3 min read July 2023 — Invest: spoke with John Drew, chairman of real estate management and development business Drew Company, to discuss what makes Boston a lucrative location for affordable housing and sustainable construction methods. “We make substantial investments in the community across the board,” he said.
What have been your key takeaways from the past year?
We are doing a project south of Boston that will offer mixed-use multifamily housing and retail. It’s an interesting endeavor because it’s a much smaller scale than we usually do. We wanted to take it on because it was important to the community of Scituate. We are using land purchased from the Massachusetts Bay Transportation Authority to redevelop parking lots into multifamily housing and retail that has an emphasis on affordability. Having the transportation station across the street is a huge advantage. I hope this spurs on more neighborhoods to do the same because we’re a big believer in having housing closer to transportation because it makes people’s lives easier. We work with some very good partners to share our strengths in these endeavors. For example, we work with a team in life sciences where we do the housing and they do the commercial life sciences piece to cater to our residents’ work and living needs.
How is sustainability becoming a more prominent impact in your projects?
The projects we have done over the course of the past decade are LEED-certified, from materials to waste management, including one LEED Gold property. That’s a consciousness that is widespread on the government and industry side. From an investment perspective, there is interest from partners in future value and if a property is certified at a high standard, the price will be more directly impacted.
We have learned a great deal from our projects in recent years. The challenges we face on sustainability are significant. For example, there is greater scrutiny of the grid to bring more electricity into projects as more electric appliances are being installed. But if gas is available, the pricing is still more attractive for a project. That goes back to availability and that’s a big story. It has to do with getting more grid capacity into New England to service this area. We are undersupplied right now and that issue becomes inflated as more electric vehicles require charging stations. I don’t think there is enough public attention given to that. It is left to the government and power companies to resolve it. On the other hand, major companies looking for office space are looking for space that is flexible and green-conscious. This has as much to do with the awareness on the part of employees as it does with management, which is a strong dynamic that pushes for these building specifications.
Where are the best opportunities for growth in Boston?
We were one of the first developers in the Seaport and the growth in that area has been significant. There is still a lot of open space in Allston Brighton near Cambridge that we can use for new mixed housing and lab and office space, so that is another big growth area that is highly sought after. If you go to Hyde Park and the edge of Boston, that has a lot of great possibilities as well but it requires a lot more thought regarding what the right mix is. We try to be conscious of our neighbors when we develop but the fact of the matter is that we are not an invasive species stealing single-family homes from neighborhoods. In Roxbury and Nubian Square, there is a lot of economic distress but there are some good bones and infrastructure that need some TLC and the community is on board with that. But we have to be mindful of not replacing inexpensive housing with more expensive units that push out these residents. It’s very dependent on public transportation being faster, more efficient, and more accessible in that direction. The success of these types of neighborhoods is highly dependent on the accessibility of our public transit. But the growth potential is there. Generally, there has been a lot more family investment in these properties; in homes that were built over a hundred years ago and have been totally renovated, so people are adapting. It’s a quiet trend but it is stabilizing neighborhoods and strengthening the value of properties. It also gives people more wealth in these properties than they had 15 years ago in neighborhoods that otherwise would have been more stagnant.
How is the Drew Company investing in the community beyond real estate?
We make substantial investments in the community across the board. We are making more of an effort on securing grants for infrastructure. Most recently, we received a $2 million grant for sewage and water that was leveraged as a part of our affordable housing construction. We have supported Boston Harbor initiatives for a long time, as well. We support low-income housing and the Urban League’s efforts because they do a lot of good community programs to create better housing stock and to provide education initiatives, often in partnership with the NAACP. We raise millions for that. We are also highly involved with Best Buddies to support youth development. We are also helping the Martin Luther King team in Atlanta, Georgia to do advisory work on a neighborhood development project.
What is your outlook for the next two to three years?
We are at a point where there are a number of unknown variables. One of the great advantages Boston has had historically is young people moving in for our tech, life sciences and finance industries. Rent has increased but that has given us more opportunities in multifamily. Boston always has great universities and the growth of the sciences and student population is a major positive in terms of revitalizing what we can do here. Those young people bring a lot of energy and ideas, which can invigorate the city, and that has stabilized the market.
We do have some challenges remaining. One is that labor costs in construction are going up along with material costs, with maybe the exception of lumber. But otherwise, there are constant price increases of building materials and labor costs. That has to be offset by rents charged, which just get pushed higher. But rents have less elasticity than other factors. People are much more conscious of living costs now and that will slow down rentals and ownership. The equity financing on projects is something that is also slowing with interest rates and inflation rising. And frankly, the recent banking upheaval has dampened lending overall. There is still a lot of hesitation and anticipation of what will happen next. We need more solid growth and more money spent on office buildings. But we are going to stay active regardless. The great thing about Boston is that there will be areas that are stronger and full of possibilities even in lean times.
For more information, please visit:
