Economy/ Housing

Developer sees glass half-full on commercial real estate

O’Brien says we fundamentally need offices and cities

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ONE OF BOSTON’S top developers, a self-described half-glass-full guy, says he remains bullish on commercial real estate despite the rise of remote work during the coronavirus pandemic.

 Tom O’Brien, the founding partner and managing director of the HYM Investment Group, has two big projects under development – a massive mixed-use complex at the site of Suffolk Downs in East Boston and a mixed-use project called Bulfinch Crossing at the former Government Center garage. Combined, the two projects call for 6.35 million square feet of office space.

 O’Brien acknowledges the nature of office work has changed during COVID, but he doesn’t think the change will affect commercial real estate as much as some people think.

 “I’m not part of the hand-wringing crowd that says there’s going to be a drastic reduction in office,” O’Brien said on The Codcast. “I do think that the way people work will change, that’s for sure. It will be more flexible. But we still fundamentally need offices; we need cities because those are the places where people gather. That’s where they collaborate. That’s where they produce good ideas. That’s where we’re able to converse with one another. That’s still the future of cities and office.”

 State Street Bank announced in 2019 that it was moving its headquarters from 1 Lincoln St. to Bulfinch Crossing and occupying 510,000 square feet. O’Brien said State Street is not planning to reduce its footprint in the new building, although the company is paring back its office space elsewhere.

 O’Brien said prospective tenants are still trying to decide how much space they need post-COVID. Some, he said, may actually end up purchasing more space to spread their employees out more, while others may cut back and make do with less space.

 “It’s a mix,” he said. “There could be some reduction, but I don’t see a drastic reduction.”

 He said one factor in his favor at Suffolk Downs is space set aside for life sciences companies, which are thriving and growing. “That space is doing very, very well,” he said,

 O’Brien said the fundamentals of the office market remain strong. With his own firm, O’Brien said, he has noticed the difference at meetings where some people are attending in person and some are there via Zoom.

 “The people who are on Zoom during a meeting when people are there in person, it just doesn’t work,” he said. “You can’t fully participate as a Zoom person while people are in the room. What’s going to end up happening is those sorts of awkward situations are going to drive this kind of return to the office process.”

 The developer said he’s been through recessions before in Boston and this one may pose a tougher recovery, in part because hospitals and universities, which often pursue capital projects during the downturns, haven’t been able to do so this time because they’ve been hard hit by COVID-19.

 But O’Brien said he thinks the fundamentals in Boston are sound. “No matter how we get into the recession, no matter where we go, at the end of the day Boston still ends up being a place that [lines up] well within the world economy and remains a popular place,” he said. “For the most part, Boston is going to find itself in the right place again.”

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Bruce Mohl

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About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

 O’Brien said his gut tells him the ghost town that is currently Boston will return to its crowded state again.

 “We’re all anxious to get back out there, see people again. Boston is such a small town,” he said. “I would suggest there’s going to be an explosion of people wanting to be outside, wanting to go to events, going to restaurants, going to hear music. It’s going to be a really breathtaking opportunity to get back and re-engage with people. I’m looking forward to it, and I know millions of people are as well.”

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