As the spring selling season swings into full gear, all eyes are on Boston’s newest luxury condominium towers. The Clarendon and 45 Province (along with the W Boston, which remains partially under construction) aren’t just barometers for the overall market.
Industry watchers are keeping tabs on sales velocity and pricing performance in the new residential towers because of the intense financial pressures on projects like these opening their doors at the market’s bottom.
Together, the Clarendon, 45 Province, and the W are carrying roughly $485 million in construction debt. Nationwide, construction debt has done tremendous damage to lenders’ balance sheets. Helaba, the German lender holding the $120 million note on 45 Province, has already seized one high-profile area project through foreclosure.
Clear winners and losers are already beginning to emerge. The Clarendon has been open for a fraction of the time 45 Province has, and already, it’s more than twice as full.
Sales have been brisk at the Clarendon, the 33-story, 103-unit Back Bay tower built by New York’s Related Cos. and Hub developers Beal Cos. The project’s marketing and sales team, Related Sales, has closed 27 sales since December, an average of more than six per month.
Twenty of the 27 units sold for more than $1 million, including one unit sold in March for $4.75 million. According to data from The Warren Group, publisher of Banker & Tradesman, it was the first condominium in Boston to reach that price point in 2010, and one of only five since the beginning of last year. Two other sales flirted with the $4 million mark. Closings have routinely eclipsed $1000 per-square-foot.
The Clarendon has benefited from its boldface-name architect, Robert A.M. Stern, and from its in-house restaurant, Post 390. Kimberly Sherman Stamler, a vice president at Related, called its location at the corner of Clarendon and Stuart “the best in Boston for a luxury residential high-rise.” The tower sits nose-to-nose with the John Hancock Tower, and most units boast 360-degree views.
Stamler added that the pace of activity has accelerated since construction on the building wrapped up, and the sales team has moved into the finished tower.
“Buyers always like to be able to feel their product, and now they’re walking into finished building,” she said.
It’s a different story across town, at the Abbey Group’s 38-story, 138-unit 45 Province tower. The Abbey Group cut the ribbon to the Downtown Crossing building last June to much fanfare, but sales quickly fell off a cliff.
Buyers closed on four units last May and another nine units in June. Since the start of last July, though, the Abbey Group has closed on just three sales. The last sale recorded with the Registry of Deeds closed in January, and carried a price tag of $432,000.
Between Jan. 1 and April 16, 96 $1 million-plus sales have closed in Boston, according to the Boston real estate firm Otis & Ahearn. But 45 Province hasn’t closed a $1 million sale since last June.
At the June ribbon-cutting, Abbey Group President and COO David Epstein said his team had sold 20 percent of the tower’s units. But 10 months after the ceremony, the developers have yet to close on 12 percent of the units. The Abbey Group has closed on roughly $23 million in sales to date and is carrying a $120 million construction loan.
“We are encouraged and optimistic with the influx of qualified and serious buyers that we have seen entering the spring selling season,” said Matt Watkins, a spokesman for Abbey Group. “With current sales in the pipeline, the development is nearly 15 percent sold. Our confidence in the city and enthusiasm for our product is unwavering.”
Downtown broker John Ford, of Ford Realty, blamed the development’s struggles on the Filene’s pit that’s a block down the street, and on pricing.
“The Hynes [Filene’s] fiasco has really impacted them,” Ford argued. “It’s been a major blight on sales. Right now, Washington Street is just cell phone shops and junk food. If the Hynes development had taken hold, it would’ve really brought up the street, and the area.”
Ford was quick to call 45 Province “a great product” that has “some of the best views in Boston.” But, he added, the project’s sales team has earned a reputation for inflexibility on pricing. Faced with a steep price tag, most buyers have steered clear of a project that city planners had hoped would invigorate Downtown Crossing.
Related hasn’t budged from its pricing at the Clarendon, either, and they’ve found a pool of buyers more than willing to pay well in excess of $1000 per-square-foot. The difference, Ford said, is that one project has the location and amenities to justify its price tag, and the other doesn’t.
Kevin Ahearn, president of Otis & Ahearn, said condominium sales citywide are bouncing back after a weak 2009.
“Activity is up, transactions are up, and the value of sales is up 55 percent from last year,” Ahearn said. “There’s been a big pickup in activity, and it’s been broadly based, at all price points, including the high-end.”
Otis & Ahearn is marketing the residences at the W, which lies down Stuart Street from the Clarendon. Ahearn said 30 units at the building, with an aggregate sales value of $33 million, have either been sold or placed under agreement. Construction activity continues on the building’s upper floors, preventing those units from closing.
