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In Person
Packard’s Corner Power Play

By Steve Adams
Banker & Tradesman Staff

Sunday, November 9, 2014

 

Harold Brown  
Title: Chairman, The Hamilton Co.
Age: 89
Experience: 60 years

Harold Brown
Harold Brown

 

Few executives have a longer-range perspective on Boston’s real estate market than Hamilton Co. Chairman Harold Brown. Brown’s Boston-based company turned 60 this year and continues to look for good properties at reasonable prices. Right now, Brown is bullish on retail properties. Most recently, the Hamilton Co. acquired a pair of retail-anchored commercial buildings in Boston’s Government Center and Allston neighborhoods for just over $3 million. With the purchase of 1117 Commonwealth Ave. for $950,000, Hamilton Co. now controls the entire commercial block at Allston’s Packard Corner, containing 65,000 square feet of commercial space. Since 2009, The Hamilton Co. has surpassed $400 million in residential and commercial acquisitions and has more than $1.5 billion in total assets.

 

Q: With office buildings and multifamily properties selling at post-recession highs, do retail properties offer a value proposition in the current market?


A: This is a good time to buy retail properties in Boston. The retail market is not as much in demand as multifamily and office buildings. The property by Government Center, there were six to 10 people bidding on it. The other one was a small parcel that was pretty typical of the retail market. The multifamily and office markets are becoming so high and the demand for commercial real estate is getting heavier. (Retail) will be the only thing left within the realm of reason.

 

Q: What sort of cap rates can investors expect in the retail sector?

A: Most people that buy retail would like to see 5 to 10 percent, but realistically in today’s market you’ll get anywhere between 4 and 6 percent. At one point, we were active all over the country, but we have coalesced in downtown Boston and the suburbs and New Hampshire. They seem to be on the upswing. The stuff downtown is becoming very, very expensive. The only reasonable buys are the suburban properties. Cap rates have been as high as 12 percent in various downturns and this is the lowest they’ve ever been.

 

Q: How big of a role is foreign investment playing in the current cycle?

A: You have a very unusual situation at the moment. You have a huge demand for commercial real estate getting stronger with a lot of overseas buyers with money that they don’t know where to park. And you have low interest rates, which create low cap rates. At some point in the very near future, interest rates are going up and cap rates are also going up. The question: is the demand for real estate going to compensate for the diminution in the value?

 

Q: How friendly is the lending climate for acquisitions?

A: Financing is readily available, assuming your credit is OK. There’s no problem in that area whatsoever. In fact, banks are really looking for good loans. It’s one of the catalysts and it creates the pricing the way it is.

 

Q: What Greater Boston neighborhoods do you think will be seeing the most rent growth among commercial and multifamily properties?

A: I would say Somerville – for just about everything. Second would be downtown Boston. The only problem with downtown Boston is we may have the problem of oversupply, and I don’t know the answer to that. I think we’ll know next year.

 

Brown’s Top Five Reading Selections:

1.      Bloomberg News

2.      Wall Street Journal

3.      Boston magazine

4.      Stuart Woods novels

5.      James Patterson mysteries


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