Jonathan G. Davis
Title: CEO and Founder, The Davis Cos.
Industry experience: 45 years
Jonathan Davis has developed office buildings, lab space and multifamily housing in Greater Boston during up-and-down real estate cycles since the mid-1970s. In Davis’ view, the latest building boom has a key distinction that sets it apart from previous eras: demand for new commercial space and housing is pushing development to nearly every corner of Boston, rather than being concentrated in the downtown core.
The Davis Cos. has invested in more than 20 million square feet of commercial space and 6,000 housing units since 1976, and developed another 6 million square feet of new construction. It assembled the development team for the city’s next go-to location for visiting businesspeople: the $550 million Omni Boston Hotel at the Seaport, which is under construction across from the Boston Convention and Exhibition Center and scheduled to open in 2021.
Q: The BPDA is starting to look at planning for the future of downtown Boston. Given its location and transit connections, are there many more good opportunities for projects like Congress Square, adding height to existing buildings?
A: I have to be honest, I can’t walk past [Congress Square] without cringing, and it’s not because I don’t think it’s cool. We competed hard for that project and we never imagined that kind of additional density was a possibility. What Related did was to transform a challenging series of buildings that had multiple levels and relatively low ceilings and were a pretty inert block in the Financial District. I’ll admit to significant developer envy on that project.
It makes a tremendous amount of sense to take a more thoroughgoing look at where we are in the city and where we are going. The BPDA has been really thoughtful about balancing the interests of the wide variety of constituencies they have to serve, but the city’s development pace has been a rapidly moving target. The principles of New Urbanism are informing planning in cities globally, and there’s an understanding of that in Boston.
Q: Are automobile-dependent locations still viable for new development?
A: I’m not ready to pronounce the demise of all suburban locations. We recently completed two large projects in the northwest 128 market, the Burlington Corporate Center and the Exchange at Bedford. Each were close to half a million square feet. We got them both into the mid-90s of occupancy and we were able to move rents. We have 1.4 million square feet in Waltham in a joint venture with Marcus Partners and PGIM at Reservoir Woods. We’re fully leased, we’ve got five major corporate headquarters and we’re building a new build-to-suit for Alkermes right now.
Having said that, there’s no question that corporate locational decision-making today is all about competing for knowledge workers and most of them, especially the young talent wants to be in the city. Fifteen years ago, there were studies that demonstrated that locational decision making was largely driven by where the CEO lived. Today, that’s been turned on its head.
Q: As the city of Boston reviews its inclusionary development policy, how well do you think the existing policy is working and what changes would you like to see?
A: We just broke ground on a really exciting project at 100 Shawmut Ave. in the South End. We worked hand-in-hand with the BPDA, the Department of Neighborhood Development and two abutters, the Boston Chinese Evangelical Church and the Chinese Consolidated Benevolent Association. We were able to permit a joint Planned Development Area and we each got significant density bonuses. As a result, working together, we were able to generate over 100 units of affordable housing on a site that had been sitting in limbo since 1984.
This component of the project is going to be a mixed-income high-rise, largely as a result of the $15 million subsidy we provided to kick it off and other support CCBA is going to be able to cobble together.
Without out of the box creativity like this, it is very difficult for developers to support much more than the 13 percent of affordable units that are required in Boston today. It’s not just about land prices. Construction costs are crazy in Boston. The market-rate housing is largely serving middle-class working professionals, so there’s a limit on how high the market rents can be. An approach that keeps that percentage and allows for flexibility in special circumstances really is the way to go.
Q: How are the transit and congestion crises in Greater Boston affecting your investment strategy?
A: Since it’s all about competing for talent, I do think making building projects that are accessible via public transportation is important. A great example is our recently competed Alewife Research Center, a 225,000-square-foot lab building literally right across the street from the Alewife T stop. The project was fully leased five months after completion.
Q: What’s some of the most useful advice on real estate investing you’ve received?
A: When I was a college student I had a neighbor who was a developer. I was fascinated by real estate development and asked him what development was all about. He said, “You take a piece of property and you do something different with it.” That felt like an incredibly dismissive answer at the time, but over the years, I’ve come to realize it’s exactly right. Find a vision and that’s the way to create value.
Another lesson we learned in the early ’90s, and we’ve profited from this enormously, is that when it’s the hardest to raise money, when it appears that the world is bleakest, that’s always the best time to invest.
And the third thing is, when you’re a developer always remember that you’re changing the community in important ways which have an effect on all the residents. Remember that what you’re doing has an impact on people and approach your work that way. That is a huge driver of all of our activities today.
Davis’ Five Favorite Jazz Saxophonists:
- John Coltrane
- Charlie Parker
- Stan Getz
- Sonny Rollins
- Cannonball Adderly