In Hotels, Health Equals Wealth

PKF Consulting USA, a CBRE Company is an branch within CBRE Hotels specializing in consulting and research in the hospitality industry. In her role as Senior Vice President of PKF’s New England practice within CBRE/New England, Andrea Foster works with our Hotel Brokerage & Investment Sales team here in the New England Market along with Jenna Finkelstein, a Consultant with PKF. CBRE/New England’s Hotel Brokerage & Investment Sales group includes Senior Vice President Dave McElroy and Vice President Scott Hutchinson.

By Andrea Foster and Jenna Finkelstein

AKMF headshot

Andrea Foster, Senior Vice President & Practice Leader– PKF Consulting USA, a CBRE Company

Business is back for hotels across the United States with occupancy levels surpassing long-run averages and hotels raising room rates more aggressively. According to PKF Hospitality Research (PKF-HR)’s forecast, occupancy is estimated to be above the long-run average in 56 of the 59 U.S. markets they track, 13 of which are achieving their highest occupancy levels in the past 27 years. By 2015, the U.S. lodging industry will experience six consecutive years of increasing occupancy, the most since 1988. The hotel industry has finally climbed out of the recovery period following the Great Recession as people are traveling more than ever before, and at higher prices.

According to the 2014 edition of PKF’s Trends® in the Hotel Industry, in 2013, total hotel revenue increased 5.4 percent from 2012 (the most current year-end data available). Driving this increase was 5.9 percent growth in rooms revenue, while all other revenue sources averaged 4.4 percent growth. On a per occupied room basis, all other revenue increased by 2.7 percent. Hotels have struggled in recent years to encourage spending from hotel guests on services and amenities other than rooms. After increasing occupancy and rate, hotel managers are now seeing the return of guest spending in other areas of operation, a healthy sign of growth.

Spa is one hotel department in particular that is seeing great gains in both revenues and profits. Fueling the growth of hotel spas is a combination of a nationally improved economy, increases in hotel occupancies, and a shift in the perception of spa from an exclusive, luxury experience to a wellness-oriented experience valued by the average consumer to help facilitate a healthier, more vibrant life. As spa and wellness are becoming more prevalent in today’s society, hotels are ensuring they adopt these lasting trends and offer consumers an experience aligned with society’s increasing desire for a healthier lifestyle.

At its root, spa is about health and wellbeing, and there are indications that health and wellness trends are here to stay. As such, hotels are incorporating spa and wellness not only in spa department, but into other aspects of the hotel, such as rooms, meetings, and food and beverage. For example, some hotels are offering aromatherapy and sleep-aiding amenities in rooms, trendy juices and spa menus at their restaurants, and outfitting meeting rooms with healthy snacks and beverages and premium air quality control. In addition, hotels are creating new ways for guests to be active and social, such as initiating a bike-share program or leading group hikes/runs. Thus, spa and wellness is growing outside the spa, and in facilitating healthier lifestyles for their guests, hotels are seeing a positive impact of the integration of spa and wellness into their entire operation.

PKF Consulting USA (PKFC) and PKF-HR, both CBRE Companies , together are the only consulting firm with a proprietary annual database of approximately 7,000 individual hotel income statements, which includes detailed hotel spa revenue and expense data. Using this database, our Trends® in the Hotel Spa Industry report is the only publication of its kind reporting hotel spa performance and profitability, providing hotel spa operators and owners with sound benchmarking information. The performance overview to follow is excerpted from our extensive 2014 Trends® in the Hotel Spa Industry report.


Hotel spas benefitted greatly from hotels capturing more demand and society’s trending healthier lifestyles. In 2013, the most current detailed data available, all hotel spas averaged a 4.6 percent increase in revenues, greater than the average increase experienced by all hotel revenue sources other than rooms. Specifically, both urban and resort hotel spas saw revenues increase, by 7.7 and 3.6 percent, respectively. On a per occupied room basis, urban hotel spas saw a greater increase in total spa department revenue, driven by a combination of an increase in customers, revenue per treatment, and revenue per customer.

Revenue per treatment increased 3.2 percent for urban hotels, while resort hotels experienced a decrease of 1.2 percent. Revenue per customer for urban hotels increased 1.3 percent, compared to a 1.3 percent decrease for resort hotels. For urban hotels, we attribute a portion of these increases to effective revenue management and selling techniques. To calculate hotel guest capture rates, the number of occupied hotel rooms is divided by the number of spa treatments from hotel guests. Combined, hotel spas averaged a 7.8 percent capture rate in 2013, comprised of resort spa capture rate of 11.0 percent and urban spa capture rate of 4.6 percent. This reflects a slight increase over 2012 for resort spas, while urban hotel spa capture was flat.

Hotels continue to reach out to locals to boost spa revenues. By sourcing local patrons, hotels can decrease the volatility of spa revenues relative to occupancy patterns, and bolster demand in off-peak periods. Daily facility use, fitness and personal training, health and wellness, and membership fees, typically associated with locals and non-hotel guests, grew by 4.5 percent combined. This is slightly greater than the increase in total treatment revenue, which grew 4.2 percent.

Retail revenue increased for both urban and resort hotel spas, by 10.4 and 3.3 percent, respectively. We are finally seeing a return to spending on retail and product merchandise in addition to spa treatments, which is a healthy sign for hotel spas.


Increase in hotel spa revenues is great news for hotel spa operators, and even greater news is the fact that much of these additional revenues passed through to the bottom line. Both urban and resort hotels managed to achieve a greater increase in revenues compared to their change in operating expenses, showing that hotel spas are becoming more efficient in their operations.

As it is a “high touch” experience, labor remains as the spa department’s highest expense. As revenues increase at hotel spas, it is no surprise that labor costs increased compared to the prior year, as well. Labor expenses at all hotel spas increased 2.6 percent overall from 2012 to 2013, however the percentage of total labor expenses to total spa department revenue decreased from 60.8 percent in 2012 to 59.6 percent in 2013. As demand increases for hotel spas, higher staffing levels are needed to create the same personal, high-quality experience. One notable change we saw in 2013 was a decrease in payroll related expenses for spas with less than $1M in revenue. It seems reasonable that this would be driven by a shift from full-time employees to part-time, on-call, and/or contract labor for which benefits are not offered. For spas with lower volume, this can be an effective cost-saving strategy.

Due to an increase in revenues and the controlling of expenses, hotel spas were able to see high percent increases in total spa departmental income. Combined, all hotel spas averaged a 13.9 percent growth in profits. Leading the way were urban hotel spas, which grew their bottom line by a greater percentage than resort hotels. Despite a lower overall growth in spa departmental profit, resort hotel spas saw higher profit margins than urban hotel spas, at 23.1 percent compared to 17.7 percent.


Consumers are ever-more driven toward unique and active experiences that are “share-worthy”, and spas have a continued opportunity to deliver just this in a way that can generate posts, shares, and create online trending. Technology continues to transform the way the hotel industry conducts business, and thanks to social media, hotels and spas are able to engage with their customers more than ever before. Hotels are realizing the profound influence of technology and social media on guest purchase decisions, behavior, and awareness. A presence on social media is no longer a competitive advantage, but a competitive necessity; all hotels and spas must engage with their customers online to remain competitive. For hotels to rise above the competition and differentiate themselves, they need to provide consumers with unique and personalized experiences. Not only are hotels regularly engaging with their guests through social media, guests are also in constant communication with other potential customers. Therefore, it is important that hotel spas efficiently provide innovative and meaningful experiences that are Facebook- and Instagram-worthy, which will help increase the awareness of these offerings, organically.


2013 was a healthy year for hotel spas as they were able to increase revenues and control expenses, resulting in an increase of departmental profits, and we estimate similar improvements in 2014 as we gather year-end financial statements. As occupancies continue to reflect record demand levels, hotel spas have more opportunities to generate spa guest patronage, and the healthy living trends allow spa and wellness experiences to appeal to a broader guest base. It is reasonable to expect that spas providing innovative and unique services, that maintain approachability and the essence of wellness, while managing their expenses, will prove to be most successful in the future. For hotel spas to have sustainable success, they will need to maintain a balance between controlling costs, sourcing new customers, and offering high quality, unique experiences in both spa and broader wellness.

Andrea Foster is Senior Vice President and National Director of Spa & Wellness Consulting, for PKF Consulting USA, a CBRE Company. She is also the publisher of PKF’s Trends® in the Hotel Spa Industry report. Jenna Finkelstein is a Consultant with the firm. They are both located in the firm’s Boston office.

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Acquire Real Estate: Standing out in the crowdfunding crowd

by Lenny Pierce, Research Analyst

AcquireWith at least 85 real estate crowdfunding platforms in existence and with the industry set to reach $2.5 billion in 2015 according to Massolution, crowdsourced real estate investing has become commonplace in the commercial real estate community. For many, it is seen as an improvement on the Real Estate Investment Trust (REIT) model in that invested money is going straight towards specific projects rather than to a company’s stock performance. However, despite the phenomenon’s growing popularity, certain limitations to its effectiveness are still being worked out. For example, the ease with which a group can build an online crowdfunding portal does not necessarily ensure that the most experienced people are handling your investment and the lack of underwriting throughout the many platforms creates varying certainty that the investor’s interests are perfectly aligned with those of the funding medium. This winter, seven-year CBRE/New England Capital Markets veteran Josh Klimkiewicz launched an online platform of his own real estate crowd investing brand Acquire Real Estate LLC to address these and other recurring issues head on. We caught up with Klimkiewicz to discuss what makes Acquire so disruptive not just to the current state of real estate crowdfunding, but also to the world of commercial real estate on the whole.

Josh Klimkiewicz

Josh Klimkiewicz

Walk us through the traditional real estate investment process. What were the inefficiencies of this model as you saw it?

The traditional real estate private equity model involves a real estate operator identifying an investment opportunity, underwriting that investment, locking up the deal, preparing their marketing materials and legal documents, and conducting their due diligence prior to closing. During this time they also need to focus on securing the funding, both equity and debt, to close the transaction by pitching the deal to high-net-worth investors in their network and institutions one at a time. This is a time consuming, terribly inefficient process and at certain equity requirements, generally less than $15 million, there are virtually no single source options whereby you can raise the necessary funds. Individually mailing out subscriptions documents for signatures and collecting checks just adds to the time and confusion. And that is only a single deal.

Now walk us through the crowdfunding model. How does this model–and Acquire specifically–address those inefficiencies?

Crowdfunding has enabled a centralized process for the fundraising efforts. Instead of pitching the deal to investors one at a time and managing the paperwork and fund collections, real estate operators can post a deal on a single portal and reach many thousands of possible investors at once with the portal handling the subscription process and fund transfers electronically. Furthermore, most crowdfunding portals pool investors into a Single Purpose Entity that is the investor of record in the Sponsor’s syndicate, meaning, to the Sponsor the pooled investors are only treated as one investor for their accounting purposes. What this all boils down to is, Sponsor’s utilizing the crowdfunding model gain access to a large pool of growing investors without any additional administrative time or costs. This allows them the ability to purchase more deals, larger deals, and devote more of their time to uncovering great real estate opportunities and less time to managing a large pool of investors.

Why have accredited investors–individuals who either have a net worth of $1 million or who have earned 200,000 each year for the last two years–traditionally had difficulty accessing real estate investment opportunities?

Traditionally the most accessible avenue into real estate for investors, both accredited and non-accredited, has been publicly traded REITs. Anyone with a trading account can invest in Public REITs at extremely low minimum investments. However the low cost and accessibility comes at a price. You are not actually investing your money in real estate. Rather you are purchasing stock of a company that derives its revenue through real estate investments. As such, public REIT pricing is more reactive to movements in the overall stock market or unforeseen events at the company than the value of the underlying real estate the REIT is invested in. Some notable examples include during the financial crisis, or more recently American Realty Capital due to an accounting error. Also, as an investor in a public REIT you have no control over what individual assets the REIT chooses to invest in. Fee-heavy Non-Traded REITs (also known as Private REITs) and Private Equity Real Estate Funds are less reactive to the stock market than Public REITs but generally offer the same limitations regarding control over your investments and come at much higher minimum investments.

Direct access to real estate has always been based on personal relationships. Some accredited investors may know one or a few real estate operators allowing them access to a few deals but the time commitment necessary to development meaningful relationships with a large subset of real estate operators and underwrite those opportunities is too vast for your typical accredited investor. They just don’t have the time or wherewithal to build a truly diversified portfolio of real estate investments across sponsor, product type and geography. Companies like Acquire allow accredited investors to leverage our relationships and access the investment opportunities that come with them. We also take on the heavy lifting of analyzing those opportunities, negotiating the deals on their behalf and presenting the investments in a centralized location so they can easily build the real estate portfolio that best fits their goals.

What type of professional experience did you prioritize in assembling the Acquire leadership team?

Title II of JOBS Act (general solicitation) created a great opportunity to disrupt the traditional fundraising model for real estate but it also created a situation where it was easy for anyone with some technological acumen to create a web portal and start a real estate crowdfunding site. During our discovery phase we realized very quickly that while there were many real estate crowdfunding platforms, few were started by experienced real estate professionals offering high quality investment opportunities. Our goal, first and foremost, was to assemble a management team that had extensive experience in all aspects of the real estate investment process and the right relationships to ensure we could offer great product. That included an executive team that had purchased and managed sizable private equity real estate portfolios and lending funds, had vast institutional capital markets experience both in structuring and disposing of real estate investments and we needed a management team that had experience building successful companies. Since we are also a technology company at the core we needed a strong development team headed by CTO that had built his career on creating innovative and disruptive technology. Finally, since this is a new and growing industry and will undoubtedly have ever changing legal and compliance aspects we needed a General Council with decades of experience dealing with securities and SEC compliance. I believe we accomplished all those goals.

Explain the pre-funding element of Acquire’s investment platform and why it is so important to your model?

The pre-funding element of our business model came from early discussions with notable real estate operators and also from our own experience. Part of our management team built their own private equity real estate portfolio raising money from high-net-worth investors and institutions. One thing a real estate operator can’t have once they have committed to deal is funding risk. Most crowdfunding portals today operate under a “best efforts” model whereby a deal is posted to the site with a funding goal and an end date. All investor money is held in a 3rd party escrow account until the funding goal is reached and then transferred to the operator. If the funding goal is not met all money is returned to the investors. This model is a deterrent to the best sponsors, those who have no problem raising money for their deals, because the funding risk is too high. This model is also a deterrent to accredited investors since they could be locking up a large chunk of their investable capital in a noninterest bearing account with no certainty that the deal may close, all the while, missing out on other viable investment opportunities in that time. By prefunding our deals with Acquire cash we eliminate the funding risk to the sponsor, allowing us access to better sponsors and better deals, and we have the ability to take investors into our deals on a rolling basis eliminating lengthy escrow periods – our investors typically take ownership of their investments in less than a week after they committed to the deal.

What are some of the more noteworthy real estate investments that Acquire has participated in since its founding?

  • We participated in a Shaw’s anchored retail deal in Middlebury, Vermont, purchased by Crosspoint Associates. That deal is currently paying returns to investors over 9%.
  • We participated in a Publix anchored center in South Florida purchased by Katz Properties. That deal is currently paying returns to investors of 8%.
  • We recently closed on a hotel deal in Dallas, Texas, with one of the most active hotel purchasers/developers in the country and are in the underwriting and negotiation phase for several other transactions around the country.

What are the limitations and/or inefficiencies that still exist with crowdfunding?

We believe we have eliminated one of the largest limitations of the crowdfunding model, the funding risk, by pre-funding all our deals. Another major issue for real estate crowdfunding and limited partner real estate investments in general is the idea of liquidity. Direct real estate investments are by nature illiquid with no public market to dispose or transfer those interests. Generally speaking, once an investment is made, that investor is in for the long haul, five to ten and possibly dozens of years, with limited to no means of an exit unless the underlying asset is sold or recapitalized by the sponsor. This can be a major deterrent for accredited investors who envision the possibility of needing access to that cash in the near future, however, the idea of a robust and fully functioning secondary market for crowdfunded real estate investments in still a ways out. Finally, there is an inefficiency in the market where the accredited investor’s interest may not be aligned with the interest of the portal. In many instances the crowdfunding company is acting as a listing service posting deals on their site, receiving fees from the real estate operator to do so and also receiving management or administrative fees from the investors without any skin in the game. This can produce a situation where the crowdfunding company is incentivized to post as many deals as possible without doing the proper underwriting and due diligence necessary to ensure a good deal. It’s fact that you look at investments differently when your own capital is at risk and in most instances the individual investors are relying on the underwriting of the crowdfunding company to make their investment decisions. Our model is to prefund every Acquire deal but also to remain in that deal, invested alongside our members, so that our interests are aligned.

What do you think this form of real estate investment will mean for the CRE industry in the long term?

Like it or hate it crowdfunding for real estate is here to stay. Disruptive technology takes no prisoners and is merciless to the status quo. The rise of real estate crowdfunding has allowed the use of technology to connect interested investors simultaneously to operators who need money while streamlining the investment process and lowering administration time and costs. As crowdfunding matures real estate operators will be able to raise more money, from more people, more efficiently than ever before. You can expect crowdfunding to continually constitute larger pieces of the capital stack until eventually it becomes the single source solution for operators funding needs. It is the greatest change to real estate fundraising since the creation of public REIT.

Acquire’s intention, according to Klimkiewicz, is to forever change the face of private equity fundraising. Going forward, Acquire plans to grow their group “through strategic partnerships with top sponsors, providing them a more reliable and efficient source of capital and allowing them to devote their time and energy to uncovering exceptional investment opportunities” according to Klimkiewicz. The crowdfunding model is mature enough that the conversation curious investors ought to be having is not whether or not to utilize the medium, but which portal to use–and with the confidence wrought from their prefunding model and team of seasoned professionals, Acquire makes a strong case that it ought to be at the top of that list.

For more insight on Acquire from the minds that manage it, check out the video below from The Street. In it, Acquire CEO Steve Bettinger further expands on the level of choice that Acquire affords the investor and discusses a handful of active Acquire projects.

VIDEO:Crowdfunded Commercial Real Estate Deals Offer REIT Alternatives

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Boston: Life Science Hotbed

by Lenny Pierce, Research Analyst


Panel–Bisnow’s Boston Life Sciences Summit

On March 5th at East Cambridge’s Royal Sonesta Hotel, Bisnow hosted the Boston Life Sciences Summit –an event titled “Boston Life Sciences: Global Hotbed?” The discussion featured professionals from the Massachusetts Biotechnology Council (MassBio), The Massachusetts Life Sciences Center and The Boston Globe as part of the event’s keynote interview on the climate of the life science industry as well as a panel of seven speakers focusing specifically on how that climate could affect real estate in the city of Boston in the coming years.



The event lead off with a discussion between The Massachusetts Life Science Center’s Susan Windham-Bannister, MassBio’s Robert Coughlin and The Globe’s Mike Sheehan. Among other issues, these speakers stressed the importance of marketing the Life Science Corridor to incoming life science companies. The Life Science Corridor is a partnership between the mayors of Somerville, Cambridge, Boston, Quincy and Braintree to promote this string of cities along the Red Line as the nation’s Silicon Valley of life sciences. Naturally, the much-needed improvements to the Red Line itself were seen as a crucial step achieving this effect. While the discussion of transit improvements in Boston always leads to questions as to the sources of funding, Coughlin was quick to point out that more life science groups coming to the hub means a larger tax base to pay for T improvements–even if those improvements were made before the companies arrived.

The second half of the summit featured seven panelists who either worked directly in the life science business or for real estate service groups that are intimately involved with said industry. This panel consisted of Karan Paruvangada of AstraZeneca, Bill Kane of BioMed Realty, Thomas Ragno of King Street Properties, Somerville Mayor Joseph Curtatone, Jason Theberge of Commodore Builders, and Erik Lustgarten of Steffian Bradley Architects.

One theme these panelists focused on was the importance of density to the modern life science tenant; the value that biotech and pharma companies place on being physically close to one another. Bill Kane stressed that the life science industry has made a massive shift from one where intellectual property was strictly protected to one where the consistent exchange of information between companies is considered crucial to each entity’s success. This clustering effect doesn’t necessarily need to happen in Kendall Square and Kendall Square alone­–provided an area can get enough companies on board, that vital density can be achieved elsewhere in locations like Lexington and Waltham as well. In fact, the same principal can be achieved inside a single building as has happened with King Street’s 87 and 200 Cambridgepark Drive. 87 Cambridgepark Drive is now home to Dicerna Pharmaceuticals and after major renovations that afforded the property a much more open layout, smaller companies lucky enough to join Dicerna in the property will be able to form something of a micro-hub within the building.

"Joe Curtatone at Assembly station opening, September 2014" by Pi.1415926535 - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons -,_September_2014.JPG#/media/File:Joe_Curtatone_at_Assembly_station_opening,_September_2014.JPG

“Joe Curtatone at Assembly station opening, September 2014” by Pi.1415926535 – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons – Link here

The last topic covered was a discussion of where in the Boston area we could see our next stage of development for life science real estate. Mayor Curtaone was naturally quick to make the case for Somerville­–and it’s a strong one. Not only is the city already along the Life Science Corridor, but according to Curtatone, it also has over 300 acres of developable land. Somerville’s proximity to Cambridge also means that the value placed on geographical industry density also strongly favors the city as the next great life science hub.

Sustaining Boston as America’s life science hotbed will require meticulous attention from both the public and private sectors. With similarly strong life science hubs in places like San Diego and San Francisco, Boston’s status as the premier destination for pharmas and biotechs is something we as a city will need to constantly bolster. Just as Lexington and Waltham are perfectly reasonable alternative to Kendall Square for density-seeking groups, so too could Raleigh-Durham and Philadelphia be reasonable alternatives to Boston. Luckily, according to every one of Thursday morning’s speakers, defending our position as the most desirable location for life science companies in the country is a challenge that Boston is more than ready to meet.

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ULI 2015 Trends in Real Estate Forum

by Taylor Shepard & Lenny Pierce

After rescheduling the event due to one of Boston’s many blizzards, the ULI 2015 Trends in Real Estate Forum proved to be well worth the wait. As part of the event, the charismatic Mitch Roschelle presented PwC’s 2015 Emerging Trends in Real Estate report imparting statistics regarding demographic shifts and his predictions for the upcoming year. Three major themes that Mitch presented that carried through the rest of the program were the effects of technology on the commercial real estate industry and the importance of investing in infrastructure as well as the impact of secular changes in the nation’s demographics.


While we know the modern tech consumer as one who is consistently receptive to new technologies, this has not always been the case. To illustrate this point, Roschelle presented intriguing statistics documenting the briefer and briefer periods of time it has taken people to adopt revolutionary technologies throughout history.

The time it took for 50 million users to adopt a specific technology:

  • 75 years for the telephone
  • 38 years for the radio
  • 13 years for the television
  • 4 years for the world wide web
  • 5 years for Facebook
  • 5 years for AOL
  • 3 days for Candy Crush

Roschelle stressed that real estate will most definitely be affected by this accelerating receptiveness to new technologies, asserting that the industry will need to evolve or encounter meaningful disruption. The potential for industry transformation is strong enough that ULI Boston/New England and the MIT Alumni Association of the Center for Real Estate have collaborated to form a program called Real Disruption – an on ongoing series of events dedicated to examining disruptive technologies and how they are affecting the real estate industry.

Thursday night’s program included the presentation of videos showcasing two such disruptive technology platforms – CompStak and SourcedCapital – as well as a closing video showcasing a more condensed montage of other real estate technology platforms.


Another major topic that Roschelle introduced was the importance of investing in infrastructure, a discussion that focused on the current gap between estimated cost and available funding for these projects throughout the United States. This theme was further explored and applied to the Boston market specifically by panelists Tom Alperin of National Development, Don Briggs of Federal Realty Investment Trust, Paul Lee of Landsea Holdings Corporation and moderator Carlos Febres-Mazzei of CBRE/New England.

Febres-Mazzei said that, in addition to the projected $9.5 billion that is currently envisioned for infrastructure investment, additional funds may be required to make the 2024 Olympics feasible. The discussion of hosting the Games has been a good catalyst for identifying a greater vision for the region and has forced parties into examining ways to improve upon our current transportation infrastructure. Panelists agreed that even if Boston doesn’t end up winning the bid, we could still leave the vetting process with valuable new urban planning concepts that otherwise may have never been formulated.

As the population of Greater Boston continues to increase, it will be important to provide a transportation system that can provide stronger linkages between the area’s growing neighborhoods and unite the urban fabric of the region. Although it was not identified exactly how these infrastructure improvements would be funded, the public-private partnership model has proven successful in other markets and on specific projects within Boston. Investment in transportation infrastructure and facilities has a high re-use factor and can dictate the economic vitality of an area long after its initial application.


Roschelle also discussed the accelerating rate of urbanization that has been seen within the U.S. and across the globe. A slide detailing urban population growth on a global scale stated that 1.5 million people are added to the world’s urban population every week and that by 2025 there could be nearly 40 cities with populations over 10 million. Overall, Roschelle said, the concentration of the world’s population in cities is expected to be 72% by 2050. In a slide detailing urban population growth over the next 3 years in the U.S., Boston was among the cities with the highest percentages at just above 4%. Other notable locales for urban population growth were Austin, New Orleans and Denver.

Roschelle said that it isn’t just the Millennials who are driving this urbanization trend. Though we often associate the distaste for driving and eagerness for city living with those in their late 20s and early 30s, the younger half of Baby Boomers have adopted the same mentality according to Roschelle. Like their younger counter parts, those Baby Boomers born closer to ’64 than ’46 are happy to trade in backyards for short commutes and a more stimulating urban lifestyle. This massive multi-generational group is one that is willing to delay home ownership and for the foreseeable future will be looking instead to rent– good news for the multi-family market.

Just as Roschelle began his presentation with an inventory of which 2014 Emerging Trends projections ended up coming true, he ended by recapping his projected trends for 2015 beside empty “Yes” and “No” boxes to be officially checked at next year’s conference.

To keep track of all ULI events in your area, visit their events page here.

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2014 CBA Awards Recap

CBRE/NE Urban teammates Halloran, Lucas and Brinch at the CBA Awards.

CBRE/NE Urban teammates Tim Halloran, Greg Lucas and Adam Brinch (L to R)


by Andy Hoar, President/Co-Managing Partner

The 2014 Commercial Brokers Association Achievement Awards were held last Thursday night at Boston’s InterContinental hotel. CBRE/New England was once again well represented in this year’s event, with six nominations across all categories and winning both Industrial Deal of the Year and Broker of the Year.

Outgoing CBA President and CBRE/New England Vice Chairman/Partner David Fitzgerald helped kick-off the event, along with the incoming 2015 President, Cresa Principal Adam Subber. CBRE/New England’s Alison Powers, a Vice President on the MetroWest Suburban brokerage team, also spoke at the event on behalf of the CBA’s Developing Leaders.

The Industrial Deal of the Year went to the Affordable Interior Systems, Inc. (AIS) lease at 25 Tucker Drive in Leominster, MA–a deal in which both the tenant and the property owner, Calare Properties, Inc., were represented by CBRE/New England. Bob Gibson, Steve Clancy and Rachel Marks comprised the tenant representation team while Mark Reardon and Bob McGuire represented the building owner. AIS, a manufacturer of commercial office furniture and seating, had been looking for a location to consolidate its collective 500,000 sq. ft. of space under one roof since 2011. After a negotiation period which saw Michigan-based Haworth, Inc. gain strategic interest in AIS, the company wound up leasing 401,316 sq. ft. of a 588,000 sq. ft. building – the largest and most modern manufacturing facility in the Leominster/Fitchburg market. The finalization of the deal required a 13-year tax exemption on behalf of the City of Leominster totaling $929,419. AIS was also granted the option of expanding into the remaining 188,000 sq. ft. as a part of its lease.

The final award of the night was for the 2014 Broker of the Year, which CBRE/New England took home for the second year in a row. This year’s honor was bestowed on CBRE/New England Vice Chairman Greg Lucas. Over his 35-year career in commercial real estate, Greg has sold or leased over 9 million sq. ft. of space in the Greater Boston Area, including the largest commercial lease in the history of Boston, Vertex Pharmaceuticals‘ 1.1 million-square-foot lease at Fan Pier in 2011. Greg’s career has largely concentrated on the representation of life science clients, making him one of the most well regarded specialists in the Cambridge market.

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We at CBRE/New England want to congratulate all of our colleagues and business partners who were nominated last night. We’d also like to thank the Commercial Brokers Association for hosting yet another fantastic Achievement Awards ceremony. Here’s to a terrific 2015!

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Boston 2024: Transforming Boston into a Legacy City

David Manfredi speaking at CREW Boston 2024 event Photo by Emily Hedeman

David Manfredi speaking at CREW Boston 2024 event
Photo by Emily Hedeman

by Lyndsey Shepard

The debate surrounding Boston’s bid to host the 2024 Olympics continued yesterday at a luncheon hosted by Commercial Real Estate Women (CREW) Boston at the Westin Boston Waterfront hotel in the Seaport. Guest speakers included David Manfredi, Principal of Elkus Manfredi Architects and Boston 2024 Master Planning Committee Co-chair, Tom Alperin, President of National Development and Boston 2024 Master Planning Committee Co-chair, and Erin Murphy Rafferty, Executive Vice President for Boston 2024. Highlighted by each speaker was the emerging theme and goal of the 2024 Olympics to create an enduring legacy, to “plan the games in alignment with the future of our city” according to David Manfredi.

The goals of the Olympic Committee extend well beyond 2024 and aim to shape “how we want our city to look in 2030 and the decades that follow” as noted by Erin Murphy Rafferty. Details of the plans include capitalizing on the unique aspects that the city of Boston has to offer and developing venues that can be repurposed after the Games to improve youth sports practice and learning facilities, transportation, existing infrastructure and student housing. Specifically, the improvements to Franklin Park would later serve as a training facility for student-athletes, while the proposed location of the Olympic Village on UMass Boston’s campus could later be repurposed as student housing. The latter vision is especially appealing to UMass as the college is looking to transition itself into a more residential campus.

As the every Olympiad does for its host city, the 2024 Games would set Boston on an international stage, potentially bolstering tourism and increasing land values. Tom Alperin noted Barcelona as an example of this phenomenon, highlighting how the city rose to be the third most visited city in the world following the 1992 Olympics hosted there. One particular tourist-friendly feature of Boston that would be highlighted on a world stage during the 2024 Games is the city’s walkability. Boston boasts over 47 miles of publically accessible waterfront and an expansive network of green space. Based on proposed venue sites, 28 out of the total 33 would be within a 5.5km, making Boston’s Olympic proposal for 2024 the most ‘walkable’ in comparison to all previous Olympic host sites, the closest contender being Tokyo with 26. As David Manfredi noted, we would be connecting clusters of Olympic venues like never before.

What would certainly be a welcome lasting legacy of the games would be the improvements to public transportation. With the recent weather-related transportation issues taking the city by storm, Tom Alperin urged the audience to view the situation as an opportunity to improve and “take advantage of a good crisis.” The Boston 2024 bid has already awakened conversations surrounding transportation improvements, including mechanically updating existing subway lines and forming pieces of the oft-discussed urban transit ring with Bus Rapid Transit lines, improvements that would provide relief and serve to benefit Boston residents for decades to come.

The panelists concluded by emphasizing their desire for community input, noting that they are set to hold 20 meetings over the next 20 weeks in order to open the dialogue surrounding the 2024 Olympic bid. Beyond the feasibility study conducted by The Special Commission to the Feasibility of Hosting the Olympics in the Commonwealth, the Boston 2024 committee hopes to convey to the Boston community the lasting legacy outcomes hosting the games would provide the city in forms of growth, transportation and other immediate improvements, a along with increasing tourism and investment on an international scale.

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Carlos Febres-Mazzei Talks Real Estate Trends with WGBH

by Lenny Pierce, Research Analyst

PwC, in conjunction with the Urban Land Institute (ULI), has released its 36th annual Emerging Trends in Real Estate® report–a publication that is one of the most highly regarded annual outlook publications within the real estate industry. This year’s edition has once again identified Boston among the top ten U.S. Cities for real estate investment. Carlos Febres-Mazzei, a Senior Vice President with CBRE/New England’s Capital Markets team, sat down with local NPR affiliate WGBH to discuss these findings and what they mean for the forecast of real estate investment here in Boston in 2015 and beyond.

Hear the full interview below:


As mentioned in the interview, Carlos was also a moderator at ULI 2015 Trends in Real Estate Forum where the Emerging Trends in Real Estate Report was explored further. Panelists on the forum included Tom Alperin of National Development, Don Briggs of Federal Realty Investment Trust, and Paul Lee of Landsea Holdings Corporation.

CBRE/New England’s coverage of the event will be in an upcoming blog.


Carlos Febres-Mazzei

Carlos Febres-Mazzei

Carlos Febres-Mazzei is a Senior Vice President with CBRE/New England’s Capital Markets team, specializing in Debt and Structured Finance and focusing on institutional originations. Mr. Febres-Mazzei joined CBRE/NE in April 2012 after nearly six years with the Boston office of HFF.

He has originated and/or executed on over $3.5 billion in debt, structured finance and investment sales transactions, in addition to advisory assignments on several institutional asset portfolios totaling over $14 billion.

Mr. Febres-Mazzei has closed on numerous product types including office, retail, multifamily, industrial, urban mixed-use, life sciences and senior housing. Prior to HFF, he worked with Willowbend Development (now Fireman Capital), the Ritz-Carlton and Greg Norman Golf Course Design.

Mr. Febres-Mazzei holds a master’s degree in Business Administration, magna cum laude, from Babson College, in addition to a bachelor’s degree in Landscape Architecture with an Urban Planning focus from the University of Maryland. Mr. Febres-Mazzei resides in downtown Boston.

  • Boston Business Journal’s “40 Under 40,” 2012
  • Author, whitepaper, The Roles and Responsibilities of Special Servicers in CMBS Workouts
  • Guest Lecturer, MIT Center for Real Estate; Babson College

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