3 min read June 2023 — Colliers is a leading, diversified professional service and investment management company, providing services to commercial real estate users, owners, investors and developers. Invest: spoke with Executive Managing Director & Boston Market Leader David Goodhue about the uniqueness of the Greater Boston real estate market, how Colliers is handling the challenges facing the industry and environmental and sustainability trends impacting the Greater Boston market.
How does the Greater Boston real estate market stand out compared to other markets that are on a similar growth trajectory?
What has helped us stand out positively is our life sciences and industrial markets. Naturally, with the universities we have here, the NIH funding, venture capital and private equity, there has been a remarkable amount of investment around things like life sciences, robotics, batteries and clean tech, among other innovative technologies. Capital has slowed naturally over the past six to 12 months but these institutions and players aren’t going anywhere. And we expect things to open back up again, hopefully very soon. So, life sciences will 100% continue to be a main driver. Along with industrial, these two segments drove us through COVID. And you can tie industrial to life sciences in the sense that there’s a lot of manufacturing and research coming to Massachusetts as a result of the life science companies that already exist here. And it’s not exclusive to Cambridge anymore. The Seaport District has firmly established itself as a life sciences hub. We’re seeing a lot of interest in manufacturing and research as far out as Route 495 and beyond, so about 30-plus miles from Downtown Boston.
What are the best-performing real estate assets in 2023?
Assets and projects that have commitments or that we expect to do well are highly sophisticated GMP research facilities. Some are being built, and some are being renovated, but without a doubt, the clean tech, environmental, and sustainability industries are looking to grow here and they’re attracted to the best developers and the best landlords. On the other hand, office space in Boston suffered virtually everywhere as a result of COVID; however, the blue-chip landlords and developers who are building or renovating the best product are still attracting the best tenants at quality rents. What suffered more in terms of office space has been the class-B market.
What are some of the opportunities in the Greater Boston region and how is Colliers capitalizing on those opportunities?
I would stay on the theme of environmental, sustainable, clean tech, life sciences, robotics, and 3D printing, among others. Those types of innovation companies are here or they’re coming here for all the great reasons that make up Boston. From a real estate perspective, facilities that can accommodate those types of uses, like flex industrial GMP, are where I would put my money. And a lot of these landlords have buildings that can be renovated to a particular standard. So, I like the flexibility that some of these buildings offer from an investment perspective.
What are some of the challenges the industry faces and how is Colliers helping its local clients mitigate them?
To me, the biggest challenge relative to real estate is hybrid work relative to office space. We’re never going to go back to where we were; however, I do think that we need to get to a middle ground where cities like Boston can get back to the consistent day-in and day-out energy and vibrancy that draws people in. There are areas of the city, like the Seaport and Back Bay, where there’s enough tourism, you feel the activity and you feel the energy. But the financial district is not what it was. And being a global financial hub, the notion of the financial district in Boston being half as occupied daily as it was pre-COVID is disheartening. I do believe that over time the pendulum will swing back toward an in-person environment for all the reasons that we hear about surroundings, culture, mentorship and productivity. The flexibility for people to be productive outside of the typical office space is fantastic but it needs to be more the exception to the rule than the standard in many cases. Overall, I do feel that the government needs to make a very direct, intentional effort to get people back. There needs to be coordination with the business community to make a concerted push to get more people back, which would result in an overall benefit everywhere.
How have you seen your clients’ preferences, priorities and concerns shift and how are you catering to this change?
Much of the uncertainty and concerns for tenants 12 to 18 months ago remain today. A lot of companies are still trying to figure out who they’re going to be as it relates to the future of their physical workplace environment. We ourselves are designing a new space and will be moving into it soon, so I have first-hand experience in being the primary stakeholder in a future work scenario. And it is challenging to take a step back and look at your organization and how you see growth and how you will attract the best and brightest workforce. There’s no clarity to it, there’s no playbook for it. So, for me, it’s really on a client-by-client basis. You have to listen to them, help draw out their priorities and goals and get a clear understanding of their unique culture.
How do you see environmental and sustainability trends impacting the Greater Boston real estate market?
With all of the environmental and sustainability-focused companies that are here, or coming here, naturally, it only makes sense and is appropriate for Boston to remain hyper-focused on the environment and sustainability. Boston has been in a leadership role in that regard and there’s a shared vision politically and from a business perspective. And we have the intellectual capital to make it all happen. So, it’s of primary importance to the city of Boston and to the state of Massachusetts at large. In terms of the real estate community itself, it’s very clear that the landlords most focused on sustainability in their real estate assets have outperformed others. Yes, it costs money but the tenants are willing to pay for it and landlords are willing to provide it.
What is your outlook for Colliers and how did this outlook inform the priorities you’re going to be focusing on in the near or long term?
I’m extremely positive long-term about the city of Boston. We’re going to go through cycles naturally, but if it has to happen, where would you rather be in a downturn than Boston? For Colliers, we have been on a high-growth trajectory not just globally and nationally but certainly locally in the Boston office. I expect to continue to recruit heavily in the Boston office. The big thing for growing the Boston office comes down to getting great people. The foremost focus, however, is always on clients. I wish the present state of the world was different like everybody does but I stand by what I said: I like the big picture, long term. There’s no place I’d rather be than Boston.
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