Peter GottliebPresident and CEO, Hobbs Brook Real EstateAge: 42Industry experience: 20 years
Under its new CEO Peter Gottlieb, Hobbs Brook Real Estate is diversifying the geography and asset mix of its real estate portfolio. The Waltham-based developer has traditionally focused on the development of suburban office parks along Route 128, including 225 Wyman, a new 507,000-square-foot office-lab building in Waltham that is 96 percent leased to ElevateBio BaseCamp, Seqirus, Pegasystems and TIAA is. It is now expanding its investment criteria to other asset classes and markets in the US. Prior to joining Hobbs Brook, Gottlieb was senior vice president and regional director at Rubenstein Partners, overseeing its investments in the New England and Chicago markets.
Q: How is Hobbs Brook Real Estate changing its investment focus? A: Hobbs Brook has historically been heavily focused on the Boston market and even more so on Waltham. Since Hobbs Brook has moved from managing both FM Global’s corporate real estate and its real estate investments, Hobbs Brook now exclusively directs FM Global’s real estate investments. FM Global’s corporate real estate is now managed internally. Our concept is to grow the portfolio outside of Boston and expand it into diverse assets outside of office and life science where we now have significant concentrations. We are developing research paper addressing what we want to evaluate in new markets, be it partnership with joint ventures and local operators. That’s an exciting exercise we’re about to embark on. Between Waltham and Lexington in our core facilities, we have about 2.6 million square feet in about 20 buildings.
Q: When evaluating expansion into new markets, what characteristics are you looking for? A: The sky is the limit. We’re in an exciting position to be able to target every market, including gateway markets like New York and San Francisco, and continue to invest in Boston, but we also have a lot of experience and interest in diving into secondary and tertiary markets as well. It’s really portfolio optimization on the real estate portfolio side. There has been a shift from managing FM Global’s corporate real estate and investments to focusing solely on investment properties and diversification is becoming important. I have a track record of success in a number of different markets outside of Boston and we want to capitalize on that. We will deal with basic and new developments of assets. I still see a lot of potential in the industrial sector. We will evaluate multi-family housing, hospitality and retail. If there’s a good opportunity, we’ll look into it. We have the flexibility to create a more diverse portfolio.
Q: What are your prospects for the office sector? A: It seems to change from week to week. We are triangulating around a likely hybrid workforce going forward. What we don’t think will change is an escape towards quality and the provision of premium equipment packages, as well as a real focus on environmental sustainability. I keep a close eye on what brings people back to the office, and one of the biggest concerns about returning to work is commuting. We are very careful with locations and commute times for suburban residents. For investors in 2021 and 2022, it was a bit of a wait and see. Some leases are smaller and the lease terms are shorter. You kick the can down the street. Where tenants can only have a time horizon of 24 months, we accommodate this.
Q: How is uncertainty about MBTA’s level of service and reliability affecting the prospects for the viability of downtown Boston real estate? A: I don’t think downtown is going anywhere as an office destination. Groups need to offer flexibility to their employees, and we’re seeing more groups considering a hub-and-spoke center with a downtown location and a suburban outpost. Whatever works in the suburbs as an escape to quality, we see downtown. To the extent that people commute, you need to have ample parking and access to public transport, as well as a solid equipment package in your building.
Q: Now that 225 Wyman is complete and essentially leased, what is Hobbs Brook’s next major development project? A: We are particularly excited about the Ledgemont Technology Center in Lexington. It is currently a life science room from the 1960’s. We will likely replace some buildings and create three new sites to accommodate an additional 270,000 square feet of Life Science in Lexington and will resubmit site plan review for a total of 460,000 square feet for the campus in a few weeks upon completion. We also conduct an evaluation of higher and best uses in our existing portfolio. We have significant Class B assets: is it best used as an office, life science or some other concept that we need to consider over the long term?
Q: Does inflation affect your investment strategy and the attractiveness of new developments as opposed to acquisitions? A: We’ve seen a monthly cost increase of 1 [percent] to 2 percent over the past three months. When it comes to pricing, we approach subcontractors directly rather than relying on general contractors for both labor and materials to make the best choices, but use their understanding of timing and supply chain to make the right decisions when we build surfaces. The timing of delivery will be of paramount importance when choosing materials and optimally equipping the rooms.
Five favorite classic cars that Gottlieb will never buy:
