Boston’s Building Spree Continues

Anyone who lives in or visits Boston can’t help but notice one thing: almost every corner seems under construction. With cranes and work-in-progress steel structures seemingly everywhere that you look, the city is teeming with development.

A recent story in The Boston Globe reported that Boston’s current “building spree” has become historic, stating that its “enormity, pace, and geographic sweep are redefining the skyline faster than any period since the early Industrial Age.” The article identifies the Seaport District, the South End, North Station, and Dudley Square as neighborhoods that are experiencing some of the most rapid transformation.

Boston real estate agent David Bates recently referred to these sweeping changes as the “Boston real estate Kool-Aid,” noting that Boston real estate is undergoing a renaissance period. “Companies are coming, people are coming, families are staying and innovators are innovating,” Bates wrote in Curbed.

Here are some recent stats that reveal just how much Boston’s population, housing market, and businesses are on the rise:

  • In 2014, World Population Review reported that Boston’s population rose nearly 2% (adding nearly 30,000 people to reach about 646,000) in 2013 from its last recorded population in 2010—more growth than the city experienced in the eighties and nineties combined.
  • The Greater Boston area is home to around 4.5 million people, which makes it the 10th-largest metro area in the U.S.
  • At the end of 2014, 14.6 million square feet of new buildings were on the rise across the city of Boston.
  • Boston is gradually developing a taller skyline with five proposed towers of more than 600 feet, defying a 19th-century zoning code with height limits of 80-120 feet.
  • An unprecedented amount of new housing construction is underway in Boston, with 72 projects in progress, nearly 70% of which are residential buildings.
  • By 2018, about 8,000 new apartments are expected to be completed in Boston. This doubles the number built in large luxury buildings since the sixties.
  • The median selling price of condos rose to $619,000 in downtown Boston in 2014, up 12% over the previous year.
  • In the first 10 months of 2014, a survey conducted by Bates found that about 60% of Boston-based condos sold for at least their asking price, with buyers paying at least 1% above list price on close to half (43%) of these sales. One in five buyers surveyed paid at least 5% over the asking price, and one in 10 paid at least 10% over ask.
  • Foreign investment in commercial properties in Boston rose to $10.4 billion in 2014—more than doubling since 2013—ranking Boston sixth in the world in funds attracted from foreign sources.

Bates sums up how this total picture of Boston’s boom will affect real estate in 2015: “New neighborhoods will be created and old neighborhoods will be transformed; some commercial areas will become much more residential and some residential areas will become much more commercial. The skyline will grow and the infrastructure beneath will be improved. Retail, restaurants, pharmacies and supermarkets will arrive in their new city locations.” Boston Globe staff writer Casey Ross adds that “With our health care and academic institutions, we have a very compelling story to tell. I think we have a strong outlook for the next 10 years.”

More Housing Opportunities in Boston

Thinking about how to take advantage of this growing real estate market? You don’t have to decide today how you want to invest in Boston’s thriving real estate market. Get to know the city first! Start with short-term apartments in Boston and discover its most promising neighborhoods. Call Furnished Quarters at 800-255-8117 to learn more about your options.

W Hotel Boston Foreclosure

“The debtor has demonstrated no ability to mount a fresh sales campaign to rehabilitate its business or otherwise reorganize nor does it have any prospects for such reorganization on the horizon.”

Those are the words of Prudential Insurance Co., the main debt holder of the W Boston, and foreshadow their desire to foreclose on the Boston W Hotel and the developer behind it SW Boston Hotel Venture LLC, doing business as Sawyer Enterprises.

Sales velocity at the now-bankrupt W Boston has been slow, a trait not uncommon to other new luxury condo developments that were delivered during the US’ great recession (see Ultra Luxury Condo Sales Velocity Low). Prudential has been unimpressed, to say the least, with what Sawyer is doing about that trend.

Sawyer’s idea of renting out units in the high-end development located in the Theatre District of Boston appears to be laughable by Prudential. Much like the rough stigma of the neighborhood itself, which has arguably gotten better since the W broke ground, Prudential doesn’t want a transient rental base to taint a fresh product, leaving it difficult to ultimately sell.

Prudential Wants Their Money Back from Boston W

All of this foreshadows the ultimate goal of Prudential, which simply put, is to get their money back. Renting out a select set of units in the building may provide short term cash flow, but does little if anything to bolster Sawyer’s ability to make its balloon payment, and some would say, would ultimately detract from it.

Inevitably, if a significant cash infusion does not come quickly, the public is going to see another Boston condo auction. Should Prudential take back the deed to this property, they’ll have no desire to hold it, and will attempt to liquidate as quickly as possible. The few current owners in the building will, unfortunately, be stuck in the same position that those at Nouvelle at Natick have faced since they originally bought at high price per square foot values, only to see that price significantly diminished by an auction that was forced in the wake of the property developer’s bankruptcy proceedings.

Where is Otis & Ahearn in all of this? O&A being the exclusive sales and marketing firm that is responsible for selling the W Boston units into the market. They have had a relatively unblemished track record of selling out buildings across the downtown market, including a complete sell out of 285 Columbus Lofts, a development that sits on the border between the South End and the Back Bay, in quick order. Undoubtedly, if they continue on point with the project, buyers will see creative and fresh approaches to speeding up sales velocity.

City of Boston’s $10.5 Million Loan to Boston W Hotel

The City of Boston infused $10.5 million into the project during 2009 to ease completion, and almost regardless of where they stand in the debt stack where there are different classes of debt, called tranches, that public money will take a long time to return home.  However, there’s little debate that bringing the structure to market that replaced the former parking lot and hole in the ground, and new jobs, was a positive addition to the city of Boston, and depending on how the debt repayment goes, a good investment.

W Boston Hotel Construction (January 2009)

W Boston Hotel Completion (August 2009)

Four Ways to Make Bathrooms Greener

Going green, or eco-friendly, is more than just a passing trend in the real estate industry. Rather, it is the wave of the future and Boston condo developers and current owners alike are taking notice. In fact, a growing number of homebuyers are looking for homes with eco-friendly designs and construction. Therefore, if you are looking for a way to increase the value of your home, or if you are simply trying to reduce your carbon footprint, you might want to consider implementing these four ways to make your bathroom greener.

Tip #1: Improve Water Efficiency

One way to make your bathroom more eco-friendly is to replace the toilet with a low-flow model and to install low-flow showerheads. You might also want to look for bathroom appliances with the WaterSense label, as those appliances that earn this label must be 20% more water efficient than their less efficient counterparts while still performing as well or better than those without the WaterSense label.

Tip #2: Choose Green Construction Materials

When remodeling your bathroom, there are many green material options to select from. Not only will these options reduce your carbon footprint, but many are quite attractive as well. For example, recycled glass tiles look great in the shower and green flooring options such as linoleum made from natural raw materials and bamboo will add flare to the room. Products carrying eco-friendly labels such as Green Seal and EcoLogo are also good construction options.

Boston Condo Bathroom

Tip #3: Install an Exhaust Fan

Installing an exhaust fan is a great way to get the air moving in your bathroom. Not only will this help keep your bathroom fresh, exhaust fans also help remove dampness from the room. By keeping dampness at bay, you reduce the risk of developing mold. This, in turn, reduces the need for using environmentally harmful chemicals to get rid of the mold.

Tip #4: Install Eco-Friendly Shower Curtains

Display your eco-friendly mindset by doing away with PVC shower curtains and replacing them with a “green” option. Eco-friendly shower curtain material options include coated nylon, hemp, linen, and organic cotton

By taking these four simple steps, you will save energy, water and money in the long run.

About the Author: Brian Kinkade is a broker and team lead with Brokers Guild – Cherry Creek Ltd, one of Denver’s fastest growing full service Denver real estate firm. Brian’s team of Internet savvy agents service the Denver Metro area while specializing in Denver luxury homes, Colorado horse property and International sales. They invite you to visit their advanced real estate website today to search for homes, gather local information, and learn about Denver neighborhoods. Brian and his team are standing by and ready to assist with your home purchase, property sale or relocation needs.

Samuels & Associates Pitch New Fenway Developments

The Fenway neighborhood has always held a special place in the hearts of Bostonians. The smell of hot dog and peanut vendors, the nostalgia of the run down buildings and worn streets, a stroll on them is almost like taking a page from a history book. However, a local developer has a new vision for the Fenway, one that will affect Boston real estate drastically.

Samuels & Associates of Boston filed a letter of intent earlier this month for its plan of two mixed-use buildings in the Fenway neighborhood. If approved, the builders will be renovating 132 Brookline Avenue at the corner of Brookline Avenue and Kilmarnock Street, and another building at the corner of Boylston Street and Van Ness Street. The proposal calls for the Brookline Avenue location to hold 170 high end apartments and ground floor retail, and the Boylston / Van Ness location to house a 150-unit luxury apartment building with over 400,000 square feet of retail and office space included. They also plan to build a parking lot underground at the Van Ness location that would accommodate up to 500 parking spaces. Steven Samuels of Samuel & Associates has a vision to make the Fenway more similar to a neighborhood such as the Back Bay.

This wouldn’t be Samuels’s first venture into the Fenway. His company already owns 11 buildings in the area, including luxury apartments. According to Mayor Thomas M. Menino, “This is further proof that developers are still bullish on Boston”.

Boston is one of the nation’s oldest cities but developers with a new vision of these old streets are bringing new ideas and possible revenue to the city. Retailers such as Whole Foods and Target have also discussed moving into this up and coming neighborhood, part of a continued effort known as the Fenway Triangle development that has been evolving the Fenway neighborhood into a revitalized urban village.  Samuels believes that “What will make the Fenway great is good, consistent, pedestrian-friendly retail that becomes unbroken in effect”.

Fenway Triangle Development

Bostonians pride themselves on tradition, but the city does seem to be developing with the times. And according to this article, change can be a good thing. John F. Palmieri, director of the Boston Redevelopment Authority, released a statement concerning these changes and is quoted saying,“We’re excited that the Samuels & Associates team wants to redevelop these parcels as it will further enliven the district with a mix of uses ensuring a thriving 24-hour neighborhood”.

24 hour neighborhoods and trendy stores will certainly increase foot traffic for the Fenway area. As the economy and real estate market begins to pick up once again, these developers are giving new life to the Fenway district.

W Boston Condos Onsite Sales Center Opens

Recently, the W Boston Condos announced the opening of their on-site sales center that will welcome potential buyers to the newly opened 28-story iconic glass hotel and condo tower in Boston’s Theatre District.  What’s the significance of this?  Potential buyers will no longer need to visit the original sales center located in a low-rise office building on Newbury Street in Boston’s Back Bay, a far cry from the Theatre District, and ultimately, a situation that created a struggle for listing agency Otis & Ahearn to truly give clients an accurate feel for the luxe living experience of the W brand.

A sales center inside a development, rather than across town or down the street in a different structure, is something a condo developer wants as early in the development sales cycle as possible.  A condominium developer wants to have a model unit finished as quickly as possible so that they can help buyers envision their living experience for what it will actually be.  The trouble is, the construction process most oftentimes cannot accommodate the buildout of a complete unit in the midst of hard hat construction everywhere else.  And that said, marketing firms like Otis & Ahearn that are marketing the condos at the W are stuck trying to make the best of a situation, trying to sell a product with models and a showroom that aren’t entirely representative of the end product, and involves shuttling highly qualified buyers to the development site to do hard hat tours during specific hours of the day to not disrupt mainstream construction (arguably, the time constraints are more of a safety concern than anything else).

With the launch of the Boston W Condos on-site sales center, sales velocity at the ultra-luxury development, where units range in size and price from studios to three-bedrooms starting at $400,000 to over $4,000,000, should begin to accelerate.  According to LINK, one of the city’s two Boston MLS systems, only 11 of the 123 condos at the W have sold (9%).  With the addition of the on-site sales center presence, giving buyers the ability to touch and feel the real product and tour the building all under one roof, Sawyer Enterprises, the developer behind the hip new building, is poised to make a strong sales push in the summer of 2010.

W Boston Condos Opens Sales Center

Is City Truly Wise to Vornado's Roth Deliberately Stalling Filene’s?

It’s a small world, and you never know who is listening.  Steven Roth, the chairman of Vornado Realty Trust found this out first hand after experiencing a backlash from Boston Mayor Thomas Menino following comments made by Roth while at a business school in New York City that indirectly tipped his hand about Vornado’s planned course of action with the Filene’s Basement One Franklin Tower site, which is currently a large hole in the ground amongst tarp wrapped buildings.

Earlier in March, Roth, billionaire Vornado chairman and primary owner and co-developer of the Filene’s Basement site at Downtown Crossing, told a Columbia University audience that in the mid-’90s he purposely let the former Alexander’s department store construction site on Lexington Avenue in Manhattan sit vacant and become increasingly blighted for more than three years, despite complaints from city officials, in a grand plan to force the city’s hand to provide public money for site development.

“The more governments would want this redeveloped, the more help they would give us when the time came,” Roth is purported to have said. Mayor Menino and the City of Boston feel that the Filene’s site, which represents an anchor space in Boston’s Midtown Downtown Crossing neighborhood, is too important to sit vacant and blighted, and to be used as a bargaining chip. Menino is threatening Vornado’s Roth with a hardball eminent domain play that may force Roth’s hand or clear the way for a new developer’s entrance.

Filene's Basement Redevelopment at One Franklin

Steven Roth, Chairman, Vornado Realty Trust

Filene’s One Franklin Tower History

Vornado Realty Trust acquired the Filene’s Basement building in Downtown Crossing in July 2006 for $100 million after Federated Department Stores closed it. Filene’s Basement remained in operation at the site on a sublease until fall 2007, when the store was closed to make way for the $700 million mixed-use redevelopment of the site into a 38-story tower, including 1.2 million square feet encompassing office, condo, and hotel space. Filene’s Basement had expected to open a new store twice its previous size there (along with Target and Zara), in spring 2009 upon the project’s projected delivery. Vornado made its first Boston real estate acquisition in September 2005 with the $96 million purchase of the Boston Design Center in South Boston from the Davis Cos. The Filene’s Basement building purchase placed Vornado as landlord and co-developer with Gale International Realty.

On June 15, 2009, Syms Corp, in a joint venture with Vornado, won a second Filene’s Basement bankruptcy auction (the first involved Men’s Wearhouse rescinding their bid) at $62.4 million. On June 17th, a bankruptcy judge approved the sale, which included leases for 23 Filene’s Basement stores, its trade name, inventory and distribution center. This move gave Vornado a more overall strategic hold on Filene’s direction and holdings, however, the Filene’s Basement Downtown Crossing sublease was excluded from the Syms-Vornado joint acquisition, instead, Vornado took over control of the entire lease. Vornado entered into such a lease back for additional protection against $500,000 a month penalties that would be in place until the redevelopment project saw completion.

Filene's Basement Boston

Filene's Basement Boston

Steven Roth Upsets Boston Mayor Menino

On Wednesday, March 3, 2010, Steven Roth, chairman of Vornado Realty Trust, was the keynote speaker at a two-hour Columbia University Graduate School of Architecture, Planning and Preservation lecture called ‘The Real Estate CEO, Steven Roth’. During the lecture, the (New York City) Bloomberg LP tower at Lexington Avenue and 59th Street on the former Alexander’s department store site was discussed. It was purported that Roth spared little detail in explaining that, as site owner and developer, he had almost no basis in the (Bloomberg LP tower) land during the mid 1990s, and it was in his best interest to purposefully allow the building to become an increasing blight, to which the government would need to lend a helping hand in the form of subsidies and the like to spur redevelopment.

Less than a week after Roth’s Columbia appearance and comments, Boston Mayor Thomas Menino, onto Roth’s scent about the possible use of the same technique with the Filene’s Basement building, fired a letter to Roth, in which he called Roth’s alleged remarks “simply outrageous.” In Menino’s letter, he went on to say, “admitting that you embraced a deliberate policy of long-term blight, at a major commercial location in New York City, exhibits a callous disregard for the well-being of the city and its people. Blight kills jobs by destroying an area’s appeal to businesses and customers. It destroys a neighborhood’s residential appeal. It drives property values down, and it promotes crime. The notion that you would purposefully cause this to occur – not due to financing difficulties or other problems beyond your control, but as an intentional cynical ploy to extract concessions from the public sector – is inexcusable.”

Menino Threatens Vornado’s Roth with Eminent Domain

Responding to what he called a “consistent policy of indifference” and saying he won’t let the site “lay dormant,” Menino continued in his letter to Roth, “I am directing the Boston Redevelopment Authority to examine eminent domain options for the One Franklin Street site. I will also ask that the Authority re-evaluate the approvals it has already given this project. This development is too important to Downtown Crossing and to the entire city of Boston to be used as a bargaining chip to improve your bottom line.”

Eminent domain refers to the power possessed by the state over all property within the state, specifically its power to appropriate property for a public use.

Vornado has arguably spent millions of dollars, and almost 4 years trying to redevelop the Filene’s Basement site at Downtown Crossing into the One Franklin Tower development, and today, the site sits abandoned, a large excavated hole surrounded by the remaining site structures wrapped in white tarp and fencing with pictures of what should be to come.

Perhaps Steven Roth knew that Boston would be listening when he spoke at Columbia earlier this month. Perhaps it was a calculated decision to speak out in such a way, either as a mechanism to disengage from the property entirely, or, make an understated point to the City of Boston that he will need more explicit help if the project is to be completed. It could be argued that Roth would be happy to walk away from the Filene’s site via eminent domain, a police power that the state can execute on, but would involve Massachusetts “justly compensating” Vornado for the land.

Filene's Basement Redevelopment at One Franklin

Filene's Basement Redevelopment at One Franklin

Filene's Basement Redevelopment at One Franklin

One Franklin Tower Boston March 2010

One Franklin Tower Boston August 2008

City Says No to Harbor Garage Redevelopment

“The proposed project is at such wide variance from the applicable state and local permitting requirements currently in force that it simply cannot be constructed as currently designed.’’

That’s the response from Energy and Environmental Affairs Secretary Ian Bowles to Donald J. Chiofaro, founder of The Chiofaro Company, and his plan to redevelopment the parking garage that sits in between the Aquarium site and the Harbor Towers condo development.

Chiofaro’s proposal calls for a 560-foot office tower and a 690-foot residential tower, which would translate to 40 and 59 stories, respectively (see project mock up below from Kohn Pedersen Fox Architects). What’s the City of Boston willing to support? A 200 foot height limit, which is 45 feet higher than current zoning, but well below what Chiofaro needs.

The City versus Chiofaro turmoil was brought to a head at a March 18th Boston Redevelopment Authority (BRA) meeting that focused on development projects along the Rose Kennedy Greenway, following an indirect exchange between Chiofaro and Mayor Thomas M. Menino earlier that day. In the Boston Globe, Chiofaro put out a statement that “he will abandon his proposal to build two skyscrapers near the New England Aquarium unless city officials relax height restrictions and approve buildings tall enough to make the project economically viable”. Menino followed that with on air radio comments that the “Manhattanization” of Boston was not going to happen on his watch.

Let’s think back though, Chiofaro has been in this situation before, when in 1981, Chiofaro began his epic journey to redefine the Boston Harbor skyline with the construction of International Place. 46 and 35 stories in two towers, International Place stands as Boston’s largest office complex and has maintained its position as the city’s premier property since opening in 1987. Is Chiofaro up for another 6 year battle with the city?

Currently, the BRA has not scheduled a public meeting of the Impact Advisory Group for the Harbor Garage Redevelopment, and both Massport and the Federal Aviation Administration have formally expressed their concerns regarding the proposed heights of Chiofaro’s buildings, and both have requested that the heights be reduced.

Why do the buildings need to be so tall?  The project is simply not economically feasible otherwise claims Chiofaro. Simplistically, Chiofaro is stating to the City of Boston that he has the money, or will have the money, to fund construction and the economic development that comes with it, something the City may not be in desperate desire for, but still wants, but it must be done in a way that incentivizes Chiofaro to make it happen.

From an economic standpoint, current market indicators point to the fact that such a large-scale development could not be absorbed anyway. However, perhaps Chiofaro is factoring in the lengthy and uphill struggle that developers face in Boston, be it a roof deck or 50-story building, and the cycle of real estate development and the corresponding market fundamentals at the time of construction completion will come together to form a perfect storm, similar to what Chiofaro experienced with International Place.

Boston Harbor Garage Redevelopment

Downtown Residential Development Continues

Albeit smaller projects, and slowly, downtown Boston is still seeing the addition of residential condo inventory through new construction and redevelopment.  The Boston W was the last large-scale project to receive financing for construction, and while there has not been additional large-scale projects green-lighted for development in Boston pre-dating the recession, small-scale development is happening across various neighborhoods of downtown Boston.  Two examples include a South End redevelopment at 655 Tremont Street, and a new construction on an empty parking lot at the corner of Clarendon and Lawrence.

South End 655 Tremont Street

At the northwest corner of Tremont Street and W Brookline Street in the South End, 655 Tremont is a 10-unit redevelopment of an existing mixed-use building.  Construction began in 2009, and currently, one unit in the development has sold, and another is under agreement (according to MLSpin).

The development has pushed eco-friendly construction with eucalyptus floors throughout.  The units and building boast generous closets, deeded storage, a bike room, and a common roof deck.  Prices for the 1 bedroom 1 bathroom, 1 bedroom 1.5 bathroom, and 2 bedroom 1.5 bathroom units range from $424,900 – $779,900.

655 Tremont Street

Clarendon / Lawrence Parking Lot Development

Several blocks away from 655 Tremont Street, at the southeast corner of Clarendon and Lawrence Streets in the South End, a developer has taken a former parking lot, and is moving forward with a new construction building.  Such a project is reminiscent of 40 Worcester Street, also an empty South End corner lot until 2009 when a brand new 3-unit rowhouse was erected to fill the space.

Original Empty Parking Lot at Clarendon & Lawrence

Current Construction at Clarendon & Lawrence South End

W Hotel Boston to Create 200 Jobs

Earlier this week, in an effort to get ready for the currently planned late October opening of the W Hotel Boston, the Starwood brand hotel held a job fair, or as they call it, talent auditions.

The hotel portion of the 235 hotel room and 123 luxury condo development at the corner of Tremont and Stuart Streets is poised to open in several months, creating approximately 200 new jobs for the Theatre District of Boston.

Approximately 6,000 people have already applied for jobs at the hotel.  For more information on employment opportunities at the Boston W Hotel, visit the talent center at 660 Washington Street to apply for a position, or their career website.

Developers Consider Accelerated Marketing Plans

In light of my most recent conversations with various constituencies across the industry, I have identified 5 reasons condo developers should consider an accelerated marketing plan today, versus postponing to a future date.

  1. We are still in a declining market. A number of reports just came out today confirming this. To claim otherwise is to be simply whistling past the graveyard. IHS Global Insight of Lexington announced an expectation that prices will drop through 2009. The IMF downgraded its worldwide and US economic forecasts today for 2009 placing the US at a -2.8% decline for 2009. Home prices will not rise amid a deepening recession.
  2. There is still time. A proper campaign can still be mounted to liquidate inventory between now and the week of the 4th of July. The Boston real estate market goes on vacation in late July and August. Now is the time to sell while the market is active.
  3. Lenders are getting impatient. Many banks need to get their money off the street. Workout officers are pulling back from offering extensions. An accelerated marketing plan can be an attractive offer for negotiating with a lender. If you are a developer with a note coming due in the next 12 months act sooner rather than later. Lenders are very likely to cooperate in instances where it’s possible that they would otherwise own the project. Carrying and disposition costs for fractured or broken condo developments are unpleasant and unpredictable. In my travels and in speaking with special assets and workout groups I can tell you they are not expecting it to get better soon and they are getting impatient.
  4. If you’re going to be short, tis better to be less short sooner than more short later. There is more value in a project today than there is next quarter or next year, that is the nature of a declining market. If you’re forecasting that you’ll be short or close to it today, you’ll be really short next quarter and wicked short next year. Take the pain, pull off the band-aid with one quick swipe, don’t opt for the slow bleed.
  5. Certainty in this market ephemeral. If things aren’t going as well as you’d hoped wouldn’t it be nice to forecast a conclusion? You might actually be able to sleep at night if there was some reasonably firm date upon which you could be assured that the thing you fear has come pass.