SOUTH SHORE INSIDER - 9/30/06
Real estate developer bullish on the South Shore
By KAITLIN KEANE - The Patriot Ledger

BOSTON - Developing commercial real estate has become tougher in the 11 years since Jack Spurr Jr. joined A.W. Perry, the commercial real estate development company his great-grandfather founded in Rockland 120 years ago.

As president, Spurr deals with changes to land-use permit processes and a general difficulty in developing new land in this region while overseeing one of the company’s largest development projects, the new offices for Blue Cross Blue Shield of Massachusetts in Hingham.

Despite the challenges, Spurr remains ambitious about development on the South Shore. With two-thirds of the company’s roughly 900,000 square feet of building space located south of Boston, he said he hopes to capitalize on the region’s potential while continuing to lease space to eager new businesses.

While the new Blue Cross building will be owned by the Boston-based health insurer, A.W. Perry’s preferred strategy is to lease space to its clients. Owning 800 acres of undeveloped land on the South Shore - much of it between exits 14 and 15 west of Route 3 - gives A.W. Perry the opportunity to continue that trend.

The 59-year old Scituate resident said he intends to keep his focus on the South Shore, an area he sees as ripe with potential for development. He oversees a staff of 25 people from the company’s downtown Boston headquarters.

What are the benefits of developing properties on the South Shore right now?
Plymouth County is the fastest-growing area in the state, so I think we’re going to see more demand for businesses to move down there. The train and Route 44 have helped that, but businesses also feel that the South Shore has a lot of people who make up a good labor pool, so we’re starting to see more businesses gravitating toward us. And that certainly helps us on the residential development side as well.

What are the benefits of developing properties to be rented to clients rather than sold?
For the tenant, they have the ability to expand without being tied to a building that they own. They don’t have to take care of the property because we do it. We prefer to have long relationships with our tenants. We have a lot of tenants that have been with us for many years. There’s one that has been with us for almost 50 years and a number that have been with us for more than 20.

For us, one of the pluses is that we do own some land, whereas a lot of developers have to go out and buy land in order to do a project. We have an inventory of land to work with. When we developed Serono (headquarters in Rockland), it was a development project that then became part of our portfolio. Those are the kind of projects we want to do.

Blue Cross will own its Hingham building rather than rent from you. Is that a new direction the company will take?
We prefer to develop and own properties, but in this case it was a major opportunity for us. We may consider other opportunities (to develop for other property owners), but now we’re doing what we’ve done best.

What are the challenges of developing on the South Shore?
The permitting process can be daunting, and that is (the case in) Massachusetts in general. Also, the problem with development in general is that people like to be the last person to have moved to a place. Issues like traffic get raised. When we built Serono, we rebuilt a part of Hingham Street (in Rockland) and put in a traffic light there. Now, with Blue Cross, there are additional changes to be made. You can’t just put a building up on a site and not deal with the impacts around it. That’s the biggest challenge of development today.

Have you chosen recent development projects, such as your condo projects in Pembroke and Hanover, based on the demand in the market?
You try to gauge the market to some extent because you’re only going to be successful if you meet the needs of the community. Timing is critical and some of it’s luck. With (A.W. Perry’s) residential properties (in Pembroke and Hanover), sales have been brisk in spite of the market. There was a lull in the market the last part of 2005, but we started off 2006 doing really well.

What has changed during 30 years of developing in this area?
The development has become more complex in that the general public and regulators have become more sophisticated. We have a responsibility to deal with environmental issues and quality of life. The bar has been raised for (the) quality of life and quality of development - and that leads to higher development costs and higher housing costs.

Copyright 2006 The Patriot Ledger