Gale International

Tom and I attended the monthly Executive Breakfast Club meeting at the UMASS club in Boston this morning. Bob Maloney of Gale International gave a presentation regarding the status of commercial development in downtown Boston. His company is presently building 2.5m square feet in Boston, and have a huge development in South Korea as well.
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He said that over the past 30 years, downtown Boston has absorbed an increase of 1 million SF of office space on average every year, and that there has been no new large scale corporations migrated to Boston during that period. The space has been assumed by organic growth of companies, particularly in the financial and venture capital industries, as well as some law firms. This has been achieved despite major banks leaving the core downtown during that period.
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He says that the vacancy rate is around 10% which is the equilibrium point.... over 10% rents begin to go down, under 10%, they go up. Rents are now in the $45 per square foot range and he expects them to trend up to $70.
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Bob says that it costs $600/sf to develop first class office space in Boston, and that you need rents of $75 per sf to justify the expense.
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He was completely in command of the Boston Market, understanding all of the development prospects of his competitors, and what their impact would be on the overall market. A very impressive presentation.
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BTW, I didn't ask any stupid questions, nor did I offer ridiculous comments, although I had to fight the temptation.