Banker & Tradesman August 24, 2015

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Est ab li s h e d 1 8 7 2

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www.bankerandtradesman.com

Week Of Monday, August 24, 2015

services

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real

estate

weekly

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massachusetts

A Publication of The Warren Group Money Management Commercial Interests

Too Much,Too Soon

Commercial Real Estate Bubble Beginning To Form By Scott Van Voorhis | Banker & Tradesman Columnist

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et’s call the frothy market for downtown Boston skyscrapers what it is: A bubble. Yet the big question is not whether office tower prices are getting loopy again – they are. Rather, why prices are hitting such crazy levels so soon after the last crash? The Great Recession was at its peak just six short years ago, with trophy towers and suburban complexes still getting foreclosed upon just a bare three or four years ago. But here we are again, with a nice but hardly spectacular Back Bay office complex going for $1.3 billion – about what the Hancock tower fetched during the last bubble – and prices per square foot pushing the previously unheard of $800 to $1,000 a square foot. We even have a plan by the REIT that owns the State Street tower to sell shares, with the tower priced at roughly $900 a square foot, or more than double the median for downtown Boston. So it is fair to ask whether there we are seeing some perverse market incentives at play right now. A globe Boston tenants absorbed awash in easy money is certainly 861,000 square feet one factor right now. All that in the second quarter, money has to go someplace, after all. dropping vacancy to 8.4 But the lack of any really dire percent as Class A asking consequences for reckless office rents rose to $52.31 per market investors after the Great Recession is certainly lurking in square foot. the background as well. While millions of homeowners were kicked to the street as the real estate market and economy

Why is the Boston office market – and that of a number of the world’s top cities – already back in bubble territory?

Missing A Piece Of The Puzzle Millennial Homebuyers Lack Financial Education, Struggle With Down Payments By Jess Pitocco Banker & Tradesman Staff

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he prospect of becoming a homeowner is a daunting one for many potential buyers, and the Millennial generation in particular is shying away from the concept. In addition to a crushing student debt burden, Millennials in Massachusetts face the shadow of a large down payment and battle a lack of inventory, but one of the biggest challenges they face is a financial education that could help them buy a home affordably. “Millennials feel that a home is cost-prohibitive at their age,” said Peter Milewski, director of homeownership and lending at MassHousing. “The sweet spot for first-time homebuyers is from ages 21 to 35.” But they won’t be waiting much longer: 68 percent of firsttime homebuyers are below the age of 34, according to National Association of Realtors’ “Home Buyer and Seller Trends Report 2015.” TD Bank’s survey, Continued on Page 9 Green For Greentown

SBA Competition Recognizes Three Mass. Accelerators

Continued on Page 3

Somerville Accelerator Wins Cash Prize In SBA Contest

The 2.4 million square feet absorbed along Route 128 in the past year has been the most in any 12-month period since 2000.

By Laura Alix Banker & Tradesman Staff

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In Person ������������������������������������������������������������������ 8

Banking & Lending ������������������������������������������������ 12

Points ����������������������������������������������������������������������� 4

Residential �������������������������������������������������������������� 9

Classified Sections ������������������������������������������������� 14

Somerville startup accelerator – the aptly named Greentown Labs – is getting a little extra green, thanks to a clever little video that caught the attention of Small Business Administration (SBA) leaders in a nationwide competition. Think of an accelerator as a little ecosystem for up-and-coming businesses. The SBA’s Growth Accelerator Fund Competition, now in its second year, awards cash prizes to accelerators that prove their merit and gives particular attention to those that fill a geographic gap. Accelerators that win the competition also commit to quarterly reporting for

By The Numbers ������������������������������������������������������� 6

Commercial & Industrial ���������������������������������������� 10

Records Section ������������������������������������������������������ B1

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Class A rents along I-495 are the highest they have been since 2008.

All statistics are as of the second quarter of this year. Source: Transwestern


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