German Investor Buys Seaport Office Building in Record Deal

In one of the largest single-asset trades in Boston real estate history, Skanska USA has sold 101 Seaport Boulevard to German real estate fund Union Investment Real Estate GmbH for $452 million. The transaction is Union Investment's third recent acquisition in Boston, and will join the portfolio of open-ended real estate fund Unilmmo: Europa. The deal doesn't include the building's ground floor, which will be home to the By Chloe restaurant by this summer. Newmark Grubb Knight Frank represented Skanska on the sale and the leasing; full terms of the deal were not disclosed. The divestment will be recorded by Skanska USA Commercial Development in the first quarter of 2016, Skanska said in a statement.

"After the acquisition of The Godfrey Hotel and the Converse Headquarters at Lovejoy Wharf, we are pleased to have strengthened our foothold in the important and economically very stable gateway market of Boston with the acquisition of this trophy building at 101 Seaport Boulevard," said New York City-based Tal Peri, Head of U.S. East Coast & Latin America at Union Investment Real Estate GmbH.

"The building, its elegance, and its environmentally conscious design, both inside and out, reflect our passion for the community, the Seaport and the City of Boston. 101 Seaport has been a catalyst for the transformation of the neighborhood and we look forward continuing to deliver the most sustainable and efficient buildings along Seaport Boulevard with the completion of Watermark Seaport and the development of 121 Seaport," added Charley Leatherbee, Executive Vice President of Skanska USA Commercial Development.

Skanska developed the 17-story, 440,000 square foot office building at the corner of Seaport Boulevard and Boston Wharf Road for $126 million, wrapping construction in early 2015; Skanska also leases 28,000 square feet on the tower's second floor. Accounting giant PricewaterhouseCoopers in October 2015 relocated its northeast headquarters from Boston's Financial District into 333,500 square feet at 101 Seaport, becoming the building's anchor tenant. 101 Seaport is the first office building in Boston to be certified Platinum under the LEED sustainability standard.

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Office Spaces Backing Out of Cubicles

A new article from the Wall Street Journal titled More New York Companies Experiment With Innovative Office Space takes a look at one of the newer trends in office organization and layout that's doing away with cubicles and offices in favor of open and collaborative spaces. Just last week, Gerson Lehrman Group Inc. (GLG), for example, launched its new office design that offers an array of workspaces — from comfortable couches to high stools at a barista-staffed coffee bar to single-occupancy glass booths — and does away with permanent desks, assigning employees only a laptop, a headset and a locker.

"Something funny about having a lot of stuff is it makes you feel like you're doing something," said Alexander Saint-Amand, CEO of GLG, whose company helps other firms learn about business issues by matching them with experts. "But when you don't have all that stuff, it frees you up to actually concentrate and work."

An excerpt of the article follows:

Companies such as Microsoft, PricewaterhouseCoopers and Accenture have been experimenting with variations on unassigned seating since the 1990s and early 2000s. The Macquarie Group drew much attention in 2009 when it instituted an activity-based working concept at one of its offices, for 3,000 workers, in Sydney, Australia.

Last year, real estate services company CBRE Group Inc. brought its version of the office design to its Los Angeles operation. CBRE said it planned to have the system in 21 of its offices by year's end.

"When we actually looked at what they needed, they needed much more choice, the ability to make good decisions about getting their work done," said Lenny Beaudoin, CBRE senior managing director of workplace strategy.

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PWC Report Expects Investable Real Estate to Grow

PricewaterhouseCoopers (PWC) released its latest report that anticipates global investable real estate to grow by more than 55% to around $45.3 trillion by 2020 (from a 2012 total of $29 trillion). The report, Real Estate 2020, suggests that these expansions will be greatest in emerging economies, where economic development should lead to better tenant quality and, in some countries, clearer property rights and will play out across housing, commercial real estate and infrastructure.

"Demographic shifts will affect demand for real estate fundamentally in 2020 with the aging Baby Boomers creating an increase in demand for specialist types of real estate like senior and intergenerational housing, while there will be a rise in micro-units for the younger population," said Mitch Roschelle, partner, U.S. real estate advisory practice leader, PWC. "As the real estate industry and environment evolves, there are certain risks that market participants should be aware of so they can navigate those challenges thoughtfully, while also being able to jump on the increasing amount of opportunities in the space. This is how we help our clients at PWC – and we’re working with them now so they will be fully prepared in 2020 and beyond."

An excerpt of other changes in real estate the report expects by 2020:

• A huge expansion in cities, with mixed results. By 2020, the 21st century’s great migration to the cities will be well underway. Cities are expected to swell across the fast-growing countries of Asia, Africa, the Middle East and Latin America. Even the developed Western countries will be urbanizing, albeit at a slower pace. By 2020, cities will be competing fiercely with each other.
• Growth in emerging markets is anticipated to ratchet up competition for real estate assets and competition between real estate organizations.
• Sustainability will transform design of buildings and developments, presenting opportunities and risks for real estate asset managers.
• Technology will disrupt real estate economics: growth in online shopping will continue to reduce the need for retail space, but shorter delivery times increase the need for warehouse space close to customers. As workers increasingly work from home or satellite offices, the need for office space will decrease. For developers, technology advances will make eco-efficient building more practical. Real estate capital will take financial center stage. Private capital will play a critical role in funding the growing and changing need for real estate and its supporting infrastructure. Real estate managers will need to leverage the full range of financing possibilities to take on new types of risk, often with long-term investment horizons.

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PWC Survey Results: CRE Market Picking Up

PricewaterhouseCoopers' first-quarter report, which surveyed U.S. real estate investor confidence, shows that the commercial real estate sector is expected to remain in recovery mode in 2012, but added that the market for distribution and industrial real estate will likely become one of the hottest CRE sectors between 2013 and 2015. According to a Wall Street Journal report, real estate executives who responded to the survey said they expect investor interest in those properties to grow with an expansion of the economy and consumer spending.

The retail outlook, however, is a little more bleak. "There's been a total paradigm shift in retail,"Mitch Roschelle, who heads PwC's real estate advisory practice. "Big box stores are being replaced from the consumer's perspective by online shopping…and too many retailers are competing with each other's sticks and bricks stores."

Nationally, more buyers are considering the rebounding industrial sector, as it demonstrates positive signs of recovery, reported the South Florida Business Journal. Warehouse demand is increasing rapidly, especially in coastal markets with international port access, according to the report.

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PWC Takes 140,000 SF in Atlanta

PricewaterhouseCoopers (PwC US) has announced that it will be moving its Atlanta office to a new midtown location at 1075 Peachtree, assuming 140,000 square feet of space at the 18-story building. PwC signed a 16 year lease deal for the office space at the mixed use development of 12th & Midtown and expects to move in mid-2012 according to an Atlanta Journal-Constitution article. The company currently occupies roughly 112,000 square feet at the Millennium in Midtown located on the northeastern corner of 10th and West Peachtree Streets, less than five minutes from its new location. The full terms and costs of the lease were not disclosed, but it was noted that PwC will be represented with marquis signage at the top of the 1075 building. Other major tenants include The Boston Consulting Group Inc. and Seyfarth Shaw LLP.

"Our business and culture are based on building relationships, delivering value and winning in the global marketplace. 1075 Peachtree supports those elements locally for both our clients and our people," said PwC Market Managing Partner Gary Price. "The new building's impressive amenities and features, stunning architecture and prime Midtown location were too compelling to pass up," Price added.

"PwC embodies the international leader we envisioned occupying the space in 1075 Peachtree," said Doug Guedry, vice president of office leasing for Daniel Corp. "The firm's reputation for outstanding performance and exceptional innovation is in line with our mission to bring value to Midtown, and we look forward to collaborating with PwC as they build out a world-class office environment."

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