CLIENT SPOTLIGHT: Grillo's Pickles

If you haven't been to the Grillo's Pickles website, you should. There, you'll find the fantastic story of how this company began. We've copied part of it here to save you a click.

Grillo's Pickles began with a pickle cart, just a small wooden stand in downtown Boston, where Travis Grillo and his friends would sell two spears for one dollar. Travis would make the pickles by night using his family's 100-year old recipe - one he'd memorized from making pickles every summer as a kid. In the morning, Travis would bike to the Boston Common and set up the cart with his buddies. They'd hang out all day, urging people to try the simple Grillo family pickle. It was a small business but Travis worked hard for it. He made more pickles, biked more miles, and slept less hours than he ever had before.
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CLIENT SPOTLIGHT: Factory Five Racing

Factory Five Racing was founded in 1995. Over the years they have grown from a start-up business in a small garage to become the world's largest manufacturer of "build-it-yourself" component car kits. They employ a full-time crew of about 40 people, and are located in Wareham, Massachusetts (about an hour south of Boston). They make their products right here in the USA, in the heart of New England where American manufacturing was born.
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Fred and Danny Magnanimi grew up watching their father create beautiful, handcrafted jewelry in the family's Cranston, RI jewelry manufacturing business. When the boys grew up, Fred moved to New York and began working on Wall Street as an investment banker, while younger brother Danny, still enamored by the family business, stayed home. Increased competition from overseas businesses created significant challenges for the business, but Danny was confident he could find a way for the family business to evolve and thrive. This was his mission, this was his passion.
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        Commercial Real Estate: Looking Ahead to 2017

        As we enter the fourth quarter of 2016, it makes sense to look ahead at what is in store for commercial real estate in 2017. There are several factors that will impact the market in New England, and although surprises can always occur, I believe the outlook is generally positive.

        First, it appears that the Fed will keep us in a low interest rate environment which means continued low cap rates on commercial real estate. Most economists expect a rate hike in 2016, but the consensus opinion seems to be that any rate increase will be limited to 25 or 50 basis points, with a similar rate increase likely in 2017. Given the continued low inflation rate, and the always precarious nature of the recovery from the Great Recession, the Fed will be hard pressed to aggressively move interest rates up from the current levels.

        These low interest and cap rates have created price pressures in Boston and other top markets. It is hard to imagine prices in Boston increasing further and lowering cap rates below 4%. Rather, I would expect to see movement in other New England markets as developers move out of Boston into areas where prices have more room to grow.

        A related factor is the appetite lenders have for real estate development loans. Although certain types of development (think multifamily housing) are seeing lessened interest from banks and other lenders, on the whole, competition remains strong among banks, insurance companies, and private equity funds to finance many real estate projects. For example, we have been involved in assisted living, rehabilitation, and other medical related projects in 2016, and both equity and debt are readily available to developers operating in those sectors.

        An additional source of capital for real estate developers remains EB-5 money. The EB-5 program provides a method for foreign nationals investing money in the U.S. to obtain a green card by investing $500,000 in a Targeted Employment Area (defined as an area of high unemployment or a rural area) or $1 million outside a Targeted Employment Area. The investment must create or preserve at least ten jobs for workers in the U.S.

        To date, we have seen many projects funded in part by money invested by foreign nationals. Political instability and the allure of a green card allowing permanent U.S. residency have been the major impetus behind the popularity of the EB-5 program. Many of these investors, especially in New England, are from China, Korea, and other Asian countries.

        However, as political and economic instability spread through events like Brexit, it is a very real possibility that the EB-5 program may become popular with investors from the United Kingdom, and perhaps, even elsewhere in Europe. Foreign investment in American real estate has risen dramatically over the last several years, and most analysts expect that to continue in 2017.

        Recent changes in American law also continue to stimulate foreign investment. The Protecting Americans from Tax Hikes Act of 2015 contained important modifications to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). The changes are foreign taxpayer-friendly. In particular, they reduce impediments for non-U.S. investors investing in U.S. real estate by allowing foreign investors to be treated similarly to U.S. taxpayers, which will likely lead to an increase in foreign investment in the American real estate market as well.

        Unexpected political and economic events can always arise that make a mockery of any prediction concerning the real estate market. However, barring such an unexpected event, the factors discussed above should lead to a positive commercial real estate market in New England during the next year. Whatever happens, it is sure to be interesting!