Canceled Listings – The Shadow Inventory

The Batterymarch Insider

Batterymarch Group LLC is a full service independent real estate brokerage firm specializing in the downtown Boston market. More about our services here. “The Batterymarch Insider” is a brief snapshot of our current market thinking. As always, our “terms of use” apply. We encourage you to subscribe.

In This Issue:

Canceled Listings – The Shadow Inventory

“In our experience, people don’t enter into selling agreements with brokers just for the fun of it – that’s like driving down 20 miles of bad road just for kicks and giggles.”

Property Spotlight – On the Market

Old Boston vs New Boston – Where is the Value?

We review and compare – a Back Bay triplex vs a Downtown high-rise.

“The prices are roughly the same, but these units and the lifestyles they afford couldn’t be more different”

Canceled Listings – The Shadow Inventory

Market data in real estate is far from transparent. It’s often difficult, or downright impossible, to get a clear picture on what’s really going on in the market. Like any analysis – garbage in, garbage out.

We recently pointed out that inventory at the high-end of the market was beginning to pile up. We highlighted that according to MLS, there were 68 Back Bay condominiums offered for sale in excess of $2.0 million.

A week later we gained two new listings (bringing the total to 70) and the number of available units dropped to 60. You may be saying to yourself, if ten of the 70 available units found buyers, isn’t that pretty good? Well, that’s not what happened.

Only two listings actually found buyers, the other eight listings were canceled. When listings are canceled it doesn’t mean that the sellers no longer want to sell them; to the contrary, they very much want to sell. These units drop out of the inventory data but they are still available for sale – they become “shadow inventory.”

It’s the Price, Stupid!

Canceling listings at the peak of the fall selling season really doesn’t make much sense. There’s no question that 7% mortgage rates have thrown a monkey wrench into the market, but demand hasn’t completely evaporated; in fact it’s actually stronger than you’d think.

Shadow inventory on the rise

The current demand is well illustrated over at 287 Commonwealth Ave, unit 4 which now has a contract. We recently highlighted the property and pointed out that “As we see it, at under $1,200/sf for a very nice unit in a premium building on Comm Ave with plenty of parking – it looks pretty compelling.”  The pricing of this unit was market correct and the seller got the desired result.

Sellers need to come to grips with the fact that they can’t expect to get 2021 prices today. Brokers need to come clean with their clients about valuation. The market will always clear at the right price.

We often hear listing agents say things like “these sellers don’t need to sell.” In our experience, people don’t enter into selling agreements with brokers just for the fun of it – that’s like driving down 20 miles of bad road just for kicks and giggles. The point is that they want to sell. The “they don’t need to sell”  bit is code for the price is way too high.

In light of the macro economic outlook, the glut of new developments hitting the market, and abundant shadow inventory – this maybe is as good as it gets for sellers for the foreseeable future. For buyers, don’t be fooled by the “low inventory” narrative.

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.

Old Boston vs New Boston – Where’s the Value?

We’ve been pretty vocal that a wave of brand new luxury condominiums is swamping the downtown Boston market (see “The 600 – Ready or Not, Here They Come!”). We’ve cautioned that this new supply will give the traditional luxury neighborhoods a run for their money and put a lid on values. This week we got two new listings that illustrate this phenomenon.

On the traditional side of the ledger is 212 Commonwealth Avenue, unit 2, which is located in the heart of the Back Bay. On the new development side is unit 6006 at Winthrop Center (240 Devonshire Street). The prices are roughly the same but these units and the lifestyles they afford couldn’t be more different. First here are the numbers.

The Locations

Winthrop Center, a mixed use development with 314 condominium units sitting above 750,000 square feet of office space, is wedged between Devonshire Street and Federal Street in the heart of the financial district. To say that this is an untraditional location for luxury condominiums is an understatement. The drawbacks to this location are obvious – the financial district is dead. Even if you assume that people will return to their offices on weekdays, walking around this area on a Saturday or Sunday feels like being in an eerie ghost town.

The advantages to the location include the close proximity to the Seaport, Downtown Crossing, and easy access to public transportation. It may take years for the developer, Millennium Partners, to sell all 314 units but we do expect the area will take on more of a residential feel over time. We’d also highlight that the Mayor just launched her Downtown revitalization initiative that has a heavy emphasis on additional downtown residential development.

212 Commonwealth is smack dab in the center of the Back Bay and just one block away from Newbury Street. 212 is not on the “sunny” side of Commonwealth, which is a strike against it. The knock on the non-sunny side of Commonwealth Avenue goes beyond sunlight. The rear alley on this side of Commonwealth is shared with Newbury Street, so you get a lot of commercial activity which can be a nuisance.

The Units

Being a brand new modern building, the Winthrop Center floor plans are very well thought out. Unit 6006 sits on the 60th floor and the glass curtain walls take full advantage of the views. The rooms are well proportioned and all three bedrooms have en-suite bathrooms.

Winthrop Center – Financial District

Winthrop Center is all about lifestyle, amenities, and service. You get valet parking, door attendant, 24 hour concierge, a 25,000 sf residents only club, the list goes on and on. You do pay for these amenities and some of them are kind of gimmicky – we have no idea what an “MIT-designed electromagnetic-free Earth Room” is, but it sounds interesting.

212 Commonwealth underwent an extensive renovation when the building was converted into two condominium units in 2019. Unit 2 is a penthouse triplex with direct elevator access, although the elevator only stops on the lower two floors.

The layout of the unit has the usual quirks that you’d expect from a Back Bay condominium conversion of a Victorian era home. With windows only on the front and rear of the building, the center 1/3 of these units typically has what architects refer to as “deep space” – interior space beyond the reach of direct sunlight (see “Deep Space – The Rockefeller 27 Foot Rule”).

It’s been a while since we were in the unit, but we recall that the height of the windows in the living room was awkwardly high. Only one of the guest bedrooms has an en-suite bathroom and both of these secondary bedrooms only have one window each. The two outdoor parking spaces are in the rear of the building off the alley.


At a macro level, we’re in the camp that sees downside to current real estate values. At the risk of sounding like a broken record, there is an inverse relationship between interest rates and asset values. Residential real estate isn’t immune to this basic rule of economics.

212 Commonwealth Ave – Back Bay

 212 Commonwealth unit 2 sold a little over a year ago for $7 million ($1,723/sf) after sitting on the market for what seemed like an eternity, so it’s a mulligan. The goal of most mulligan sellers is to get their money back, net after transaction expenses. Commission and transfer tax will run about $312,000, so this seller marked the price up a million dollars – presumably for some room to negotiate.

Unfortunately for this seller, the world changed in the last 12 months. Beyond the economic and geo-political issues, the supply of new luxury units has exploded. We see fair value between $6 million and $6.5 million – and getting that kind of money may feel like pushing rocks up hill.

Over at Winthrop Center you’re dealing with a national developer who will be very reluctant to break price this early in the marketing process (occupancy is expected early next year). They have 317 units to sell and loads of office space to lease, not easy under the best of conditions. If sales fall behind plan and the project lenders start getting itchy, we wouldn’t be surprised if the developer gets promotional.

$2,896/sf isn’t completely out of line when compared to other downtown new developments, but let’s be honest, this is Devonshire Street, it’s not the Four Seasons or a waterfront property. Having worked in the financial district for many years, it’s still hard to believe that living on Federal Street would be a thing, let alone a $2,900/sf thing.

Which Would We Choose?

If we had to choose between these two properties, we’d probably lean toward Winthrop Center. This may come as a surprise to our readers as we tend to favor traditional locations over new stock in offbeat locations. To get top dollar for traditional high-end Back Bay condominiums, the unit needs to be bang-on. By our way of thinking, 212 Commonwealth unit 2 is a bit of a miss, and the fact that it’s a mulligan raises a red flag.

Some may balk at the higher monthly fees and lack of outdoor space at Winthrop Center, but people shelling out nearly $8 million on an apartment generally want services and are happy to pay the fee. Unit 6006 has about 33% less living area, but we think that the modern layout, high ceilings, large windows, and single floor living win out over a larger triplex. 

Unit 6006 at 240 Devonshire Street is offered by MP Boston Marketing LLC. Unit 2 at 212 Commonwealth Ave is offered by Coldwell Banker.


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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