The View from the Other Side of the Table
Title: Principal, Cresa
Industry experience: 25 years
Office lease negotiations aren’t just a question of rents and tenant allowances, but a reflection of how a company crafts its public image and maximizes its productivity. After eight years on the landlord side of commercial brokerage at EQ Office, Matthew George is advising companies on those decisions in a new leadership role in tenant representation. George, who had earlier stints at Lincoln Property Co. and Cushman & Wakefield, joined Cresa this month as a principal in its Boston office.
Q: What were some of your primary responsibilities and specialties at Lincoln Property and Cushman & Wakefield?
A: When I got in at Lincoln I started as a property manager, working in construction management and leasing, and probably the second half of my tenure it was leasing 100 percent, both landlord and tenant. They would let you go anywhere. We did One Kendall Square in Cambridge and some stuff in the suburbs, but the majority was in downtown and Cambridge. At Cushman & Wakefield, it was 100 percent downtown leasing. Then when I joined Equity Office, Blackstone had acquired them and I was doing leasing in downtown Boston and Cambridge.
Q: How competitive is the hunt for office space in the Boston urban core?
A: Due to today’s market and the scarcity of space with vacancies in the single digits, these tenants, specifically if they are south of 20,000 square feet, they just want to find the best location. The larger tenants that the market has seen over the last five years, with the inward migration driven by the tech companies, their footprint is a lot larger and they are focusing on class A assets, depending upon how mature they are in their funding and business plans. It’s very healthy for landlords, and the development of the Seaport really helped the tenants that were looking to come into town for all of the obvious reasons: to recruit talent and establish a better identity. A lot of it is the workforce and who they’re trying to chase in that realm: Reebok, Alexion Pharmaceuticals, PTC. All the stuff that’s happened in the Seaport speaks for itself. Downtown, you had musical chairs but also pushed by how companies are dealing with their workspace. That was a big piece that we saw at EQ Office, specifically at 100 Summer St. We lost Cambridge Assoc., we lost AIG and most recently Nixon Peabody. These three large anchor tenants moved out, but they were backfilled with CloudHealth, Bullhorn and Rapid7. It was just a huge velocity of leasing in the past three years at that building specifically.
Q: With limited short-term availabilities in the Seaport, what’s the next logical submarket for tenants to consider?
A: For new development, you’d look at what’s happening downtown with Millennium at Winthrop Square, and what’s happening with HYM Investment Group at One Congress, and then really the periphery. I think the former Boston Globe site is a great opportunity for tenants right on the Red Line. It’s got great visibility off [Interstate 93] and you’re still in Boston. You’re starting to see that with all regions: north, south and west. Owners are trying to push outside the urban core to find value and it’s pretty exciting to see what’s happening.
Q: How does your background on the landlord side benefit your new position at a tenant representation brokerage?
A: It’s positive for tenants to have a real understanding of what the landlord mindset is going into a negotiation and what’s important on that side of the table.
Q: Is the coworking model forcing landlords to offer more flexible lease terms?
A: The coworking phenomenon is very helpful in that matter. You can see how those companies are establishing beachheads in Boston and expanding. The obvious one is WeWork, and they have a real place for the companies that are looking for short-term solutions: venture-funded companies that need the ultimate flexibility on lease term. Landlords are still focused on credit tenants that want to do long-term leases: five, seven and 10 years.
Q: What’s the impact of the new HQ by WeWork model that’s looking to lease entire floors in class B buildings?
A: We’re definitely getting under the hood and trying to understand how that all plays out. As far as WeWork taking smaller spaces in class B buildings, the landlord is a little bit more amenable to that because if [WeWork] wants to lease under 20,000-square-foot floorplates and they’re going to do it at a 10- or 15-year deal, they’re feeling pretty comfortable with that in today’s market. There’s been a lot of discussion about whether they’re competing with landlords for smaller tenants, and that hasn’t been figured out yet.
Q: What’s an example of an unusual transaction you helped piece together recently?
A: On the leasing side, the one that sticks out to me was Bullhorn at 100 Summer St. The reason for that is it’s a company in growth mode and image change mode, and they were down in the brick and beam Fort Point area for a long time. To see a company saying, “OK, it’s exciting to see what’s happening down here in the Seaport and we like the feel of our space, but we’re a mature company trying to get to the next level.” To focus on a 1-million-square-foot tower to establish their headquarters was really exciting. And also to negotiate how they could find a path to growth, because you’re looking at these companies starting to balloon, home-grown companies that are growing. Landlords in this era of real estate are much more open and listening to what the customer wants. You don’t want to dictate their culture or feel, and a lot of what you’re seeing is being pushed by the tenants. At EQ Office, we loved that about Bullhorn: the design of their space: open plan, fun colors. They put a jam room in their space because the founders have a band. You see it at 60 State St. – they put in a slide. These are things that are exciting, and it helps the tenant get secure in the building, it helps with recruitment, so why wouldn’t a landlord want to embrace that?
George’s Five Favorite Tunes:
- “Release Me,” Pearl Jam
- “Little Wing,” Stevie Ray Vaughn
- “Rising,” Bruce Springsteen
- “Over the Hills and Far Away,” Led Zeppelin
- “Three Little Birds,” Bob Marley