Cambridge Joins List of Boston’s Boomtowns

As reported in my last two posts on Fenway’s Boom and Boston’s Building Spree, “growth and development” is the name of the game in the city and surrounding areas. Cambridge is another hotspot that’s only getting hotter, fueled by the fact that the locale is the center of a statewide biotech boom.

“Cambridge has definitely benefited from the growing trend of high tech and biotech companies moving closer to the talent pools they want to recruit,” said Boston real estate agent David Bates. “There is significant development occurring in Cambridge right now to accommodate these companies.”

In August, Chemical & Engineering News called Boston “the hottest place on Earth for biotech,” noting that Cambridge is the epicenter of the action. Some facts behind this claim include:

  • Global pharma giant Pfizer announced in July that it will consolidate its operations in Cambridge to a 500,000 square-foot campus for about 1,000 employees in Kendall Square.
  • To create the Kendall Square research facility, Pfizer will be expanding its lease agreement with a subsidiary of the Massachusetts Institute of Technology (MIT).
  • Industry insiders gathered soon after Pfizer’s announcement at the RealShare Boston 2015 conference to discuss the expanding biotech real estate boom and how it will affect trends in the rest of the state.
  • Eli Lilly recently announced plans to establish a new drug delivery and device innovation center in Cambridge to enhance the global healthcare leader’s local presence and help attract top scientists and bio engineers. The Lilly Cambridge Innovation Center will be located in Kendall Square.
  • The influx of biotech firms into Cambridge has led to other companies being drawn into the area as well, including those that provide services to the tech industry.
  • The Worcester Business Journal Online reports that 15 of the top 20 global biotech/pharmaceutical companies are present in Massachusetts—but many are getting priced out of Cambridge and Kendall Square because of the competition for space.

With biotech becoming such big business, Cambridge’s growth is flourishing in other ways as well. The Cambridge City Council has been reviewing recommendations for the site of a potential 500-foot skyscraper in Kendall Square—which would be the first of such towers in the square, where the tallest building currently (the Department of Transportation’s Volpe Center ) stands 13 stories high.

Needless to say, along with Cambridge’s commercial growth comes residential growth. Bates noted that while median condo price points in Cambridge (2014: $580K) are tame compared to Back Bay, Midtown, and the South End, his research has shown that nearly three-quarters of Cambridge condos sold for more than the list price, and almost 20 percent of buyers paid at least 10 percent more than list. “The sparse inventory has sparked Cambridge buyers to go to extreme lengths to buy the homes they want in Cambridge,” said Bates. In 2013, Bates reported in Curbed on a buyer—rumored to be a billionaire—who famously paid more than a million dollars over the asking price to secure the Cambridge home he wanted.

Yet while Cambridge is the only Hub condo market to sell more than 1,000 condos in a year (1,041 in 2005), Bates noted that the number of Cambridge condo listings in recent years has been a “bust rather than a boom” due to inventory shortage. In the first seven months of 2015, Cambridge only sold 336 condos—around 20 condos fewer than it sold in the first seven months of 2014, a year in which only 661 Cambridge condos closed.

In his e-book Context 2015: 14 Hub Condo Markets, Bates reported that since 2011, median prices have increased nearly 40 percent in Cambridge. He also noted that the real estate market in Cambridge stands out for being “the most insane of all markets” when it comes to buyers paying substantially more than the asking price. In 2014, nearly 20 percent of buyers in Cambridge paid $50K over-ask. “As a result of the hysteria over newly listed condos, Cambridge brokers often hesitate to put out a full market price as the listing price and instead often opt for ‘restrained’ list prices that will provoke showings, offers, and extreme over-ask bids,” Bates wrote in his e-book.

As interest in the Cambridge area continues to surge, developers will increasingly cater to the preferences of their future residents. “Developers in this area typically use the mantra that residents want to live work and play in the same area,” said Bates. “For example, a lot of Cambridge residents use their bike as their main form of transportation. This might provoke a Davis Square BBQ restaurant to use a bike valet.”

From 2009-2014, the House Price Index (HPI) shows home prices for Cambridge saw a total appreciation of 10.6 percent. This hot market is not expected to fizzle any time soon. Real estate industry analysts predict the house price trend to continue its upward trajectory until at least the third quarter of 2017.

Cambridge Housing Opportunities

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Cambridge One First Condominiums

One of the most robust and architecturally unique condo developments that Boston has seen in some time is actually not in Boston, but just north, across the Charles River in (East) Cambridge.  The One First condominium development is composed of five (5) separate and distinct buildings tied together by a landscaped private courtyard.  A majority of the units are south-facing, which provides great light all day long, and the melding of different living styles, from duplexes to entire floors in one of the Otis Street buildings, makes One First living unique.

The way in which the development is laid out, its interconnectedness specifically, creates a community feel with individual spaces.  Residents are moments from Green Line T access at Lechmere station, and practically adjacent to the CambridgeSide Galleria shopping mall.

The main lobby of One First sits at 150 Cambridge Street.  While each of the five buildings has its own separate entrance and lobby with mail service, the 24/7 concierge operates out of the main lobby, and is intimately connected with the remainder of the development’s buildings.  Similar to Boston condo developments like One Charles, One First makes use of a rather new technology called Building Link.  Building Link is an Internet-based system that manages all day-to-day communications, record-keeping and task tracking between occupants, building staff and property managers in residential buildings.

Cambridge One First Condominiums

The One First development consists of 196 residences, as well as 4 commercial spaces.  Approximately 148 of the condos in the development have sold (76%), and two of the commercial spaces are leased.  The condo development is currently two unit sales away from the developer handing over control of the HOA to residents.

HOA fees are approximately $0.60 per square foot, and support amenities that are becoming standard in Boston, but not entirely ubiquitous, including wireless Internet in the common areas, a library and screening room for resident use, common roof deck adorned with approximately $58,000 of teak furniture, small fitness center, 24-hour concierge, garage parking, and a well maintained and landscaped set of grounds and common areas.  Perhaps the only thing lacking in the units themselves are a Washer / Dryer included, hookups are available in each unit, however.

Parking and additional storage are amenities that are expected and an added bonus respectively.  The One First parking garage boasts 180+ parking spaces, mainly in the underground elevator-served garage, as well as a handful of spaces in the north end of the courtyard.  The development also has 40 storage units that offer residents an additional refuge to store possessions (units themselves do have relatively ample storage capacity), however, given the ratio of condos to storage units, there is a long waiting list for an available storage unit.

One First Condos Interior

Two rather small items, but quite noticeable about this development, come in the elevators and the insulation in the units.  Elevators across all five buildings are sophisticated and classy, lighted well by small recessed lighting.  Insulation within units is excellent – even after intent listening, buses going by outside one of the units that line Cambridge Street are only faintly audible.

There’s a relatively low investor presence in the building as it relates to rentals, with approximately 10 units used for that purpose – a comforting ratio for both residents and potential Lenders in the building.  One First does boast unusually spacious floorplans for comparable developments, as the developer and sales staff opted to, in some units, knock down walls where a second, smaller, bedroom may have been in an effort to open up living space, creating more open and flowing floorplans.

One significant factor that One First has in its corner is that the condo development, despite Buyers still being able to purchase units that have never been occupied, is an established development.  One First is approximately 76% sold, and has a very strong owner-occupied percentage.  These are items that both Buyers and Lenders look for in dissipating fears that a building is going to turn into a rental property, and from a pure lending perspective, One First boasts the kind of statistics that open up the credit markets so financed transactions can occur.

There are currently 48 units for sale at One First, ranging in price from approximately $414,000 for a 663 square foot one-bedroom, to $965,000 for a spacious two-bedroom of 1,626 square feet.  Average price per square foot for units listed for sale in the Boston MLS is approximately $600.

One First Condos Kitchen

Cambridge One First Courtyard

Cambridge NorthPoint Fate Unclear

We receive at least one inquiry every week regarding the status of the mega Cambridge NorthPoint condos project across the river in Cambridge. The ups and downs of the Cambridge NorthPoint project over the past 2 years have been a roller coaster ride for Buyers and the market in general. Based on the most recent Boston Herald article covering the Cambridge NorthPoint project, the development itself is giving earnest money and deposits back to Buyers because there is no clear closing date in sight.

As of February 13, 2008, new updates are also available at Wicked Local Cambridge.