In the past few years, it’s abundantly clear that the real estate industry in Boston and the greater Boston area has reached a head scratching inflection point. For about two years before the great crash of 2008, Boston experienced an increased number of large luxury condo constructions in the Back Bay, Beacon Hill and South End neighborhoods. However, since the downturn in the economy, and in particular the real estate market, there has been a shift toward developing affordable, conservative apartments rather than luxury condos.
Currently, popularity has shifted from spacious two and three bedroom units down to one bedroom units, and more compact studios are getting snatched up by young professionals and recent graduates from the city’s various universities. Ironically, while the job market in Boston has stayed relatively steady (Forbes rated it as the #8 Best City for jobs out of 100 cities across the country), it seems Boston residents are holding on to their wallets and being cautious when it comes to real estate investments.
Now that the focus is on a smaller, somewhat ‘less impressive’ living space, developers, building owners and tenants are looking at buildings in a different light, as companies look to recruit tech savvy and environmentally conscious talent, they also look for buildings to reflect those same values, including .
The real estate trend is extremely noteworthy, despite the fact that the market has shifted, there is still a consistent focus on technology and advanced systems and the benefits they can provide to owners and tenants. No matter where the market heads next, upscale or down, we fully expect that smarter buildings will be in the mix. Solar panels, green roofs and LEED certification are becoming increasingly important assets. In addition, automated systems and advanced energy management systems give building owners more control and the ability to not only save money on energy but participate in “demand side” programs, creating additional revenue opportunities.
As one may expect, working on luxury residences including, the Mandarin Residences, The W Hotel Residences, and 45 Province Street has shown us that high end condo projects were quick to adopt advanced building systems in order to give their occupants the utmost in comfort, control and safety. Recently, areas like Cambridge, South Boston and the Seaport and Innovation Districts have become increasingly trendy and high demand in new residencies, mainly because they are considered “up and coming areas,” which typically means a fairer price.
Quick to jump on board, especially when it comes to lowering costs and being “green,” there has been a move toward energy efficient upgrades in low to medium housing communities. For example, The Castle Square Apartments located in Boston’s South End; a 500-unit low-and moderate-income apartment complex on Tremont Street, followed the “cost-effective upgrade” trend of urban renewal with an economically smart “face-lift”. The apartments have been undergoing an energy efficiency renewal to update the exterior and interior of the building, in addition, to achieving a 72 percent drop in energy consumption. By enhancing the current property’s HVAC and boiler system with state-of-the-art energy efficient technology, along with completing the nation’s largest Deep Energy Retrofit, Castle Square and its tenants are able to save over 50% on gas and electricity costs, and reduce its energy demand and consumption with managed energy practices. Once the renovation is completed it is expected to achieve U.S. Green Building Council’s LEED Gold Certification.
On the other hand, similar to the high end residences, developers are still interested in advanced systems, particularly when it comes to energy management because they understood that this was an important value proposition for potential tenants.
Long stalled projects are being revived while the Seaport and Innovation districts are going head-to-head with traditional technology hotspots like Cambridge and Waltham. As projects begin to move forward, both developers and tenants are realizing there are a number of ways to save when it comes to real estate investments. Whether it is downsizing, investing in energy efficient opportunities, or both, the real estate market is learning and adapting to a new age.
Paul Guarracino is the President of J.M. Electrical Company, Inc of Lynnfield, Massachusetts.