CrowdStreet’s Darren Powderly is joined by Jay Doherty, CEO & Owner of Cabot, Cabot & Forbes, to talk about the impact of the life sciences industry on the Boston metro area, the importance of long-term relationships, and what a decline in retail means for neighborhoods.
Darren Powderly, Co-Founder & VP Capital Markets
CrowdStreet
CrowdStreet
Darren founded CrowdStreet in 2012 after identifying the need to radically improve people's access to commercial real estate investments via technology. Over his 20+ year career, Darren has transacted billions of dollars’ worth of commercial real estate investments and enterprise software contracts. Darren is a driven leader who loves building relationships based on mutual success. In addition to building businesses, leading teams and advising a prestigious list of national clients, Darren has personally owned commercial real estate, syndicated investment groups and developed properties from the ground up.
00:00:04 Hello, everybody. My name is Darren Powderly, and welcome back to StreetBeats. Street. Beats is our weekly show where we highlight leads in the real estate industry across the nation. Uh, before I get started and introduce today's guests, I want to remind you that we welcome your feedback. We want to hear from you what you think of the show. So please give feedback on the social media channel where you're watching this episode, and or our website also register. If you like the contents of today's show, feel free to register for the StreetBeats newsletter. So, without any further ado, I am pleased to be joined today by Jay Doherty, the CEO of Cabot and Forbes in Boston, Massachusetts. Uh, Jay, please tell us a little bit about yourself, your, uh, bio and your company.
00:00:49 I'm a Boston native. Um, I started work professionally in economic development in 1974 as a, uh, special economic advisor to Governor Michael Dukakis. And after a stint at Harvard Business School, I came to Cabo Cabo Forbes in 1981. Over the last several years since I became a sole proprietor to the company in 2008, the emphasis has been on transit oriented development, almost to an exclusion of other forms of development. And, uh, we have in Boston, we've needed a lot of housing development. So in addition to office and r and d development, we have been very successful in introducing multi-family development at transit-oriented locations.
00:01:34 That's quite a history. It took me a while to study your portfolio. I mean, you know, first of all, you're the oldest development firm in Boston. I know there were many generations before you, of course. Uh, and you took, uh, ownership of in 20 2004 and again 2008. But it is a really impressive portfolio of projects. Let's kind of, first of all, at a high level Boston, um, it was recently ranked Ulis, uh, number five market and the entire United States. What are the demand drivers today, uh, and how has that really influenced your pipeline of developments in, in the, you know, current environment?
00:02:13 Since the mid to late 1970s, Boston began a gradual transition from older industries, ship building, uh, textiles, uh, flu processing, and building off companies like digital and data general. And Raytheon, uh, the economy here gradually grew more and more focused on innovation industries. And that trend has continued unabated since the early eighties to the point now where, uh, the technology industries really dominate the entire scene. At this point, the dominance one is life sciences. Mm-hmm. <affirmative> and its dominance is really hard to overestimate or overemphasize. Uh, life sciences here is a prolific industry, very fast growing, and in fact, if you look at Covid, you'll see that, uh, the life sciences industry here has been a direct recipient of new funding that is designed to deal with Covid. Moderna is known across the nation, I think. Mm-hmm. <affirmative>, uh, that's about a half a billion dollar new investment, but there are several others as well. And the medical institutions here, Brigham and women, mass General Partners, those are often involved in, uh, different relationships and research projects also connected to Covid. So Covid has on the life science side, not been a negative influence, if anything, I guess unfortunately it's been a positive influence. The biggest problem with life sciences is that there is no space, and that's why ownership of any property in Cambridge is really exciting and really valuable because this trend I think will continue on a paid,
00:04:01 When you and I spoke a couple weeks ago, we were, and it is on your website as well, the, the, the importance of long-term relationships. I mean, you started with CCN F in 1981, you were to Harvard. Before that you were born in, bred in Boston. You served as the president chairman of N A I N A I O P, which is the Liebing industrial and office, uh, industry group and other groups as well that I know you serve as the head of, but speak specifically about, you know, the importance of long-term relationships, particularly in these, you know, public-private, you know, uh, and government, uh, relationships that you've developed and continue to maintain at the years.
00:04:41 Well, in particular, um, as somebody who has served in the public sector long ago and been in the real estate industry now about 40 years, you're correct in that what we particularly try and do is form deep ongoing relationships with the communities where we are most active. So we're very comfortable in Boston. It's not infrequent that we can do a project and consult directly with Mayor Walsh. Mayor Walsh was deeply involved in forming the Brighton project was actually an un zone piece of land that is today supporting 750,000 square feet development. And it was a project he wanted to see happen to relieve some of the pressure in that neighborhood of graduate students over populating housing. Um, so in Boston we have very long-standing relationships with the mayor, with the Boston, uh, bra, the Boston Planning and Development Agency. And in Cambridge, Cambridge is a little bit different, doesn't have a mayor that has the kind of single-handed control of Boston. It is a more diffuse area. It city council plays a role, the city manager plays a role, and there is a mayor that does play a greater role than other city councilors.
00:05:49 Are there any other, uh, in addition to the life sciences, the projects that you, uh, have in your pipeline right now, like the Quad, which sound like Covid has benefited, accelerated the trend in a market where there's effectively 0% vacancy? Uh, are there any other things that, you know, opportunities that you see out there either now or, you know, as we make our way as a society through the pandemic?
00:06:17 Well, one of the things that I, I, I cannot quite figure out is how we're to have vigorous neighborhoods and downtown urban cores when the, um, continuing decline in retail has been accelerated by what's happened with Covid. Uh, right now, a a very popular investment strategy is the kind of product that we will have in Cambridge at Smith's Place, which is an industrial strategy. Um, coming in close to the city, it's almost impossible to find industrial sites. Amazon took 830,000 square feet in, uh, Everett, uh, about five miles up the road from here because last mile is really incredibly difficult to solve. And if you walk the streets of Boston, you'll find UPS and FedEx and, and independent contractors lined up on the side streets, uh, delivering that stuff. On the other hand, uh, we're seeing continued decline in retail facilities, even at the large scale level.
00:07:20 Uh, one of the most prominent malls here is called the Natick Mall, and I noticed the other day that, uh, Neiman Marcus took its pad and put it on the market for outright sale and vacancy. That's a pretty dramatic gesture. So retail is a, an ongoing problem. Um, I don't, I don't know exactly how that's gonna work out. Uh, we approach mixed use a little bit differently cuz the retail we're looking at is things like craft breweries and, uh, fitness centers. And I think ultimately those are still much desired by the public. The other sector, of course, is hotels, and they're clearly hotels that aren't gonna make it through this. Uh, and we keep our eyes up for those. Um, obviously the investors in those want to keep it going if there's any chance they can come back. But right now, almost all hotels in Boston are closed. And I think there have been some that really have problems and will have problems surviving this, this particular time. So that is, I wa I look at that because again, we're very AlAllander poor and everything that becomes vacant is an opportunity for redevelopment. So we always keep our eyes on, right?
00:08:26 Correct. Well, Jay, uh, Doherty, CEO of the CC&F thank you so much for joining us today for you StreetBeats. Uh, it's great to get a glimpse of what's going on in the ground through your eyes in Boston, Massachusetts. And, uh, hope you're having a great summer and, uh, just look forward to seeing you in person one day soon.
00:08:45 Thank you. You too.
00:00:49 I'm a Boston native. Um, I started work professionally in economic development in 1974 as a, uh, special economic advisor to Governor Michael Dukakis. And after a stint at Harvard Business School, I came to Cabo Cabo Forbes in 1981. Over the last several years since I became a sole proprietor to the company in 2008, the emphasis has been on transit oriented development, almost to an exclusion of other forms of development. And, uh, we have in Boston, we've needed a lot of housing development. So in addition to office and r and d development, we have been very successful in introducing multi-family development at transit-oriented locations.
00:01:34 That's quite a history. It took me a while to study your portfolio. I mean, you know, first of all, you're the oldest development firm in Boston. I know there were many generations before you, of course. Uh, and you took, uh, ownership of in 20 2004 and again 2008. But it is a really impressive portfolio of projects. Let's kind of, first of all, at a high level Boston, um, it was recently ranked Ulis, uh, number five market and the entire United States. What are the demand drivers today, uh, and how has that really influenced your pipeline of developments in, in the, you know, current environment?
00:02:13 Since the mid to late 1970s, Boston began a gradual transition from older industries, ship building, uh, textiles, uh, flu processing, and building off companies like digital and data general. And Raytheon, uh, the economy here gradually grew more and more focused on innovation industries. And that trend has continued unabated since the early eighties to the point now where, uh, the technology industries really dominate the entire scene. At this point, the dominance one is life sciences. Mm-hmm. <affirmative> and its dominance is really hard to overestimate or overemphasize. Uh, life sciences here is a prolific industry, very fast growing, and in fact, if you look at Covid, you'll see that, uh, the life sciences industry here has been a direct recipient of new funding that is designed to deal with Covid. Moderna is known across the nation, I think. Mm-hmm. <affirmative>, uh, that's about a half a billion dollar new investment, but there are several others as well. And the medical institutions here, Brigham and women, mass General Partners, those are often involved in, uh, different relationships and research projects also connected to Covid. So Covid has on the life science side, not been a negative influence, if anything, I guess unfortunately it's been a positive influence. The biggest problem with life sciences is that there is no space, and that's why ownership of any property in Cambridge is really exciting and really valuable because this trend I think will continue on a paid,
00:04:01 When you and I spoke a couple weeks ago, we were, and it is on your website as well, the, the, the importance of long-term relationships. I mean, you started with CCN F in 1981, you were to Harvard. Before that you were born in, bred in Boston. You served as the president chairman of N A I N A I O P, which is the Liebing industrial and office, uh, industry group and other groups as well that I know you serve as the head of, but speak specifically about, you know, the importance of long-term relationships, particularly in these, you know, public-private, you know, uh, and government, uh, relationships that you've developed and continue to maintain at the years.
00:04:41 Well, in particular, um, as somebody who has served in the public sector long ago and been in the real estate industry now about 40 years, you're correct in that what we particularly try and do is form deep ongoing relationships with the communities where we are most active. So we're very comfortable in Boston. It's not infrequent that we can do a project and consult directly with Mayor Walsh. Mayor Walsh was deeply involved in forming the Brighton project was actually an un zone piece of land that is today supporting 750,000 square feet development. And it was a project he wanted to see happen to relieve some of the pressure in that neighborhood of graduate students over populating housing. Um, so in Boston we have very long-standing relationships with the mayor, with the Boston, uh, bra, the Boston Planning and Development Agency. And in Cambridge, Cambridge is a little bit different, doesn't have a mayor that has the kind of single-handed control of Boston. It is a more diffuse area. It city council plays a role, the city manager plays a role, and there is a mayor that does play a greater role than other city councilors.
00:05:49 Are there any other, uh, in addition to the life sciences, the projects that you, uh, have in your pipeline right now, like the Quad, which sound like Covid has benefited, accelerated the trend in a market where there's effectively 0% vacancy? Uh, are there any other things that, you know, opportunities that you see out there either now or, you know, as we make our way as a society through the pandemic?
00:06:17 Well, one of the things that I, I, I cannot quite figure out is how we're to have vigorous neighborhoods and downtown urban cores when the, um, continuing decline in retail has been accelerated by what's happened with Covid. Uh, right now, a a very popular investment strategy is the kind of product that we will have in Cambridge at Smith's Place, which is an industrial strategy. Um, coming in close to the city, it's almost impossible to find industrial sites. Amazon took 830,000 square feet in, uh, Everett, uh, about five miles up the road from here because last mile is really incredibly difficult to solve. And if you walk the streets of Boston, you'll find UPS and FedEx and, and independent contractors lined up on the side streets, uh, delivering that stuff. On the other hand, uh, we're seeing continued decline in retail facilities, even at the large scale level.
00:07:20 Uh, one of the most prominent malls here is called the Natick Mall, and I noticed the other day that, uh, Neiman Marcus took its pad and put it on the market for outright sale and vacancy. That's a pretty dramatic gesture. So retail is a, an ongoing problem. Um, I don't, I don't know exactly how that's gonna work out. Uh, we approach mixed use a little bit differently cuz the retail we're looking at is things like craft breweries and, uh, fitness centers. And I think ultimately those are still much desired by the public. The other sector, of course, is hotels, and they're clearly hotels that aren't gonna make it through this. Uh, and we keep our eyes up for those. Um, obviously the investors in those want to keep it going if there's any chance they can come back. But right now, almost all hotels in Boston are closed. And I think there have been some that really have problems and will have problems surviving this, this particular time. So that is, I wa I look at that because again, we're very AlAllander poor and everything that becomes vacant is an opportunity for redevelopment. So we always keep our eyes on, right?
00:08:26 Correct. Well, Jay, uh, Doherty, CEO of the CC&F thank you so much for joining us today for you StreetBeats. Uh, it's great to get a glimpse of what's going on in the ground through your eyes in Boston, Massachusetts. And, uh, hope you're having a great summer and, uh, just look forward to seeing you in person one day soon.
00:08:45 Thank you. You too.