Articles Posted in Commercial Real Estate

Easthampton Proposes Building Size Limit To Exclude Big Box Retailers

In a move calculated to enhance the business climate for small to medium-size businesses, the City Council of Easthampton, Massachusetts is considering an ordinance to ban big-box retailers all over the city. Only the industrially zoned area would be excluded from the new ordinance, which limits buildings to a maximum of 50,000 square feet. The Ordinance Committee and Planning Board are considering the proposed ordinance, introduced by City Council President Joseph McCoy, acting on behalf of David Gardner and Daniel Hagan, Jr. The initial discussions among members of the Ordinance Committee took place at its November 25 and December 10 meetings, as posted in published agendas. No recommendation has yet been issued, according to chairman and District 4 councilor Salem Derby. The official debate before the Planning Commission has yet to be scheduled. McCoy said there would be plenty of opportunity for the public to weigh in on the proposed building size cap, particularly as the Planning Board conducts its evaluation. Public hearings will be held, he said.

Gardner formerly chaired the Zoning Board of Appeals and was also on the Planning Board. He is a member of Easthampton’s Economic Development and Industrial Commission (EDIC). Hagan, an attorney,  was a leader in 2010 in petitioning to limit the size of  the highway business district on Route 10, hoping to use the limitation to thwart the development of big-box stores, a plan rejected by the Planning Board.

Proposal Is Called Compatible With Existing Business Buildings’ Scale, Encouraging For Business Growth

Gardner’s position is that the proposal to limit the size of retail buildings is compatible with goals and future planning set forth in the City of Easthampton Master Plan. The proposed limitations on building size would encourage the growth of small businesses and discourage development that’s out of scale with other elements of a neighborhood or commercial district. The 50,000-square-foot limit would not exclude smaller-scale retailers and is not unreasonable. Gardner offered examples of existing commercial buildings that would be in compliance with the new limits, such as the Easthampton Savings Bank at 28,700 square feet, the Municipal Building at 26,000 square feet, and Valley Medical at 31,000 square feet.

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Last year, Massachusetts ranked ninth in the nation for direct commercial property development spending. According to commercial real estate development association NAIOP, approximately $3 billion was spent on commercial property construction in the state in 2011. The increase in commercial development bumped the state up to the top ten from its 2010 nationwide expenditure ranking of 21st in the nation. In Massachusetts, more than 41,000 jobs were reportedly supported by the 2011 increase in commercial development.

In Boston alone, ground was broken on 26 new projects in 2011 which included a $220 million residential tower downtown, Avalon Exeter residences in the Back Bay, a new dorm and educational facility at the Berklee College of Music, and a new headquarters for Vertex Pharmaceuticals at Fan Pier. The Director of Government Affairs at NAIOP Massachusetts, Tamara Small, stated 2011 development spending signaled the beginning of a state-wide commercial real estate recovery. She also cautioned that policies designed to encourage continued sector growth must remain in place.

According to an NAIOP Research Foundation study entitled How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011, commercial property construction expenditures throughout the nation totaled about $92.3 billion last year. In 2011, more than 238 million square feet of commercial real estate space was added nationwide. The NAIOP research report stated approximately 2 million jobs were created throughout the country to support building the additional space. The additional commercial space reportedly has the potential to house an estimated 610,000 employees. Nationwide, commercial real estate development spending was up about 13 percent over 2010 and added approximately $261.6 billion to the nation’s GDP. 2011 was the first year in which overall gains in commercial development spending were reported since the so-called Great Recession began in 2007.

According to a recent survey published by Marcus & Millichap, Boston’s local economy is well on the road to recovery. The company’s 2012 National Office Report states Boston employment growth will likely be centered on or near the city’s waterfront. Employers are increasingly moving into the area as the $3 billion Seaport Square development nears completion. Also, the relocation of the federal courthouse to the waterfront is reportedly attracting a number of businesses away from the city’s Financial District.

The Boston Convention and Exhibition Center is expected to generate more than $625 million in 2012. According to the report, a return to higher revenue levels such as those that existed prior to the Great Recession will likely allow Boston officials to green light a planned $2 billion Convention Center expansion. Construction was also recently completed on the Seaport Center, a 465,000-square-foot office building in the Seaport District.

According to Jones Lang LaSalle, office rents are rising near Boston’s waterfront and space is becoming more difficult to obtain. In January 2012, vacancies in the area were down nearly ten percent and rents were up 15 percent from the previous March. Although office vacancy rates remain high in the Financial District, construction has now begun on the new Alexandria Center located in Kendall Square. Both the Massachusetts Institute of Technology and Harvard University are expected to begin expanding their research arms and several biotech companies are now fixed to move into Cambridge. Institutional investors are also expected to begin purchasing more commercial assets within the city’s core.

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