| 
Adam Sichol
Co-founder and managing partner, Longfellow Real Estate Partners
Age: 43
Industry experience: 22 years
Life science development has metamorphosed from a specialized niche into Greater Boston’s most dynamic commercial real estate sector. During his 22-year career, Adam Sichol has had a front-row seat on the industry’s expansion and played a hand in companies’ growth and relocations. Sichol worked at Lyme Properties during the firm’s development of the Genzyme Center in Cambridge and the Center for Life Science in Boston’s Longwood Medical Area, before co-founding Boston-based Longfellow Real Estate Partners with Jamie Peschel in 2009.
Since then, Longfellow has developed and acquired more than 4 million square feet of commercial space. The firm last year raised $500 million for its new Strategic Value Fund, which is making additional acquisitions and ground-up developments.
Q: What were some of the highlights of your time working at Lyme Properties?
A: I was working on asset management and acquisitions earlier in my career. It was definitely a highlight for me in my career, working with David Clem and growing the portfolio. Most was in what was then the “new” Kendall Square, including the Genzyme building, which was one of the first LEED platinum–certified buildings. David Clem was one of the first visionaries around the [life science] product type and what it could mean for not only Kendall Square and Boston, but in establishing the whole cluster model.
Q: How much of the $500 million Strategic Value Fund has been deployed so far?
A: We have deployed a significant amount of those funds’ commitments but have the ability to up-size our funds to involve multiple pools of equity. The first was $500 million and we can expand those pools. I can’t comment on how much we’ve spent in equity, but those fund investments have included 350,000 square feet in San Diego and 1 million square feet in San Francisco. We have the ability to invest along the whole risk–reward spectrum: core products and also deals that pencil out to more opportunistic returns. We’re putting approximately 60 percent debt on the projects.
Identify New Prospects with Targeted Marketing Lists
Property owners are a prime target market for insurance, banks, real estate, home improvement, investment, and most retail and home service businesses. With information on more than 130 million households – encompassing 94 percent of the U.S. population – we invite you to learn more about how The Warren Group’s Targeted Marketing Lists can generate more quality business leads to develop your business.
Q: What’s Longfellow’s geographic strategy?
A: Primarily the coasts, so right now we have projects in the Boston market and in North Carolina, and we have a partnership for an opportunity in Philadelphia called Schuylkill Yards, and we’ve been active in San Diego and San Francisco. We will look to grow into all of those markets significantly over the next few years, and we’ve got a couple of others on our radar.
Q: Is New York City a threat to Kendall Square’s dominance?
A: There’s definitely a lot of interest right now from various groups on doing projects in New York. We’ve looked at some opportunities there, and I don’t think there’s going to be another Kendall Square anywhere.
Kendall Square is highly unusual for our product type. Even if you go to San Francisco, which is probably the second hottest market in the country, you just don’t get the density of companies you get in Kendall Square. But given the amount of investment dollars that are in New York in terms of the NIH and venture capital funding and the universities, there’s some opportunities. It will be one that we’re tracking closely, and I know other groups are looking at it as well.
Q: You did a lab conversion at 1030 Massachusetts Ave. in Cambridge and recently sold the property for $128 million, one of the highest prices per square foot ever paid for lab space in Greater Boston. What’s needed to make the economics work in an office-to-lab conversion?
A: We first acquired that in 2010 and the economy was not doing as well as it is today, and that building was mostly empty. We were able to go in and vacate the few remaining tenants. We bought it at roughly $250 a square foot. We completely gutted it and turned it into a class A lab building and offered market rents and tenant improvement allowances. The rents were in the mid-$50s triple-net and the TIs were around $175 a foot. In 2013, our capital partner was interested in selling, so we had an opportunity to acquire it with our new capital partner for about $900 a square foot.
Longfellow prides itself on our vertical integration, so we do everything in-house: property management, project management, asset management, and it enables us to have a strong platform. The story was working with the tenants and managing the turnover and selling the building for over $1,600 a square foot. That really is a good reflection of the value that we create throughout our platform.
Without getting into the specifics on 1030 Mass Ave., construction costs can run from $50 to $200 per square foot. We’ve seen them shoot up over the last several years, so probably closer to that higher number at this point in time.
Q: Many Greater Boston neighborhoods are being touted as “the next Kendall Square.” What’s one that hasn’t gotten enough attention?
A: It’s interesting. All of the markets that are close to Kendall Square are getting a lot of attention and that’s very well-deserved. It’s all about proximity to the high level of amenities and transportation, so all of the logical locations that people are focusing on right now within a short drive of Kendall Square make sense.
There are some interesting things going on in the suburbs. You’ve got mini-clusters in Waltham, Lexington and Bedford. As the Millennials start having families and the talent becomes more dispersed, it’s hard to predict what’s going to happen in those. I don’t think they’re going to be as strong as Kendall Square but a number of developers are getting into the specialized lab space. It’ll be interesting to see how they perform against those of us who have been doing it for a long time, and whether we will be able to absorb all the space that’s in the pipeline in Greater Boston.
Q: What are Boston’s advantages and drawbacks compared to the other markets where Longfellow invests?
A: There’re lots of advantages to Greater Boston: the talent, and NIH funding and scale of the existing market. There’s demand from users that aren’t in the market now and they want to be a part of it and collaborate. Relative to some of the other markets, the public transportation in Boston is superior. The one disadvantage, which it shares with San Francisco, is the cost of living.
Q: Why was 2008 a good time to start a firm?
A: I learned from David Clem that it’s always good to start a firm in a downturn, because that’s where there are some good opportunities that not everybody can take advantage of. If you can put yourself in a position to have access to capital, it can be a good time to start a firm. I’m happy that we did.
Sichol’s Five Favorite Family Vacations:
- Galápagos Islands
- Serengeti safari in Tanzania, Africa
- Florida Keys
- Rocky Mountains
- Disney World
