12 Month Lockup? Just Say No!

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12 Month Lockup? Just Say No!

“It’s easy to dismiss lockup periods when you genuinely have no intention to turn around and sell the property, but that’s not always how life works.”

Property Spotlight – On the Market

  • 54 Commonwealth Ave., unit 3/4 – Good Unit, Great Building, Amazing Location – Offered at $8.9 Million ($2,271/sf)

Well Bought/Well Sold

  • 1 Avery St., unit 17B – Deep Value at the New Old Ritz – Well Bought

12 Month Lockup? Just Say No!

Ok, so you’re pulling the trigger on a brand spanking new condominium of your dreams in the Boston luxury corridor. You know that the price is insane, but what the heck, you’re just going to hold your nose and do it – this is about lifestyle! You even have the new furniture picked out in your mind, all you need to do is write a check and get the keys.

Then you get the call from your closing lawyer who tells you “I looked over the deed and I just want to make sure that you are aware that there is a clause in the deed that prevents you from reselling the unit for 12 months, or, if the planets and stars line up, maybe sooner.” “Oh yeah” you respond, “they mentioned something about that when we put our offer in, don’t worry, this is our forever home.”

Developers will tell you that these deed restrictions are good for the unit owners because it keeps speculators out – that’s pure nonsense. First, speculators generally try to hold investments for at least 12 months to avoid a short-term capital gains tax. Second, notwithstanding the lockup, these buildings are loaded with speculators.

It’s easy to dismiss lockup periods when you genuinely have no intention to turn around and sell the property, but that’s not always how life works. We’re constantly amazed at the number of people who buy a property and then, for whatever reason, quickly put it back up for sale. We tongue and cheek refer to these as mulligans.

Everything is negotiable in real estate, and the 12-month lockup is no exception. This is illustrated at 1 Dalton where most of the original unit deeds provide for a 12-month lockup, but not all. The developer sold unit 4703 last June for $7.85 million, and that deed provided for only a 90-day lockup. The buyer of that unit put it on the market (together with an adjoining unit they owned) late last year for an ambitious $8.2 million. 

When developers insist on a 12-month lockup, it underscores their lack of confidence in their ability to sell their project and to an extent they transfer their marketing risk to their customers. We can live with a 90-day lockup, but beyond that – hard no. Let your feet do the talking. You’ll be amazed at how flexible developers can suddenly become.

Property Spotlight

Batterymarch Group is focused on buyer representation, so the highlighted listings are not ours. These are our opinions, so take them with a grain of salt. We’re happy to set up showings of these properties, offer our valuation analysis, and assist with preliminary renovation budgets when needed.

54 Commonwealth Ave., unit 3/4 – Good Unit, Great Building, Amazing Location – Offered at $8.9 Million ($2,271/sf)

DOM – 15, Taxes $51,304/year, Monthly Condominium Fee – $3,170

Unit 3/4 at 54 Commonwealth Ave., a 3,919 square foot 4-bedroom mid-building duplex is back on the market. The seller is now looking to get $8.9 million ($2,271/sf) for the apartment, about 6% below last spring’s asking price of $9.5 million.

54 Commonwealth Ave – Back Bay

54 Commonwealth was built in 1986 making it one of the only “newer” construction properties on Commonwealth Avenue. Prior to 1986, this was an open-air parking lot. The magic of 54 Commonwealth is how it fits seamlessly into the neighborhood, and the credit for that goes to the architect and co-developer Patrick Ahearn.

Patrick Ahearn is best known for designing and restoring stately classic homes – architectural eye candy – but his professional roots lie in Boston. Ahearn incorporated into this design what he calls a New York style sunken entrance as well as a parking garage in the rear (this unit comes with two garage spaces and one in the alley). There are many advantages to well designed newer buildings that may not be obvious. As example, the concrete slab on metal deck floors can go a long way to reduce noise transmission between units.

This unit, which is a combination of two units, is spacious with well-proportioned rooms. Being on the shady side of Commonwealth, the rear alley is shared with Newbury Street so expect more commercial activity. We have not been inside the unit, but it appears that the current owners opted for marble flooring throughout and that may limit the appeal of the unit.

With nearly 4,000 square feet in a prime Back Bay location and a great parking situation, what’s not to love? The floors. We doubt that wall-to-wall marble floors would get the Patrick Ahearn seal of approval. Swapping out the marble floors for more traditional wood flooring would be an expensive job (and your new neighbors will hate you). We think that changing flooring would have a dramatic effect and it would be well worth the aggravation. We’d peg fair value somewhere south of $2,000/sf.

Unit 3/4 at 54 Commonwealth Avenue is offered by Compass.

Well Bought/Well Sold

1 Avery St., unit 17B – Deep Value at the New Old Ritz – Well Bought

It took an eternity, but unit 17B at 1 Avery Street has a new owner. The final sale price of this 1,862 square foot three bedroom unit came in at $1.75 million ($939/sf). Net after fees the seller took a 22% hit from the price they paid for the unit in the summer of 2019 – ouch.

Boston Theater District
1 Avery Street

If you’re in the market for a true 3 bedroom unit, these “B” units at 1 Avery represent great value. An advantage to being in an older building is that developers were more generous with the square footage and the proportions of the units are appealing. Being on the 17th floor, this unit has reasonably good views, although you do get surrounding roof tops in your viewshed.

So, what’s going on here? New construction is fetching $2,000 – $3,000 a foot and they can’t seem to give these units away.

Fees – There’s a perception in the market that the fees are high on Avery Street. To some extent, that is true. But when compared to other true full “hotel service” buildings, the fees are actually in line. If you’re comparing to a newer full service building, the fees may be appear higher but that’s more of a function of artificially low fees during the marketing period.

Location – The deterioration of Downtown Crossing hasn’t helped values and the area has a more urban feel compared to Beacon Hill, Back Bay, and even the Seaport – it is the old Combat Zone after all. As we see it, being centrally located with access to good green space  (the Boston Common) and public transportation, the location is a plus.

Amenities – Amenities in new buildings are more of a sales gimmick. The thought of bringing a platter of marinated chicken on an elevator and waiting in line to use a community grill just isn’t very appealing, and resident only dining facilities went out with the Edwardian era. The Avery Street towers predate the current trend of packing buildings with amenities, but you can buy a membership at the Avery Street Equinox.

The New Ritz? – With a new Ritz Carlton branded condominium tower going up over South Station, will the moniker of living at “the old Ritz” impair the values on Avery Street? We think not. We fail to see the appeal of living over a train/bus terminal, and we see the South Station area as no man’s land – it’s a fringe location. It should however be recognized that the Ritz towers on Avery Street are getting close to 25 years old and showing their age.

Under $1,000/sf in a true full-service building is a compelling value in this market. The Avery Street Ritz towers may not be perfect but knowing that you saved $1,500 – $2,000/sf will make any imperfections seem trivial. This unit was – Well Bought.


About Batterymarch Group LLC – Batterymarch Group is an independent full service real estate brokerage and advisory firm focused on the downtown Boston high-end residential market. We represent both sellers and buyers with a sharp focus on valuation. We also offer sub-advisory and owner’s representation services to financial institutions, family offices, and trustees.

About Andrew Haigney – A 25-year Wall Street veteran, Andrew held senior positions at leading global investment banking institutions where he routinely valued and negotiated complex securities transactions on behalf of institutional clients. Andrew has been an outspoken advocate of a universal fiduciary standard. In founding Batterymarch Group, Andrew brings that same discipline and passion to real estate brokerage.

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