2016 Colliers International 37th Annual Seminar

Transcript

1. T R E N D S I N the real estate market 2016
2. WELCOMING REMARKS Tom Hynes, Co-Chairman
3. KEYNOTE ADDRESS Charlie Baker Governor of Massachusetts
4. PLACEMAKING from concept to reality
5. THE BOSTON MARKET Ron Perry, President
6. 1.75M Rendering by Neoscape
7. 3rd Tallest Building
8. High End Rents Topping $80/RSF
9. H E A D L I N E S “General Electric to select Boston as new global headquarters”. “Boston’s biggest office sale this year just closed – for $1.3 billion [500 Boylston & 222 Berkeley Street]”. “It’s official: Putnam Investments making big move to 100 Federal St. ” “Boston Globe will move HQ to downtown office [53 State Street]”. “As Pier 4 develops, Tishman Speyer makes another South Boston play [One Channel Center - $316.5M]”.
10. K E Y S T A T S net absorption 2.1M RSF vacancy 8.9%
11. K E Y S T A T S rental rates $48-$80 $38-$52 $65-$85
12. T O W E R S T U D Y 5.9% 6.6% 5.6% 3.1% Back Bay Financial District Vacancy 20th Floor
13. V E L O C I T Y 5M RSF 30% 125K RSF 1325 Boylston Street 120K RSF 333 Summer Street 110K RSF Landmark Center 85K RSF Innovation & Design Building 150K RSF 125 High Street 250K RSF One Boston Place 250K RSF 100 Federal Street 250K RSF Landmark Center 200K RSF 125 High Street 175K RSF Schrafft Center
14. 4M RSF T E N A N T S I N M A R K E T 7 options > 100K RSF 600K RSF 250K RSF 125K RSF 100K RSF 200K RSF =Committed Tenants 100K RSF 90K RSF 75K RSF 75K RSF 65K RSF
15. suburban
16. M I G R A T I O N suburban 1M RSF destination: boston
17. N E W D E V E L O P M E N T S 101 Seaport Boulevard Skanska 440K RSF 17 Floors 1325 Boylston Street Samuels & Associates 240K RSF 11 Floors 680K RSF recently completed [office]
18. N E W D E V E L O P M E N T S 1.7M RSF under construction [office] 100 Northern Avenue The Fallon Company 515K RSF 17 Floors Q2 2016 888 Boylston Street Boston Properties 425K RSF 17 Floors Q2 2017 140 Northern Avenue Tishman Speyer 350K RSF 13 Floors Q1 2018 121 Seaport Boulevard Skanska 400K RSF 17 Floors Q1 2018
19. N E W D E V E L O P M E N T S 3.5M RSF permitted North Station (100 Causeway Street) One Congress Street Congress Square 350 Boylston Street Ten Fan Pier 80 East Berkeley Street Tremont Crossing Hub on Causeway Boston Properties 500,000 RSF
20. N E W D E V E L O P M E N T S 4M RSF proposed Harbor Garage Project 111 Federal Street 650 Atlantic Avenue (South Station) 300 Northern Avenue 6 Tide Street 2 Harbor Street Harbor Garage Project The Chiofaro Company 700,000 RSF
21. F O R E C A S T 8.9% 6.6%
22. Upward Pressure On Rents Building Sales Continue! Speculative Development ? ? 2016 Predictions Workplace Evolves…
24. THE CAMBRIDGE MARKET Joe Flaherty Executive Vice President & Managing Partner
25. -74 485 -549 1,050 1,280 (1,000) (500) 0 500 1,000 1,500 (1,000) (500) 0 500 1,000 1,500 2011 2012 2013 2014 2015 SF (000s) 16.4% 10.3% 18.7% 9.0% 3.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2011 2012 2013 2014 2015 Lab Market – 9.7M SF Absorption Vacancy
26. 1,030 910 1,061 1,003 1,800 420 370 139 237 308 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2011 2012 2013 2014 2015 SF (000s) New Leases Renewals 1,450 1,280 1,200 1,240 2,108 Lab Market V E L O C I T Y
27. Lab 2.1M SF - 44 transactions V E L O C I T Y 34 2 6 2 Emerging Biotech 63.1% Big Pharma 24.1% Institutional 6.2% Big Bio 6.6% 105K SF 78K SF 208K SF 253K SF 57K SF 64K SF 43K SF 83K SF 131K SF 80K SF 295K SF 58K SF
28. 675 West Kendall Street 295,0000 SF Leasing forward Lease signed Q1 2015 Planned Occupancy Q1 2019
29. T E N A N A T S Lab 1M+ SF i n t h e M A R K E T 75K SF 30K SF 125K SF 126K SF 50K SF 65K SF 25K SF 40K SF 80K SF 35K SF 200K SF 60K SF Emerging Biotech 85.1% Institutional 2.9% Service Provider 12.0% Big Pharma: 0.0% Big Bio: 0.0% 16 1 1
30. Year 1: $75 +3% annual increases EAST CAMBRIDGE 93% of lab market 10-year Average: $86 2015 Increase: +16% 2014 Increase: +15% Class A Asking Rents - NNN 75 Sidney Street 610 Main Street 100 Binney Street
31. 244 -62 686 277 493 (100) 0 100 200 300 400 500 600 700 800 (100) 0 100 200 300 400 500 600 700 800 2011 2012 2013 2014 2015 SF (000s) 9.9% 10.5% 9.0% 8.7% 6.2% 0% 2% 4% 6% 8% 10% 12% 2011 2012 2013 2014 2015 Office Market - 11.5M SF Core Kendall Square – 3.6% Absorption Vacancy
32. V E L O C I T Y Office 1.6M SF – 44 transactions 60K SF 41K SF 165K SF 185K SF 69K SF 67K SF 40K SF 58K SF 60K SF 48K SF 251K SF 109K SF Tech/Software 44.4% Big Pharma 20.1% Emerging Biotech 15.3% Institutional 11.1% Service Provider 2.3% Consult/Fin 6.8% 16 4 6 4 12 2
33. 50 Binney Street 251,000 SF Build-to-Suit 75 Binney Street 165,000 SF Sublease 25 First Street & 2 Canal Park 185,000 & 60,000 SF Extension & Adjacent Expansion Key Transactions
34. 350K SF 20K SF 60K SF 80K SF 35K SF 250K SF 35K SF 20K SF Tech/Software 60.3% Big Bio 25.1% Institutional 1.2% Service Provider 6.0% Consult/Fin 7.4% Office 1.75M SF 600K SF 25K SF 125K SF 50K SF 8 3 3 5 1 T E N A N A T S T E N A N T S in the market
35. Year 1: $45 $1.00 annual increases 150 Cambridge Park Drive One Main Street 55 Cambridge Parkway Kendall Square Alewife Class A Asking Rents - Gross East Cambridge Year 1: $78 $1.00 annual increases Year 1: $72 $2.5% annual increases 7% 8% 0%
36. 8,598 RSF $86/SF gross average 10 year term TI: $20/RSF Renewal H I G H R E N T S One Broadway 251,234 RSF $85/SF gross average 13 year term TI: $80/RSF Build-to-suit 50 Binney Street 163,358 RSF $91/SF gross average 10 year term TI: $80/RSF New building. Sublease 75 Binney Street Confidential Tenant
37. Supply Gap What about new developments?
38. Northpoint DivcoWest $291 Million 45 acre mixed-use project 2,100,000 SF of commercial space 2,400,000 SF of residential space
39. Residential Kendall Center UPZONING: Office: 600,000 SF Residential: 400,000 SF
40. 5 3 2 Kendall Square Initiative Office/Lab: 940,000 SF 300,000 SF 280,000 SF 360,000 SF
41. Volpe Transportation Center GSA Disposition Process City Rezoning Effort 14 acres Transformation to mixed-use area Office/Lab: 1.7M SF Residential: 1.1MSF
42. THE SUBURBAN MARKET Jim Elcock Executive Vice President & Managing Partner
43. S U B U R B A N P U L S E w i t h o u t t h e U r b a n C o s t
44. i t a l l b e g i n s w i t h R e t a i l
45. from the ground up
46. changing the landscape 8%-12% increase in RENTS
47. 85K SF proposed office building with street-level retail E C O N O M I C S $37 - $39/SF $50-55/SF
48. D o n ’ t c a l l m e a n U b e r … … I ’ l l w a l k
49. M I C R O M O V E S 0.5 miles 1 minute drive-time
50. 1.4 miles 8 minute drive-time M I C R O M O V E S
51. M I C R O M O V E S 1.8 miles 5 minute drive-time
52. M I C R O M O V E S 1.6 miles 4 minute drive-time
53. M I C R O M O V E S 7 miles 13 minute drive-time
54. M I C R O M O V E S 1.3 miles 3 minute drive-time
55. Suburbs vs. Boston
56. vacancy 16.5% SF average absorption 3M SF K E Y S T A T S supply 134M SF
57. H I G H W A T E R M A R K R E N T S $22 $23 $28 $30 $51 $25 $25 $22
58. is still available premium space will continue build-to-suits are increasing construction costs SPEC CONSTRUCTION 23 spaces >100K SF
59. 400 First Ave Needham $33/SF NNN 16 year term TI: $60/SF 1265 Main St Waltham $33/SF NNN 15 year term TI: $75/SF 10 CityPoint Waltham $34/SF NNN 15 year term TI: $70/SF 275 Wyman Waltham $37/SF NNN 11 year term TI: $50/SF BUILD-TO-SUIT ECONOMICS
60. MERGERS & ACQUISITIONS
61. INNER SUBURBAN VIBE want cool space young companies is the KEY public transportation
62. 193K+ SF Westborough 1M+ SF Fall River 650K SF Taunton 330K SF Taunton 160K SF Danvers TENANTS BECOMING OWNERS
63. O N E S T O W A T C H Cross Point Lowell 191 Spring Street Lexington Needham Crossing Needham mill & main Maynard
64. 115 Hartwell Avenue Lexington SPEC LAB 80,000 SF $45/SF NNN
65. 200 Smith Street Waltham SPEC Improvements 400,000 SF
66. TENANTS O N E S T O W A T C H
67. in Burlington build-to-suit to Lowell relocate in Chelmsford renew 400,000 SF
68. SUBURBAN PULSE
69. THE CAPITAL MARKETS Kevin Phelan, Co-Chairman
70. 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2006 2008 2010 2012 2014 10 Year Treasury 1 Month LIBOR Prime Interest Rates 2006-Current
71. +250 +300 +350 +400 +450 +500 +550 +600 65 75 85 95 105 115 125 135 145 03/2014 06/2014 09/2014 12/2014 03/2015 06/2015 09/2015 CMBS BBB- Classes CMBS AAA (10Y) Classes CMBS Spreads March 2014 – November 2015
72. D O W N T O W N RESURGENCE $100M Boston, MA Class A 60K SF CONSULTING ASSIGNMENT $92.2M $62.3M Multi-State Portfolio Office/Industrial 2+M SF FIXED RATE Miami, FL Grocery-Anchored Lifestyle Center FIXED RATE $135M $80M $33.5M 27 Asset Portfolio Financing Industrial 3M SF 5-YEAR FIXED Multi-State Portfolio Apt/Office/Industrial 1.5M SF FIXED RATE Charlotte, NC Grocery-Anchored Retail 150K SF 15- YEAR FIXED RATE Deals Closed in 2015 Included :
73. 21 States 2015 Capital Markets Closings Originated by Colliers International Boston Office
74. THE INVESTMENT MARKET Doug Jacoby Senior Vice President
75. I N V E S T M E N T S A L E S human capital at Colleges & Universities stability & durability of Education, Financial and Healthcare sectors dynamic growth potential in Life Sciences 2014 & 2015 investors STILL love Boston
76. K E Y S T A T S 2015 overall sales volume $0 $5 $10 $15 $20 $25 05 06 07 08 09 10 11 12 13 14 15 Sales by Total $ (mil) Rolling 12 Month Total Quarterly Volume $10 billion 33% below peak of 2007
77. K E Y S T A T S over 2014, but still 42% higher than average from 11’-13’ slightly $0 $5 $10 $15 $20 $25 05 06 07 08 09 10 11 12 13 14 15 Sales by Total $ (mil) Rolling 12 Month Total Quarterly Volume
78. average sales price $265/SF 10% higher than last year $0 $50 $100 $150 $200 $250 $300 05 06 07 08 09 10 11 12 13 14 15 Average Price ($) PSF Boston PSF 15% higher than 2007 peak K E Y S T A T S
79. F O R E I G N C A P I T A L 04’ 05’ $1.4 B 14’ 15’ $7.2 B 419% increase
80. SAFETY F O R E I G N C A P I T A L dynamic growth potential in Life Sciences the WANT factor
81. PATIENCE F O R E I G N C A P I T A L w h a t t h e y H A V E MONEY
82. 04’ 05’ …buying THEN American Realty Financial 14’ 15’ …buying NOW F O R E I G N C A P I T A L
83. B O S T O N
84. class A sales B O S T O N $1.3 B $1,004.52/SF $316.5 M $630.92/SF $359 M $128/SF FAR 500 Boylston Street & 222 Berkeley Street 1 Channel Center Seaport Square (Land)
85. class B sales B O S T O N $285 M $471/SF $43.075 M $432.91/SF $183.5 M $454/SF 50 P.O. Square 711 Atlantic Ave Thomson Place
86. S U B U R B A N M A R K E T S
87. S U B U R B A N M A R K E T S pursuit of yield pushes outward from Boston & Cambridge 4-5% caps become 6-9% caps more value and pricing improvement 20% increase year over year in per SF pricing still a bifurcated market strong in central 128 softer in 495
88. S U B U R B A N S T R A T E G Y “Buy Wholesale, Sell Retail!” Equity Commonwealth Portfolio $376 million 5.3 million SF Columbia Property Trust Portfolio $433 million 2.9 million SF 8 buildings 629,000 SF 3 buildings 706,000 SF
89. recent sales S U B U R B A N M A R K E T S 53 South Avenue Burlington Prospect Hill Waltham 150 Royall Street Canton $119.8 M $427/SF $101 M $212/SF $58 M $220/SF
90. I N D U S T R I A L M A R K E T CONSTRAINED market | demand = INDUSTRIAL Flex product becoming more desirable = Yield 6.1 MILLION SF $481 million sold in 2015 Nearly NO Class A buying opportunities in 2015
91. r e c e n t s a l e s 112 Barnum Road Devens 675 Canton Street Westwood Colony Portfolio I N D U S T R I A L M A R K E T $36.1 M $92.06/SF $27.5 M $79.70/SF $27.4 M $68.07/SF
92. M O V I N G A H E A D DOWNTOWN SUBURBS INDUSTRIAL BE DISCIPLINED pricing & rents have increased significantly BE SELECTIVE about products and location Buy ANY functional, non-specialized industrial asset
93. SPECIAL GUEST Angela Ruggiero
94. T R E N D S I N t h e r e a l e s t a t e m a r k e t 2016