The Grey Lee Net

This past Friday I attended the MIT Center for Real Estate Global Forum for 2012, at the Federal Reserve Bank of Boston. The full-day event was dense with information and broad in perspectives. I caught up with an old friend from high school (Donna Dibona) who attended the CRE for her master’s in 2008. I met a lot of great people and learned a lot.

One of the first presentations was on the topic of High Performance Workspaces, one of my favorites. Kevin Sheehan from Boston Properties presented: there is a revolution in the workplace. Custom is in, cubicle is out. Traditional office space is like a frog in a slowly boiling pot – hopefully it will wake up and jump out before it’s too late. Kevin referenced Jim Lauman at Google, who has explored the intersection between people, space and technology. Workplaces are all about collaboration now. Rather than an assembly line for production, offices are for heuristic activity and creativity.

He described how people cost 10x the cost of space, so space has to be leveraged to support the brand and culture, to foster collaboration, to engage with sustainability and to attract and retain top talent. There’s a war for talent going on – and young people today care most about salary but #2 is their work environment. The office is not a commodity, and it’s not being replaced by telecommuting. He recommended we read a book called “Honest Signals” by Sandy Pentland, advocating for face to face collaboration, and also “Where Good Ideas Come From” by Steven Johnson. Innovation for businesses happens in team settings, in offices.

A lot of his presentation was going over the Google remodeling that has happened at their space in Kendall Sq – opening up and connecting floorplates to enable the firm to grow in-situ, and to foster communications and spark conversations which is at the heart of Google’s business strategy. Kevin was confident that the amenities of restaurants and other services in the building and others like it (i.e. Atlantic Wharf) will result in best tenants and highest values for their buildings. I really appreciated his presentation, even if it diminished teleworking, which I reckon is a major force. I agree that people still need to work together, and I’m enjoying finding the ways to enable owners to make their space the best for their future tenants (via BlastOffice).

There were a lot of other presentations – modular construction practices, where Boston fits in the global real estate market, and an academic comparison of monocentric to policentric cities by professor Bill Wharton. I caught up with Donna and other alumns during the lunch break. It was great to hear about their many projects and to talk with them about the future of office space. I will be following up with a couple of them on how to solve the logistics issues I’ve encountered. What a great group! (Donna, Daniel, Kristy and Rimi)

The afternoon held more great components of the Forum. MIT collected a group of luminaries from across the globe – including Turkey, Mexico and China – to present on what the new global investor is looking for. I am sure there is a better synopsis somewhere else [nothing seems to be posted yet, but let me know if you have seen anything, thanks]. Great perspectives on those countries. I enjoyed talking with Emre Camlibel afterwards, learning about the amazing growth going on in Turkey. There are 40 high-rise office buildings in the whole country, an $800M economy!  Qian Wang from China had great stories as well, about third-tier cities with almost 10M people…

After a “Lightning Round” of presentations about legal cases that are moving through the courts and will affect real estate development, the day closed with a series of finalists in a case competition. Both the legal cases and the development cases were very illuminating to me. The development scenarios were to develop Pier 38 and the adjacent area just south of the San Francisco Giants stadium in the “Mission Bay” area of that city. Student teams had put together a plan for the 20+ acre site since Monday, and had gone through and elimination round earlier in the day. Some of the judges were actual members of the Giants’ board. The final presentations were polished and the projects diverse. All were mixed-use, all had to handle game-day parking, all had to provide 5 acres of new parkland for the city, and each had gone in different directions. I caught up with the winners, from Toronto, at the end-of-day cocktail reception. They had really put together a great project with a good sense of the market demand for their offering. I was psyched for them, and hope to get involved in a similar case presentation sometime in the near future. The reception was at the top of the Federal Reserve with great views out across the city in both directions. The best surprise of the day was to realize that MIT’s mascot is a beaver (it was on the prize for the case competition), same as my alma mater, London School of Economics. Great minds think alike!

PlaceMakers blog – a collection of urban planning types – put out an article by Nathan Norris ”Why Generation Y is Causing the Great Migration of the 21st Century”

Norris quotes Robert Schiller: “Just last week, Robert Shiller of the Standard & Poor’s/Case-Shiller Home Price Index made the dramatic statement that, with our growing shift to renting and city living, suburban home prices may never rebound in our lifetime.”

There is a population of young people, the peak of the cohort is 22 right now, we call Generation Y. Social observers and planners are noticing they are moving to cities at greater rates than previous generations. There are some major reasons suggested by Norris: they want more adventure than the static suburbs they grew up in. They need the connectivity and serendipitous interactions that occur in dense areas, rather than their managed, play-dated upbringing. Young people want the convenience of urban cores where stores, entertainment, etc are readily available without needing to drive. And this entire generation is averse to cars, to wit: General Motors has hired the marketing arm of MTV to try to get young people more excited about owning and auto.

The article is focused on the residential dimension: where will people live and is basically responding to the Schiller remark, which made waves in the suburban residential brokerage market. I believe the same forces are going to dramatically challenge suburban commercial real estate. If crime and schools can be taken care of in cities, young people will remain in these denser mixed-use areas, and the need for suburban office parks will transform. Of course many owners will re-position assets, and it’s not like the burbs are disappearing overnight. But the trends are significant and the long bet is on the return of the city as the locus of economic activity. The car-dependent suburb will have to adapt to meet people’s needs for saving time, stimulation, and a long-term sense of community.

BlastOfficeNow is officially in the running! We have applied to the MassChallenge business accelerator program for this summer. Thanks for your feedback, support, and encouragement.

We know this is just one small part of the process of transforming commercial real estate. Our application lacks a few major things: we don’t have a working prototype of the marketplace, and we don’t have a first client. But we will continue to build the business and grow our effect.

Each of you has provided me with an invaluable short conversation, an insight, a suggestion, or (some of you) hours of feedback and coaching. I thank you all!

I will keep you posted as to how we are going. In the meantime, please take a look at our profile at MassChallenge: http://masschallenge.org/profile/blastofficenow

Our website is below.

Our prospects are out there: the future of office space!

Cheers and thanks again!

Yesterday I met with a great group of people on behalf of Castle Square Tenants Organization – one of my consulting assignments. As you know, Castle Square is undergoing the most significant deep-energy retrofit of an affordable housing complex of its size in the US. Its’ a great project to work on.

This is a picture of one of the mid-rise buildings along Tremont – #414

Over the past few months, I have gotten to know the design team. On Tuesday, a few of us met to go over the checklist for achieving a LEED designation for a portion of the project. The entire complex, all 25 buildings, have been renovated to LEED certifiability. Curiously, the evolution of the rating system has been changing so much in the past three years that the project has been going on, such that there are only five of the buildings that can qualify for a clear LEED designation. On account of the cost of performing post-occupancy energy modeling and paying fees to the USGBC – the certifying body – the project has chosen to pursue LEED for only one building, 414 Tremont St. An earlier plan to go for LEED Neighborhood Development has become impossible as the scheme has changed.

It’s kind of a bummer to only have one LEED building, while three others (the three other “pods” along Tremont) are essentially identical and renovated to the same performance specs.

The good thing is that we discovered we may be going for LEED Platinum, the highest rating possible. Owing to the great talents of Bruce Hampton (of Elton + Hampton Architects) and Heather Clark (of Biome Studio) the project embraced a total transformation of the buildings. The energy use is reduced so far that the LEED checklist gives it and unheard of 35 points (out of about 80) at 414 Tremont St. Most new buildings can only get about a dozen points on this section. Various other aspects of the building’s retrofit result in a great point score. Everyone is pretty excited and anxious to hear how the rating entity will respond – there’s always the possibility that they will dispute things and make it difficult to get the highest designation. It was a great meeting and good to go through the entire LEED checklist and sort out which points we can document, which we might be able to, and which are not part of our project.

Here’s Bruce Hampton. Even though we are only now, really at the end of the project, engaging with Steven Winter Associates (the LEED consultants) he and the design team had LEED in mind and the project was oriented toward certification since the beginning. Also at the meeting were Tom O’Neil from Pinck & Co., Mark Kelley the energy analyst, Martin Hickey from CWC the general contractors, a few folks from Winn Development, and Lauren Hildebrand from Steven Winter. Melissa Martinez of Pinck & Co convened the meeting and facilitated the discussion. My role is in the post-occupancy phase: there is a lot of training and education needed to orient the occupants toward green best practices in operations and maintenance. No matter how good the technology, it comes down to people using things in a way that moves toward the design goal. We’re all pretty psyched to be approaching Platinum at Castle Square.

Great time last night meeting the MassChallenge crowd at MJ O’Connor’s at the convention center. I went with one of my advisors, Anu Yadav, and we just went around and around pitching Blastoffice. Actually, we called it “Fill The Building” last evening. I have been playing with names lately. People liked it. It was great to be in a crowd where everyone just wants to strike up a conversation and hear about the cool idea you are working on. Really enthusiastic and ready to help crowd. I met a guy from Korea who was a little shy (on account of the language) and I know what that’s like so I talked with him for a while and gave him some links to look up as he was interested in knowing how to incorporate in Mass. and where to find office space (I suggested looking at loosecubes.com to find a small shared space, as that would be best for a lone guy with a biz idea).

I went to the MassChallenge UnTapped at Offcio last night. Officio is a co-working space at 30 Newbury St in Boston – a great facility for mobile professionals to stop in at and use as an effective workplace.

This weekend I went out to my buddy Peter’s woodshop out in the burbs. I had a little chair to work on. So did Jeb. Soundtrack: Van Morrison, Eddie Vedder, and Rat-Tat-Tat seeded on Pandora. So we had a good time.

It was a little seat I use in the foyer of my place – a nice spot to sit and shed or don shoes. Jeb was amazed at the re-bolting and glueing I was doing. He had his hands full with the other chair there – on the right. I wore plaid especially because we were going to do woodworking. I also got a chance to split some oak rounds he had laying around, waiting for the maul. That was fun.

Always a pleasure to work at Peter’s little barn there. Thanks man! Nice in the winter to have the woodstove going. He even let me use some old “barn red” paint on it. I think it turned out pretty good!

Edward Glaeser came out with another good commentary about road infrastructure. Of course I tuned into it since he references my LSE professor Giles Duranton and his colleague’s “Law of Highway Building Futility” – (actual name: fundamental law of highways congestion) the studies of reality confirm that if you build a highway, it will fill up and congestion will remain the same. The only way to reduce congestion in transportation infrastructure is to build a portfolio of transportation alternatives including trains, busses, bikes, and walkability.

The Glaeser piece is a critique of the latest “Spend and Build” federal transportation bill. He really believes we are past the time of building out the infrastructure and are in the time of keeping what we’ve got going. Sure, some jobs and mega-engineering contracting firms can benefit from big new projects, but our economy on a whole will be better off with a scheduled maintenance program for roads and bridges (among other things).

Glaeser outlines the basic history of transportation infrastructure in the US. He acknowledges the bigger and more frantic expansion of infrastructure in Asia and how some people wonder if we are “falling behind” because they are spending more on big bridges. He kicks Spain for overextending themselves to build their high-speed intercity train network. His conclusion is that big projects make sense where there is a clear need for them, but in the US, we don’t need more threads in the highway fabric, we need to deal with congestion, with airport delays, and decaying bridges and roads to allay replacement expenditure.

I definitely believe in taking care of things, even though it’s just not as exciting as groundbreaking. Politicians who control public expenditure have a hard time getting on the preventive maintenance bandwagon. I’ve wondered if there was a way to introduce performance incentives in public works management – maybe split territories of infrastructure across 3-5 guilds of commons custodial entities (joint DPW/Political Party) and track the work over time. The team generating the best maintenance record (least ongoing costs) would be rewarded, and laggards saddled with less lucrative contracts. Projects would be assigned with some randomness to account for the vagaries of pre-existing conditions and usage patterns. This way, one bureaucratic entity can’t be captured by political illogic. I’ll work on this idea a little more before I pitch it to the City of Cambridge…

• Let Users Pay
• Implement Congestion Pricing
• De-federalize Highway Spending
• Institutionalize Maintenance Funding
• Promote Private-Public Partnership
• Cherish the Bus
• Split Up the Port Authority

These are the key recommendations from Professor Glaeser. Very neo-liberal. I appreciate the interest he has in aligning responsibility with users. I want to point out that he does not seem to acknowledge the overwhelming “public” aspect of infrastructure – the commons that we all benefit from. There are just too many spillover effects from roads and transportation infrastructure to ever really assign the costs to the beneficiaries – which is why it is usually funded by governments. I like the toll road and congestion pricing, now that there is some technology that can enable that. But requiring projects to only exist if they can be funded by users is a poor metric to choose many community asset investments, so I tend to be wary of that pattern.

I hope many of Edward Glaeser’s recommendations can be taken to heart to more wisely spend tax money to improve the functioning of our communities. I also hope a more communal, civic and collaborative paradigm can help bring people into the effort to solve these problems and find the most widely beneficial and more responsible way to keep us moving and grooving.

I had a lunch meeting at the Genzyme Building in Kendall Sq, Cambridge. Their cafeteria is at the top, 16th floor or so. I have a colleague on a community service board who works there. It was a great place to have a pre-committee-meeting meeting.Very cool perspectives on the city!

Straight out the back, to the north, is the old Middlesex Third District Courthouse. The Edward J. Sullivan Building  (vacant now for two years) – stands at attention. Perhaps more like seeking attention. I read in BisNow that one of the major developers in town was looking at it for a residential conversion. You know, we’re in this “multifamily multifamily” bubble. Funny how the real estate industry loves to fixate. But really, it’s obviously a bit of a rare site – very high density in a neighborhood that will probably never allow such a large building to be built again. At least not for a while. I’d say 20 years. Unless “urban densification” goes wild.

It really is interesting how local rule cities and towns in Massachusetts have held development at bay with various zoning and development impediments. I’m reminded of eating in high-rise cafeterias in other countries. Cities of high-rise apartment buildings. Not so common around here. Who wants to get on that bandwagon? The benefits are multiple: more efficient (carbon and energy) utilization of built structure and infrastructure, transportation efficiencies, spillover effects from socializing, working and tending to families in dense arrangements, induced cooperation and sharing, and perhaps even invigorated democratic activity!

To a certain degree, big office buildings are this high-density urban environment. People spend a lot of time in close proximity. Large office buildings are even more expressive of the city due to the low ratio of personal/private space to public space. Sixteen floors of sidewalk and streetscape. All pedestrian, of course. Do people who spend lots of time in big open buildings behave more or less socially? More or less cooperative or democratic than people in smaller buildings? Now there’s a Grad School of Design thesis to work on! At any rate, folks in the Genzyme building, being all super LEED and open-atrium, have a good thing going. I hope to attend more meetings over there!

Here’s my old buddy Nick with his dog Bailey – yes, the Bailey I’m always dog-sitting.

They just closed on this small two-family down the street from where they live with Nick’s wife (Bailey’s mama) Kate and Eliza their daughter. The place had been getting renovated a few years back by an old timer, when the pipes froze and ruined a lot of the flooring and walls on the first floor. The old guy finally agreed to have his neighbor Nick buy him out (at a good price for Nick) and so now Nick gets to finish the work.

We were hanging out, enjoying the old-fashioned fireplace, since the mechanical heat doesn’t work yet. Nick has great plans to fix the place up and rent it out. Right on Centre Street.

Right across from my favorite bar/record store, Tres Gatos.

Hmmmmmm……