South Station, Boston’s main transportation center (above), is among the properties managed by Equity Office Properties. EOP has announced it will be delegating its retail leasing duties to Schaffer & Assoc. and American Retail Properties.
Having handled retail leasing internally since arriving in Boston more than a decade ago, Equity Office Properties is about to delegate those duties to a local partnership, company officials have confirmed. Schaffer & Assoc. and American Retail Properties will oversee approximately 250,000 square feet of retail space in EOP’s Massachusetts portfolio, acknowledged Maryann Gilligan Suydam, senior vice president of the Boston region for the Chicago-based real estate investment trust.
“We think this is the right direction to go,” Suydam told Banker & Tradesman last week. While EOP does not consider its retail troubled in any way, she stressed, Suydam said the firm felt brokers specializing in that sector could offer fresh concepts to reposition such space or provide a broader berth of prospects when a block of retail becomes available.
“It’s not brain surgery, but [retail leasing] is its own science,” said Suydam. “The people who focus on that area have the network and the relationships that others do not, and that can help us make better use of the space we have available.” Heretofore, EOP staffers have accommodated retail tenants as best they could, but the bulk of their duties have been on the office end of the equation. “Retail for years was treated as second-tier, and we wanted to do something about that,” Suydam said.
‘A Collaboration’
Nearly all of EOP’s commercial buildings in the region sport some measure of retail, although Suydam estimated that upward of 90 percent of the supply is concentrated in buildings sited in Boston itself. Two prime Back Bay assets, 222 Berkeley St. and 500 Boylston St., are not being included in the package being turned over to Schaffer and American Retail, but the remainder will be in their scope. Schaffer principal Joseph Levanto Jr. will reportedly play a leading role in the assignment, although Suydam did not identify any of professionals who will be utilized and Levanto declined to comment on any aspect of the situation when contacted last week.
For the most part, the retail space Schaffer and American will handle encompasses lobby shops, bank machines and specialty retailers or service providers such as shoe shining, locksmiths or dry cleaning. Other buildings, however, have a substantial amount of space in the mix, especially Center Plaza near Boston’s Government Center and the 75-101 Federal St. office properties in the Financial District. EOP also manages South Station, Boston’s main transportation center, which has an extensive amount of retail offerings available to serve commuters and the occupants of several floors of office space in the complex.
The arrangement with Schaffer and American Retail has not been completely finalized, and Suydam said it will take some time to see how the process evolves. Even so, she balked at the notion that the retail is being outsourced by EOP, instead characterizing the relationship as “a collaboration” in which brokers from Schaffer and American Retail will be regarded more as part of EOP’s team than as an independent operation. EOP will look to professionals such as Levanto to not only bring in new users as space opens up, but also possibly suggest ideas such as additional kiosks or seasonal tenants, said Suydam.
While a mere drop compared to the office space controlled by EOP, Suydam said retail uses are important to tenants, especially in a fickle weather environment such as New England. Retail amenities in a property have “become an expectation” among tenants, she said, and in certain cases could be the determining factor in securing a lease.
Efforts to contact principals at American Retail Properties were unsuccessful by Banker & Tradesman’s press deadline, but the firm has been active in Greater Boston’s suburban retail market since being founded in 2002. According to state corporation records, principals include David R. Nugent and David J. Birmingham, while veteran retail broker John McDonald of Andover is also said to be a key player in the firm as well.
Preparing to celebrate its 10th year in business this summer, Schaffer & Assoc. is run by Levanto and company namesake Michael Schaffer, who spends the bulk of his time in California. Levanto oversees the firm’s Boston operation, which is based in the retail-heavy Downtown Crossing district. Levanto and Schaffer have extensive experience in the Hub that extends well beyond the company’s founding in 1996, with both active locally since the 1980s.
While Levanto was reluctant to discuss his firm’s selection by EOP, several retail brokerage professionals spoken with said the move represents a coup for Schaffer & Assoc. and American Retail Properties. “That is an absolute grand slam for them,” said one broker last week, maintaining that it would be a plum assignment for the largest of real estate services companies.
Suydam did not provide names of those who did pursue the designation, but concurred that the opportunity created a vigorous competition. “Everybody was interested in it,” she said, explaining that EOP was drawn to the partnership that won out due to both the professionalism of those involved and the sense that they were eager to work cooperatively to meet EOP’s objectives. “We’re excited to get going,” added Suydam.
