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:
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.