Boston Business Journal Publishes Viewpoint by Tim Schofield – Bold, Local Developers Have an Edge over Institutional Funds

We are pleased to share that our Managing Partner, Tim Schofield, was published in the Boston Business Journal concerning ongoing changes in the Boston real estate market.  The full article is quoted below:

“It just doesn’t pencil out.”  No, it just doesn’t pencil out for you.

Those of us in the real estate industry have heard this expression time and again in recent years as large investors and developers explain why they can no longer do business in Boston, but the fact is that are still profits to be had and, if history is any indicator, there will be risk-takers willing to take those profits and reshape Boston in the process.

Over the past twenty-five years, Boston has been a playground for global capital.  Billions of dollars were invested in developing the Seaport District, Kendall Square and numerous luxury residential towers and complexes across the region.+ Opt In

Most of this growth has been financed by massive international funds and institutional investors, but much of that money has moved on to shinier and more lucrative opportunities elsewhere. This, we are told, marks the death of the Boston real estate market, but the rumors of our demise are greatly exaggerated.  In fact, it marks an exciting time of opportunity for bold, risk-taking entrepreneurs and investors who need only look to our recent past (with a nod toward Paris) to see the future.

Boston was built by exactly these types of adventurous swashbucklers. Long before pension funds and private equity discovered Boston, local families and boutique builders shaped the city’s architectural identity and economic growth.

Now, despite what some would have you believe, there is money to be made in something other than lab space and luxury units, and smaller firms and bold investors are poised to stake out those profits in a market that is coming to appreciate the economic and societal value, and the absolute necessity, of density.

In fact, small players possess a distinct edge in this emerging market because they are more agile and creative and they operate on much leaner margins. They can pivot quickly to seize write-down opportunities, pursue complex lots, adapt and reuse existing buildings, and operate in newly unlocked transit hubs.

Crucially, the political winds have shifted in their favor.  A growing, organized YIMBY movement is successfully dismantling restrictive local opposition to housing, and legal reforms — such as the MBTA Communities Act — are forcing municipalities to rezone for multi-family, transit-oriented housing.

This new generation of swashbucklers also have history and a world-class example on their side.  The early 20th century saw an explosion of three-family “triple-deckers” in Boston which generated nearly 48,000 housing units.  Across the Atlantic, Paris has a population density more than double that of New York City despite the fact that it has strict height limits (most residential building are six stories tall).

While a global fund or developer cannot efficiently deploy capital into a portfolio of three- to six-story buildings, a nimble entrepreneur can navigate these smaller-scale sites and still make money.  Yes, it is risky and they will make less profit than what might be acceptable to some, but history, neighborhoods, and skylines are built by such people.