The Future of Boston Real Estate

The Future of Boston Real Estate/Excerpted from a speech to the Counselors of Real Estate/Part II of II

21 October 2021/By: Lawrence S. DiCara

More than one hundred years ago, John F. Fitzgerald campaigned on a slogan promising a “bigger, better, busier Boston.” Yet today, the rationale for the creation and nurturing of the American city is changing. It will become far more a residential city and far less a commercial city.?Recovery will not be instantaneous; it will be slow but steady.

We are social beings.?That is why people have gathered in cities since the time of the Greeks, and arguably prior.?Ben Wilson’s Metropolis reminds us that cities are “humankind’s greatest invention.”?

Boston must learn to re-invent itself, as many of us have done within the past year, and will continue to do.?Everything must be on the table.

Will we become more like France and take off the month of August? Will we be a nation that has a long weekend, every weekend??

I anticipate that most employers will conclude that building corporate culture and mentoring staff will result in a return to a safe office setting.?How else will younger, newer employees get to know their coworkers??What will happen to conversations by the coffee machine or the water cooler??Ruth Lehmann, Director of the Whitehead Institute in Cambridge, explained the importance of collaboration as follows: “Most ideas come from walking around in the lab.?You have a little chat about an idea and you come back later and say no, that was kind of stupid…that is where creativity comes from.” ?Those who reduce their office footprint dramatically do so at their peril, as opportunities may be lost forever.?

As the pandemic has lingered, many of us began to question the advantages of working remotely.?An article in the Wall Street Journal observed “projects take longer. Training is tougher. Hiring and integrating new employees, more complicated.”?

It is as simple as the differences between concentrated and diffused.?On an assembly line, Jones & Smith make widgets.?In the break room, they learn about each other’s lives.?Most any lawyer can sit in front of a screen and review documents or do research, but it is in collaborating that theories are tested.

Perhaps Mozart and Beethoven composed the world’s greatest music, alone, in a room with a piano, but many of the great minds of recorded history have had collaborators:?Bell and Watson, Gates & Ballmer, Jobs and Wozniak.?Can we even calculate what we are losing by encouraging the great minds of the 21st Century to sit at home rather than be in a space where they can collaborate with others???

State Street did not emerge as a financial center as a result of people working alone, nor did Route 128 after World War II or Kendall Square in this century.?In his recently released book “Boston Made,” Dr. Robert Krim details the history of innovation in Boston, since our very beginnings and highlights “bump and connect” – “planned and unplanned meetings and conversations” as a key variable.?He reminds us that “the isolated individual does not drive innovation.”

I have seen it happen thousands of times in my own life.?At a board meeting, the person sitting next to me will say “Call me about mediating a dispute” or “You know people at City Hall, don’t you?”?or a call will come in “I just saw you speak; can I retain you?”?It is these unintended consequences that are not happening, all of which leads, in my humble opinion, to lower productivity and lower satisfaction.?

Business travel will rebound slowly since most managers have concluded that much of it is no longer necessary.?

It is an appropriate time to reinvent our relationship with public spaces and to reinvent winter as a season of light – “winter placemaking” as advocated by Jonathan Berk of Bench Consulting and others.?We need to re-imagine streets, sidewalks, intersections and bridges, as many of the great cities of the world have done.?We must be nimble and be quick.?If Salem, North Adams and Worcester can do so, Boston surely can.?I envision a city full of parklets and sidewalk cafes and mini-plazas, all of which will provide reasons for people to be Downtown, as well as in our neighborhood shopping districts.?

If the Rose Bowl can be played in Texas, Boston can celebrate colder weather!?After all, millions drive hours each weekend to ski and 60,000 people will go to a football game, and tailgate for hours, in November and December.

The MBTA must reinvent itself to attract new riders and to encourage old riders to return to the system.?Why not have the MBTA pay for entertainers to be in the major stations??Why not take advantage of technology and link the Charlie Card to other affinity cards, perhaps with those who are downtown merchants??Lastly, and perhaps most importantly, the MBTA must have flexible pricing so that when the system is not busy – during the middle of the day – fares are dramatically lower.?

It is time for visionary thinking, not timidity. The suggestion of repairing the I-90 viaduct borders on the obscene.?This is an opportunity for city building as much as it is a transportation project.?

History teaches us that strategic investments in transportation infrastructure provide a durable platform for economic growth that can last decades.?The current infrastructure bill is a chance to deliver the next round of major transportation projects.?Massachusetts must take advantage of this once in a generation opportunity to create a multi-modal interchange surrounding West Station in Allston.?Selling the air rights over West Station and the surrounding area with footings in place as part of construction should provide for significant development – paying rent to the state far into this century.?I worked on Copley Place.?I know the math!

In addition to creating a new at-grade highway, we must improve our regional rail system and connect the Red Lines and Blue Lines beneath Cambridge Street and finish the Silver Line, finally.

I currently share space with some of Boston’s most prominent abatement attorneys.?Everyone expects to be very busy going forward.?When property owners analyze their assessments, premised upon values on 1?January 2021, we anticipate there will be a long line of property owners who will question the city’s judgment.?This may make Boston feel much more like the 1970s than any of us could have imagined.?

The credit agencies have been very positive to Boston.?Moody’s and Standard & Poors have continued Boston’s AAA bond rating because of the stability of our property tax revenues.?The New York Times, citing a National Tax Law Journal has reported that, of 40 major cities, Boston is expected to suffer the smallest revenue decline this year. That is because we are so dependent upon the property tax, the base of which has been effectively doubled in the past decade.

The good news is that we are primarily dependent upon the property tax. ?Of course, because of Prop 2 ?, horrible public policy in my opinion 40?years ago and to this day, the real question is what is the levy and what are the component parts thereof??I would predict that a larger percentage of the levy will result from residential properties and a smaller percentage from commercial properties which will not only keep many of us busy, but also make for a very interesting municipal election cycle.?

As we are reminded by Boston Made, four times over the last four centuries, the Greater Boston economy collapsed, yet Boston continues to reinvent itself.?I believe we will do so again.