Kevin Costner will be right about the condo market in about three years: if developers build them then, buyers will come.
At least, that’s the conventional wisdom among some developers and construction professionals. A number of condo developers are prepping projects on parcels in Boston and Cambridge – they just won’t build them for the next three to five years, according to industry experts.
At this point, most condo developers just don’t think the downtown market is quite ready for a glut of new homeownership opportunities.
“We’ve priced a number of condo projects out three to five years,” said John Moriarty, president of John Moriarty and Assoc. “But those are on perfect pieces of land in locations where [the developers] think will be ready for condos.”
Other sources told Banker & Tradesman that developers don’t want to be seen as foolhardy for being the first to “go condo” for fear of risking professional ridicule since the apartment market is about the hottest market going. Plus, there’s the fact that banks won’t actually lend on condo projects since homeownership took such a direct hit during the recession and residents have turned to renting rather than owning abodes.
Even so, there are condos in the pipeline. Hayward Place in Downtown Crossing is under construction and is slated for completion in 2013 with 256 residences, an approximately even mix of condos and apartments. Copley Place will include about 318 residences, including condos, when its 47-story tower is complete. And Joseph Fallon just announced he is moving forward to build 150 condos in the Seaport neighborhood of Boston after the Vertex lab and office space is complete.
‘People Will Come’
But at least one condo developer was able to secure condo financing during the recession. Roxbury-based Maple Hurst Builders is putting the finishing touches on a 13-unit condo project called Bartlett Square at the corner of Green and Amory streets in Jamaica Plain. Maple purchased the vacant, 11,160-square-foot lot from the MBTA five years ago. The firm has six condos under agreement and another four pending.
Maple struggled to secure financing for the condo project after so many other projects stalled due to the freefall of the capital markets, Chris DeSisto, Maple Hurst president, told Banker & Tradesman.
“Some of the lenders we had relationships with were no longer in the spec condo business, so they wouldn’t even entertain it,” DeSisto said. “Danversbank … [now People’s United Bank], they were willing to lend on it, and thus far have been great to work with. I was always confident that the area lent itself to a good project. What has been surprising is the interest we’ve had in the three-bedrooms and the more expensive units. But financing is tighter these days for people, so people with a history of ownership have an easier time buying housing over someone wanting a $360,000 loan for a one-and-a-half bedroom condo who hasn’t owned a home before. But it’s not 300 units that we’re trying to sell.”
The project also has three retail spaces on the ground floor. While they haven’t been leased yet, DeSisto has retained a commercial broker that just started marketing the retail portions and already there are about a dozen prospects. DeSisto said he is “certainly hoping for a café on the corner,” where there is space for patio seating and a 2,200-square-foot café or restaurant. The middle unit, at 750 square feet, would be ideal for an ice cream shop, he said. And the third space, about 1,200 square feet, could be a good home for an art gallery or yoga studio, DeSisto opined.
“Right now we’re trying to honor a commitment to try to find some local businesses to fill the spaces,” DeSisto added. “We want to add amenities to this part of the neighborhood and create some vibrancy at that corner. We want to avoid mobile phone stores.”
