the kids.

Our office in Boston is very involved teaching JA classes and raising money. The JLL folks clearly get more out of it than they give.

Q: You were living on 63rd and 1st in Manhattan earning $18,000 a year?

A: It was my first job out of college. I was a planning clerk working in the field during the day. In the afternoon I’d go up to our main office to get involved in business development. I worked late hours but it gave me the opportunity to lift my head, get noticed and advance my career.

This goes back to the mentor piece with JA and why it resonates with me. I always had people looking out for me. JA is a way for me to give back.

JLL was a sponsor of the event.

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