W Hotel & Condos: Boston vs Austin

Boston is not the only city that the W Hotel & Condo Development calls home.  While the Boston W Condos brought new flair to the Boston skyline with a 28-story glass and steel structure, those in Austin, Texas saw a similar phenomenon.  So which hotel and condo development is better?

Similar to the Boston W offering an upscale new restaurant called Market, the Austin W boasts a similar swanky eatery called Trace.

Both hotel and condo developments sport a modern look and feel with loads of glass, however, the Austin W Residences boast individual outdoor living space in some units whereas Boston does not.  You be the judge, is it the Boston W Residences or Austin W Residences that catches your eye?

Boston W Hotel & ResidencesAustin W Hotel & Residences

W Hotel Condo Window Safety Issues

In mid-June of this year, several people were treated for cuts and scrapes after two glass window panes fell from the Austin W Hotel and Condos.  Austin Police stated that two window panes fell from a 24th story window onto the pool deck of the complex.

Not long before the Austin debacle, the Atlanta W Hotel experienced tragedy when two friends crashed through a seventh-story window, one falling to their death.  .

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)

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

Ultra Luxury Condo Sales Velocity Low

As the nation continues to rebound from recession, it is perhaps no great surprise that Boston’s three latest ultra luxury condo developments, 45 Province, the Clarendon Back Bay, and the Boston W Hotel & Condos, are struggling to drive sales velocity.  No condominium developer has a crystal ball, but those behind 45 Province, the Clarendon Back Bay, and the Boston W Hotel & Condos entered the market during an inopportune time in the natural ebb and flow of real estate cycles.  While overbuilding in Boston proper is not the culprit, vacancy is, with paltry building percentage sold numbers, almost all of which under 10%, facing the three developments that have arguably set a new baseline for luxury living in downtown Boston and have been a positive addition to the neighborhoods they occupy.

Aside from Atlantic Wharf (formerly Russia Wharf), a Boston Properties development that is scheduled to come online sometime in 2011, that carries with it some projected residential component, large-scale condo development in downtown Boston is halted.  The inherent goal of the underlying real estate cycle is to now consume the available inventory in the market, and financiers and developers, of a certain size, will theoretically not re-enter Boston until they see vacancy levels significantly drop.

While 45 Province, the Clarendon Back Bay, and the Boston W Hotel & Condos have all been marketed for more than a year, the Clarendon and W Boston only recently received their certificate of occupancy and opened to residents, and thus, 45 Province has had somewhat of a head start on its rivals, yet, the percentage of units sold in each building (according to LINK, one of two Boston MLS systems) struggles to break 10%.  The current statistics for the three luxury condo developments include:

45 Province
Condos Sold: 15
Average Sales Price: $1,501,817
Median Sales Price: $1,304,000
Average Price per Square Foot: $1,008
Percentage of Building Sold: 15 / 138 = 11%

Clarendon Back Bay
Condos Sold: 9
Average Sales Price: $1,131,333
Median Sales Price: $1,060,000
Average Price per Square Foot: $1,063
Percentage of Building Sold: 9 / 103 = 9%

Boston W Hotel & Condos
Condos Sold: 8
Average Sales Price: $581,250
Median Sales Price: $560,000
Average Price per Square Foot: $807
Percentage of Building Sold: 8 / 123 = 7%

These three titans of luxury living face different challenges than other recently built large-scale Boston condo developments.  Take the Macallen Building, Boston’s first large-scale 140-unit LEED certified (green) condo development, located in South Boston, which had a relatively slow absorption rate given its price point and unique characteristics.  45 Province, the Clarendon Back Bay, and the Boston W Hotel & Condos face a different challenge than educating buyers on the merits of green living and why a South Boston development warrants a relatively high price point, instead, the baseline of luxury living is tangling with the economy and overall consumer confidence, regardless of price point, and regardless of how insulated downtown Boston is to pan-US economic conditions, it will simply take time to make significant strides forward in occupancy or building percentage sold rates.

45 Province Boston Condos

Clarendon Back Bay Condos

W Boston Condos

New Ultra Luxury Baseline

After several years of construction, and a redefining of multiple blocks of downtown Boston, both the Boston W Condos and the Clarendon Back Bay began closing on units located on lower floors of each building earlier this month.  The W and Clarendon join the Mandarin Oriental, 45 Province, and Battery Wharf as the newest flock of ultra-luxury large scale Boston condominium developments that were delivered in late 2008 and 2009.

Sales figures for both the W Boston and Clarendon Back Bay have been kept relatively quiet during pre-construction and finishing, and as time unfolds and the registry of deeds is updated, Bostonians will begin to see what price points are being paid to inhabit Boston’s latest luxury living accommodations.

What can be seen thus far, with approximately 5 units in each development being recorded as sold, is that average price points at a price per square foot level in the W and Clarendon at $820 and $990 respectively are significantly lower than the Mandarin Oriental fetched, and well off the average of units currently advertised in each building of $1,090 and $1,150 respectively.

Comparing early sales with other fully sold out buildings (such as the Mandarin) or other currently available units in the same building, may not be a fair comparison given that the majority of units recorded in each building thus far have been on lower floors of each development.  It has been relatively standard that prices typically rise $15K-$20K per floor as you climb towards the penthouse of a large-scale condo development.

With the sudden boost in market closing activity due to closings at the W Boston and Clarendon Back Bay during December 2009, and further closings expected during January, those watching statistics of the Boston condo market over the next several months should look at the numbers knowing that averages can be significantly and easily impacted by injecting just a few high-end price points into a sample.

Boston W Hotel to Open This Week

Later this week, on Thursday, October 29, 2009, a long awaited opening event will take place at the Boston W Hotel.  The opening, however, could be characterized as a “soft” opening versus a “grand” opening because there is still work to be done on the building.

The Hotel will open its doors, yet, the Bliss Spa, standard fare at the luxury W brand, as well as the signature bar and nightclub to be called Descent, are not scheduled to open until the spring of 2010.  Hotel management will hold an official “grand” opening event once those amenities are fully operational.

Sawyer Enterprises, the developer behind the Boston W Hotel, has not yet fully built out the signature spa and showcase lounge because it does not currently have $10.4 million in capital to go forward with the construction.  Sawyer is in negotiations with the City of Boston to obtain the additional financing to finish off the hotel, yet the City appears to be apprehensive to extend the financing because Sawyer’s collateral for the funds is the building itself, which has already been extended as collateral to other financiers.

The W will attempt to charge an average room rate of approximately $300 per night, a figure higher than other Boston luxury hotels are securing during times of peak demand.  The 123 luxury residential condos on the upper floors of the building are currently still scheduled for a phased opening in the late 2009 or early 2010 timeframe.

W Boston Goes from Big Hole to Shiny Facade

It was just over a year and a half ago that 100 Stuart Street was a large hole, the soon to be site of the Boston W Hotel & Condos (see Boston W Hotel & Condos Construction Photos).  Previously an open-air single-level parking lot that served Boston’s Theatre District, the site had been slated for the development of a hotel and luxury condos for years – the Boston Redevelopment Authority (BRA) originally approved the proposed hotel in June of 2001, then known as the Loews Hotel Project.

Boston W Hotel Construction Site - January 2008

It was less than a year later on October 24, 2008 that the W Boston put the final piece of steel in place and the development “topped off”.  The development is now quickly approaching the October 2009 launch of the hotel, and Buyers are anticipating the opening of condos late this year and early 2010 in the multiple-phased rollout of luxury condos.  The Boston W is a $200 million mixed-use project, which includes a 235-room hotel, 123 residential condos, retail, restaurant and spa use, and 142 underground parking spaces.  Condos at the W are currently price from $430,000 – $4,550,000.

Boston W Hotel Construction Site - July 2009

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.

Boston W Hotel & Condos Readying

The pedigree of Boston’s luxury condo-hotels began in the 1980s, with the launch of condos linked to the Ritz (now the Taj), Four Seasons, and Boston Harbor Hotel’s Residences at Rowes Wharf.

The Boston W Hotel & Condos was the last major condo construction project in Boston to be fully financed before the global economic downturn hit, and when it launches at the end of this year, it will be the final large-scale condo development that hits the market for the next 2-4 years,  With the mystique of the global W brand, it is one of the most highly anticipated projects the city has seen.

Some quick facts about the Boston W Hotel & Condo development being built at 100 Stuart Street in Boston’s Theatre District include:

  • The Hotel (on the lower floors of the building) is scheduled to open in the September / October 2009 timeframe.
  • Buyers will begin to move into the Boston W condos in approximately 5-6 months.
  • Condo openings will take place in two phases, with lower floors opening first, spread out over the December 2009 / January 2010 timeframe.
  • Percentage of units Under Agreement (including penthouses) is relatively strong, especially in light of the building being marketed for just six months.
  • Current preconstruction prices range approximately from $430,000 for a studio to $4,550,000 for one of the largest penthouses, with price per square foot ranging from $700 to $1,400 depending on floor level, unit type, and location within the building’s footprint.
  • Studio units and smaller one-bedrooms are not accompanied by a deeded parking space in the onsite underground garage.

Condos at the W will begin on the 16th floor, and top out at the 28th floor penthouse. The approximate 235 hotel rooms will be on lower floors, which garners condo residents preferential city views. Floors 16 through 27 will house 9 to 10 condos per floor, including an occasional 520 square foot studio unit, while the penthouse level will be home to 5 generously sized condos.

Interior condo buildout is presently underway, and customizations, including the combining of units, is being entertained – something that would be much more difficult (and costly) as the building is completed.

Boston W Hotel

W Hotel Boston Condo Photos

Exterior work at the Boston W Hotel & Condos mixed use development has shown great advances over the past several months, with the steel structure being topped off quite quickly. The glass and steel structure inserts a very unique feel to the area at the corners of Stuart and Tremont Streets (100 Stuart Street Boston, MA 02116 will be the development address), and continues on pace to be delivered to hotel guests and residents later this year.  Reservations are currently being taken for units, for planning purposes, overall price points will be similar to new full-service luxury buildings such as the Intercontinental ($900+ per square foot) and the Clarendon Back Bay ($1,100+ per square foot).  Condos at the W will begin on the 16th floor, and top out at the 28th floor penthouse. The approximate 235 hotel rooms will be on lower floors, garnering condo residents preferential city views. Floors 16 through 27 will house 9 to 10 units per floor, including an occasional 520 square foot studio unit, while the penthouse level will be home to 5 generously sized condos.

New exclusive photos of the Boston W development are below.

Boston W Hotel & Condos

Boston W Hotel & Condos Boston W Hotel & Condos

Boston W Hotel & Condos Looking up Tremont Street

Boston W Hotel & Condos and Wang Theater