What’s Unfolding in the South Boston Commercial Property Space?
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
If the pandemic era taught us anything, it’s that it’s a good idea to get hyperfocused on local markets, with the focus being on understanding them inside and out. We took that spirit to heart and realized it was time to get a little more in-depth in terms of locations.
So we wanted to shift focus to a specific segment of a city. South Boston fits the bill for a lot of reasons.
South Boston (Southie if you’re a regular) went from farmland to massive renovation into a very gentrified, unique collection of neighborhoods. Millennials flocked to the area, and companies definitely claim some genuine Southie cred, like Reebok. That rapid change is worth looking into.
Neighborhoods of South Boston include Dorchester Heights, Andrew Square, City Point, Seaport, and Fort Point.
Interesting South Boston CRE Acquisitions
One of the strongest reasons to follow what’s going on in the South Boston commercial property space is that it’s a true hub of activity. This is not cheap real estate, and looking at the larger institutional players may give some new inspiration for people in various roles within the CRE fishbowl.
KKR Grabs Prime Luxury Space in Seaport
Luxury apartments continue to be in high demand, and KKR proved that they’re willing to spend big to get deeper into the market. In July of last year, the large real estate equity firm scooped up NEMA Boston for $332 million. That’s $802K per unit, and the purchase was the largest multifamily transaction in Boston last year.
They purchased it from Crescent Heights, a large development firm with plenty of hit properties under their belt, including the Ten Thousand tower in Century City.
Fort Point Holds Promise for Acquisitions
Fort Point is an important part of South Boston; you can hardly talk about the area without referencing this neighborhood. It’s heavy on the arts, great for development, and working professionals love the amenities within the area. History and modern living are strongly intertwined, and it looks like Tishman Speyer stepped up to grab some great waterfront property.
Tishman Speyer and Breakthrough Properties picked up a 2.5-acre development site for an undisclosed sum in September of last year. The collaboration between the two companies also got our attention: Breakthrough Properties focuses heavily on the life science niche, and cross-collaboration projects are part of their core strategy.
Additional Thoughts on Cross-Collaboration Commercial Real State Strategy
Looking deeper into acquisitions is great, but what if you don’t have the same capital as a major private equity firm? That’s when it’s time to put a little cross-collaboration planning to good use.
Few people have the same capital as a KKR or a Blackstone-level firm, but they may have more network strength than they imagined.
There’s nothing wrong with identifying larger opportunities within a hyperlocal market (specific neighborhoods within a city, for example) and then building a plan that draws on the strength of the group.
What if you have someone that’s an absolute whiz with lining up outside financing? That’s a great resource, and you can build your own joint ventures. Don’t let the current size of your business or higher investment needs stop you from getting creative.
Identifying Key Opportunities as a Real Estate Agent/Broker
Staying on top of specific real estate neighborhoods can become tedious, but it is one of the best ways to not only develop usable expertise. In addition, it also improves your reputation in the marketplace.
Commercial real estate is a world of connections, and every connection has to be useful for a variety of applications.
Sometimes it isn’t just about being the person that buys the properties: being able to see the potential opportunities waiting for buyers makes things easier. Filtering out properties that don’t make sense to prospective buyers is a way to free up their time and build a win-win partnership at the same time.
If you’re looking to increase the number of referrals flowing into your funnel over time, improving your understanding of hyperlocal markets is a great idea.
South Boston commercial real estate has its own best use cases, hot areas, and asset classes. Breaking down the data will give you new insights that you can turn over to key prospects in your network.
Best Asset Classes Within South Boston Commercial Property Space
There are quite a few different asset classes to explore within South Boston’s commercial real estate market. We’ve gathered the main categories below for quick reference.
- Flex space. The entire area is changing rapidly, especially as people are no longer commuting to work. Flexible commercial space that can change rapidly is in high demand.
- Lab space. The entire Boston area is well known for research and development (thanks, Harvard), so additional lab space just makes sense. As demand for vaccine research and post-pandemic treatments grow, expect to see the demand for lab space respond in kind.
- Apartment space. While luxury towers may not be in your current realm of possibilities, there are other opportunities to serve the market. A multifamily unit, for example, can be as small as eight units. Yet if you place it within the right location, there’s a good chance for great returns.
Everyone has to have a place within a community to live, work, and relax. Looking into opportunities around South Boston just makes sense.
The area is set to grow even more as the work from home revolution continues to bring people into new places for the amenities, not just because that’s where their employer requires them to work.
The Road Ahead
Making moves in any market comes with certain risks. Studying trends is one thing, but rallying the troops to take action is another thing entirely. It’s okay if your network is unsure about South Boston real estate.
After all, rushing in isn’t a good way to secure any gains. Going back to the fundamentals, looking at trends, and building real plans of attack goes a lot further than running only on market sentiment.
Emotional purchases don’t fit into the commercial real estate world. Data, deep analysis, and a focus on income-generation potential will win more times than making hasty purchases or recommendations.
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