Boston needs another luxury apartment tower like it needs another hole in the ground.
A bevy of new high-rises featuring all sorts of crazy rents, from $6,000-plus two bedrooms to penthouses for double or triple that, have risen up on street corners and old parking lots across Downtown Boston over the past few years.
But if there is one predictably bad thing about developers, they tend to be like lemmings, chasing the latest trend right over the financial cliff.
It happened with telecom hotels and then with multimillion-dollar condos – now it’s happening all over again with luxury apartment towers.
In fact, the competition for live bodies with fat wallets to fill all these cookie cutter towers is such that new projects like the Kensington are using the lure of “free rent” to lure prospective tenants.
“There could be a correction in the luxury apartment market this year,” notes John Ford of Ford Realty, a sage observer of the downtown Boston real estate market. “There are too many luxury apartments and I don’t see that changing in the near future.”
So far, Kensington’s offer of a free month’s rent is successful in so much as it is getting some tenants through the door. An earlier offer, which expired Dec. 31, offered six weeks free rent in exchange for signing a one-year lease, two months off for a two-year lease.
The 28-story rental tower opened last fall in Boston’s Theater District after years of construction delays that had left a big hole in the ground where the historic Gaiety Theater once stood.
Drumming Up Business
The 381-unit tower on Lower Washington Street, once ground zero of the Old Combat Zone and hard by Chinatown, is now half full, according to a spokesman.
“We are still doing one month free, on select units,” writes Roger Mecca, the project’s flak.
OK, I am taking the word “select” units to mean empty units, but maybe there is another, more nuanced meaning I am failing to grasp. “The offer has been successful and we are over 50 percent leased,” he noted.
Congrats, sounds like some phenomenal marketing at work here.
Nor is Kensington alone in having to give it away.
Charlestown’s Gatehouse 75 is offering a month’s free rent on some two-bedrooms, which go for a hefty $3,200, while Eleven West Broadway just wrapped up a free rent promotion at its even more expensive units, which top out at $4,375, Curbed Boston reported. One Back Bay will waive the security deposit if you agree to have your rent automatically debited from your account, the site notes.
Kensington faces a rising tide of apartment competition, including the newly opened Waterside Place across from the South Boston convention center, 315 on A over in Fort Point, and the new Victor by North Station.
And thousands of more overpriced rentals are on the way over the next few years.
Yet when some of Boston’s most exclusive rental addresses are forced to use free rent to differentiate themselves in the marketplace – a tactic more typically associated with hum drum garden apartments in the suburbs – it’s definitely a sign of a bigger problem.
Let’s face it. There are too many empty luxury digs out there competing for a limited pool of young professionals. And not only are they outrageously expensive, they are amazingly boring as well.
You can rent a studio at One Boston for just under $3,200 – what a deal – or the penthouse unit at Kensington for a whopping $11,000 a month.
Two-bedroom apartments renting for $6,000 or $7,000 a month – roughly median family income in Boston – don’t raise eyebrows anymore.
Nor are you getting a unique experience in exchange for pouring thousands upon thousands of dollars down the rental rat hole each month.
Each project boasts its lineup of amenities, but sorry, once you’ve seen one fitness center or pool, you have probably seen them all.
A Throwback?
Here’s something Kensington is calling the TechKnow center, where you can enjoy quality alone time with your computer. I did a double take, for it sounds like something straight out of the 1990s.
“Tucked away from the rest of the action in Club Kensington, the TechKnow center is outfitted with fully-equipped iMac® computers and a combined printer, copier, scanner,” the website ad copy reads.
“It’s the place to work or study or write the next great American novel.”
There’s also a perky little coffee shop called the Javasource. Then again, it looks like you are in charge of brewing it yourself, so maybe it’s just a faux coffee shop.
Meanwhile, over at 315 on A, the website is touting “stainless steel appliances” – big yawn – and “chef-quality meets every day routine”
The fact is, no matter how you dress it up, apartments are boring. Always have been and always will. The landlord is the owner, not you, and you are leasing some generic design set.
You want something special, then buy a condo or home and decorate it the way you want to. Try knocking down a wall in your rental and you’ll get evicted.
“It’s one boiler plate apartment versus another,” Ford notes.
So what happened? Rents soared and developers got greedy and a bit stupid as well, buying into the idea that there are legions of flush and footloose millennials just dying to blow thousands upon thousands a month for a tiny room or two, and, if you are lucky, some sort of view.
Rents shot up too fast and outran the market, with the average, Boston-area rent for a two bedroom shooting up more than 11 percent last summer and fall to just under $2,500, RentJungle reports.
No matter that the unemployment rate for those in their twenties and early thirties are heartbreakingly high, with the fortunate few that have top-paying jobs also likely to be stuck with killer student debt.
(Of course, it’s also very expensive to build anything in Boston, with one of the most extensive and costly city permitting regimes in the country.)
And you’ll have to search high and low to find any subsidized affordable units in some of these new, high-priced apartment buildings. Despite lots of hot air from City Hall during the Menino years about luxury projects being required to include a small contingent of homes for those of more modest means, the Kensington managed to evade that requirement by pledging $7 million towards a yet to be built affordable housing project in Chinatown.
Sadly, it’s a familiar story around Boston, compounding the problems created by the new wave of overpriced apartment towers.
Now, unless they can start converting some of these apartments into condos, which are actually in demand, it’s going to be bumpy few years for some of these apartment builders.
Ford, who specializes in high-end rentals and condos on Beacon Hill and the Back Bay, among other neighborhoods, is already seeing the shift.
There are just 11 condos for sale on Beacon Hill compared to about 30 apartments, according to Ford. And when the price starts getting above a couple grand, they are more likely than not to sit a while.
“They are building these high-rises that are just sitting there,” Ford said. “I wouldn’t call it a renters’ market, but you do have room to negotiate.”
Scott Van Voorhis can be reached at sbvanvoorhis@hotmail.com.
