The auction that was scheduled for November 8, 2007 was postponed until February 1, 2008, and was rescheduled for March 1, 2008, however, according to Pesco (who is handling the sale), the sale did not go forward on this date.

We receive a stream of requests every day regarding Harborview, anywhere from how much rent will be, to when can I buy a condo.  At this point, everything is at a stand still.  It’s obviously a mystery as to why the current owner is “sitting on” an essentially completed property that could be recouping investment.  Stay tuned for more information.

It’s rather unfortunate that this development will sit vacant for 6 months.  We receive inquiries on this development daily, and Bostonians will now wait even longer to obtain clarity on how this development will actually proceed.  Based on where things currently stand, a pure rental development looks promising.

Why do we say inching? Well, the auction that will be take place on Thursday, November 8, 2007 at 11am is looking for a suitor of the entire development, not the individual condos themselves. The entire development still has to be sold off, and the new owner would then proceed with renting out, or perhaps even selling off, units. In other words, if you are a Buyer looking to acquire an individual Harborview condo at below market rates, do not show up to the auction. The development’s suitor needs to put down $1 million in a cashier’s check the day of the auction, with 10% forthcoming 10 days later.

Paul E Saperstein Co., the party who is handling the auction, is working on behalf of Riemer & Braunstein LLP, who is foreclosing upon Eurohypo AG, who apparently backed Trammell Crow (project developer) to get the work done for them. The mortgage of record is for approximately $95 million, so the auction should fetch somewhere in that area – it’s currently uncertain as to what the outstanding balance actually is, given construction loans and other financing more than likely obtained throughout the development process.

Will the Harborview condos ever be sold off to individual Buyers? The answer to that is more than likely, no, at least in the short term. At this point there has not been any condo documents filed. A new owner could potentially use the property for rental purposes or proceed to move forward in the documentation required for condos. It looks more realistic that Harborview will continue down its course of becoming a luxury rental property, eventually.

For further details, view the Harborview Auction Packet (6.7 MB PDF)

Essentially, Turner Construction is claiming that Trammel Crow, Harborview’s owner, did not have the money to pay Turner, and Trammel Crow misled Turner into finishing the job (to the tune of $10 million). Unfortunately, that which is surrounding the Harborview project continues to get worse.

The suit highlights the risks of building large-scale condominium projects in Greater Boston’s softening residential real estate market. The market’s turn has prompted some developers, particularly those with properties priced in the midrange, such as HarborView at the Navy Yard, to convert condominium projects into rentals or rethink building condominiums at all.

With mortgage markets tightening nationwide and local housing sales continuing their slowdown, we determined that the best direction for the project is to reposition the property as an upscale rental building,” said Joseph Torg, a principal with Trammell Crow Residential (the project’s lead developer), in a statement.

We spoke with the Sales Director at the Harborview sales office in mid-June, and we received the thumbs up that everything was progressing nicely, hard-hat tours were taking place with prospective clients, they were on track for a September 10, 2007 opening, and 20% of the units were under reservation. As of today, the sales office main phone number is no longer in service, and any and all mention of Harborview has been pulled from the Boston MLS.

Other recent Boston condo development projects with similar reservation levels around the 20% mark have not experienced the same”luxury rental fate” – take Penny Savings Bank for instance, which is well past its July opening, and still, only 6 of its 23 units are sold and there is no mention of changing course.

One of the significant difference between Harborview and other developments that are willing to stick it out in the current market is size (number of units). Harborview at the Navy Yard is a 224-unit monster of a development, nothing else that has hit the market over the past year (or let’s say after the “credit crunch” that is being stoked at every opportunity) compares to it.

However, larger Boston developments have thrived in the past several years, even those that are in Charlestown. The 2005-built Parris Landing, just a stone’s throw from Harborview, boasts 367 units – 21 resale units are on the market currently, ranging in price from $289,000 to $920,000. One Charles (Back Bay / Midtown area), with 232 units, built in 2004, currently has 8 resale units available priced between $795,000 and $2,395,000.

Ultimately, it’s a case of development size and market timing that has given Trammell Crow cold feet about moving forward with Harborview as a for-sale property. Simply put, they had little confidence that they could sell the 180 units that remained in a reasonable timeframe given their impression of the Boston (Charlestown) real estate market (or perhaps that is their real problem, they too have bought into the idea that city center condos are akin to residential suburbs and pan-US housing, which is wrong in theory and when looking at the numbers).

The fate of Harborview does, unfortunately, put into question upcoming “super” developments such as Avenir Boston and The Clarendon Back Bay, two large-scale projects with 241 and 400 residential units respectively, with construction already started, they are both poised to hit the market with occupancy by 2010.

You can lock in on anything from a studio to a duplex penthouse, anywhere from $359,000 to over $1 million, along with at least one parking spot in the four-level parking garage below Harborview, as well as a storage unit.

Here is a general look at what you will get for your money at Harborview Navy Yard (note that each type of unit has a +/- range of around 300 square feet given the number of bathrooms and the overall configuration):

• Studios (+/- 550 square feet) starting at $359,000
• One-bedrooms (+/- 700 square feet) starting at $409,000
• One-bedrooms plus a study (+/- 900 square feet) starting at $485,000
• Two-bedrooms (+/- 1,000 square feet) starting at $509,000
• Two-bedrooms plus a study (+/- 1,250 square feet) starting at $689,000
• Premier Units (+/- 2,000 square feet with exclusive placement) starting at $1,077,000

Contact us to learn more and setup a visit to the sales center, and an appointment to tour the development itself.