Appeared in Boston Real Estate Times – January 7, 2019
NEEDHAM, MA—For the last 27 years, David Begelfer led NAIOP Massachusetts and served as an effective advocate for the state’s commercial real estate industry.
“I am very proud of all that has been accomplished over my time leading NAIOP Massachusetts. We have developed exceptional programming, educational and networking offerings,” Mr. Begelfer said when he announced he was stepping down as CEO of NAIOP at the end of 2018.
In many ways, NAIOP Massachusetts is an institution Mr. Begelfer built from scratch. With 1,720 members now, NAIOP Massachusetts represents the interests of companies involved with the development, ownership, management and financing of commercial properties. NAIOP members are involved with more than 240 million square feet of office, research & development, industrial, mixed use, retail and institutional space, as well as over 50,000 apartment units in the Commonwealth, valued at around $40 billion.
After retiring from NAIOP, Mr. Begelfer launched his own real estate services firm: CRE Strategic Advisors. He recently spoke with the Boston Real Estate Times via an email interview about NAIOP, his legacy and his future plans.
BOSTON REAL ESTATE TIMES: HOW DOES IT FEEL TO LEAVE NAIOP, THE ORGANIZATION YOU BUILT LITERALLY FROM SCRATCH?
DAVID BEGELFER: I was first a volunteer leader of NAIOP, as president and board chair. It was the great real estate recession of 1990 that led me to taking on a paid staff role as Executive Director. A job that I thought would last 2-3 years for me. However, I relished building the institution as well as the growing advocacy role that I felt was lacking in the industry.
What I most enjoyed was establishing a vast network of connections with industry, business, and political leaders. My success, NAIOP’s success, is due to countless professionals who have given their time and counsel over the years. As a result, so many individuals and businesses have benefited from the educational, networking, and advocacy over the decades. I will miss the intensive policy and political arenas, but, as a NAIOP member, I will look forward to supporting the organization’s efforts in those areas.
BRET: WHAT IS YOUR MESSAGE TO THE NEW LEADERSHIP OF NAIOP?
DB: Over the past several years, our senior management has operated more like a partnership. Both Tamara Small and Reesa Fischer have been involved in all aspects of the organization and have led the strategic planning for the organization, moving NAIOP into new areas and opportunities. For them, it is business, as usual, running this association entrepreneurially to benefit our members. I’m excited to see what’s next for NAIOP.
BRET: IN YOUR OWN WORDS, WHAT WILL BE YOUR LEGACY IN BOSTON?
DB: What I am most proud of is that NAIOP has become an effective voice for the commercial real estate industry, representing it in the legislative, regulatory, policy, and judicial areas. NAIOP is now a well known and respected brand. This organization is both reactive and proactive, representing all the various product types, whether they are private or institutionally owned. We also are a very collaborative organization, working with many of the other business groups to promote economic development throughout the Commonwealth.
BRET: WHAT CRE STRATEGIC ADVISORS WILL DO FOR ITS CLIENTS?
DB: CRE’s mission is to assist clients to determine the best options and targeted strategies for acquiring, planning, permitting, and developing their real estate assets. CRE provides an in-depth understanding of the real estate industry, offering high level, strategic advice. I will provide a unique perspective on the development process to private and institutional real estate owners who want to create a strategy to optimize their assets.
BRET: IS THERE ANY SPECIFIC TYPE OF AREA YOUR FIRM WILL FOCUS ON?
DB: Besides the traditional commercial real estate firms, I will be looking to work with businesses that also happen to have real estate assets, as well as institutional owners (e.g. educational, medical, government) that need to make critical, long term decisions about their real estate.
BRET: PLEASE GIVE US SOME EXAMPLES.
DB: I am currently working with a nonprofit that has surplus land that they want to monetize in order to reinvest in their primary business operations. I am also working with a commercial real estate development/investment firm that is looking out 5-10 years to re-evaluate their ownership strategy in light of the various disruptive forces affecting the industry.
BRET: HOW HAS THE COMMERCIAL REAL ESTATE INDUSTRY CHANGED DURING THE LAST 30 YEARS, ESPECIALLY IN TERMS OF DEVELOPMENT, REGULATIONS, TECHNOLOGY AND OFFICE USE?
DB: When I took over NAIOP 28 years ago, we were experiencing the worst real estate downturn in decades. As I leave, the industry is the strongest ever. Draw your own conclusions! Seriously, we have experienced several cycles over these years, and we have bounced back stronger than ever. Although some of those recoveries lagged the national upturn, if you look at the current state of the economy, the diversity of users, the international investments in the area, I would say we have done very well.
The biggest changes are happening faster than ever. The technological advancements have allowed for real disruption in many sectors and our industry is just beginning to feel the direct impacts of these shifts. Data is becoming more quickly available, allowing some companies to gain advantages over others. Leasing space “on demand” (e.g, WeWork) may be starting a trend that forces traditional owners of commercial space to adjust their lease terms allowing for more flexibility for the tenant.
BRET: WHAT ABOUT PERMITTING ENVIRONMENT?
DB: In some ways, the permitting environment has improved. There is more transparency in the process, at least in the core cities. However, more is asked of the developer- linkage fees, inclusionary zoning, impact fees, community betterment’s, BIDs, traffic mitigation, prescriptive energy requirements, climate change resiliency, and more! In good times, those costs have been absorbed, but we are already seeing stress on the new proformas. Also, suburban communities continue to push back on multi-family housing, as if children are this decade’s hazardous waste.
BRET: RISKS TO OUR LOCAL ECONOMY?
DB: The greatest risk to our local economy is our greatest asset, a skilled workforce. As long as we have a sufficient supply of talent, we can grow our economy. However, our high cost of living has fueled a fairly consistent domestic outmigration over the last 3 decades. Without a net in-migration from outside the country, we could never have grown our economy over these years. Today, immigration policy is a serious problem for our region. Now, with an all-time low unemployment rate, we may have to start watching out for companies having difficulties meeting their employment growth targets, looking to move.
BRET: ANY COMMENT ON REAL ESTATE CYCLES?
DB: In terms of cycles, we will certainly experience a downturn at some point. I do not believe that it will be in the next two years, but I also think that it will be a fairly soft landing for this region. Our bigger short term problem may be our continued success. This is driving up land costs and, more importantly, construction costs. We are now at the point where some projects will not “pencil out” due to thinning margins.
All in all, I marvel at the growth of the region over these last three decades. We have some of the best talented professionals in the country who have weathered the past storms, are still developing and investing, and will be around for a long time to come. I believe NAIOP will continue to be there, providing value to the industry and its members.