The Batterymarch Insider

“The Batterymarch Insider” is a brief snapshot of our current market thinking and some highlights of what we see going on in the downtown Boston market. As always, our “terms of use” apply. We encourage you to subscribe.

In this issue:

  • 37 Branch Street – “Quasi-Single Family” a Bit Too Quirky for Us
  • 73 Mount Vernon St., unit 1 – Garden & Parlors, a Dime a Dozen
  • 1 Franklin St., unit 3704 – Another Investor Loss at Millennium Tower – Well Sold

What’s Catching Our Eye

37 Branch Street – “Quasi-single family” a bit too quirky for us.

Branch Street – Beacon Hill

After 159 days on the market, the price of this newly renovated 3800 square foot four bedroom “quasi-single family” was chopped last week by over 9%; the asking price now stands at $4.995 million. Branch Street runs parallel to Beacon and Chestnut Streets, and is more or less a service road for the Beacon and Chestnut street facing properties.

37 Branch Street is an outbuilding of 52 Beacon Street. The developer is creating high end condominiums on the Beacon Street side, as well as this single family on the rear of the property. 37 Branch and 52 Beacon are connected via a ground level hallway and it’s our understanding that there will be some kind of homeowners’ association – hence a quasi-single family.

37 Branch St. (pre-renovation)

Pros: The finishes are high-end and seem well executed and we like the home automation. The walls of glass on the rear of the building and the two outdoor spaces are the real highlights. Not withstanding the quirky-ness of the street, it’s a great location.

Cons: As nice as the walls of glass are, to our taste they don’t make up for the small windows facing Branch Street. More concerning is the goldfish bowl effect of being close enough to 52 Beacon Street that you could carry on a conversation between the two buildings. The developer wisely installed automated black out shades, but we think they erred by not also installing privacy shades. Our other gripe is that you enter the building via the common hallway that connects the building to 52 Beacon Street. The presence of a sump pump in the finished lower level is also cause for concern.

At the right price this may be tempting. From our standpoint there are better options in this price range and we see liquidity issues with a resale down the road.

73 Mount Vernon, unit 1 – Garden & Parlor Condos, a Dime a Dozen.

73 Mount Vernon

Unit 1 at 73 Mount Vernon, a 3,082 square foot three bedroom lower level duplex was re-listed this week for $3.925 million ($1,273/sf). The sellers paid $3.45 million for the unit in June of 2019 and put it up for sale less than a year later for $4.295 million with no success.

In 2017, the building went through a top to bottom renovation as part of the conversion into condominiums. It took nearly two years to sell the last time around, which likely can be attributed to the fact that nearly half of your living area is below grade. It’s been a while since we were in the unit, but it appears that the current owners did make some improvements.

Pros: Great location, the buildings on this stretch of Mount Vernon are set back from the street which helps reduce sidewalk/street noise, and a recent mid-level renovation.

Cons: Basement living area, outdoor space doesn’t get great light, and valuation – these “garden & parlor” units are a dime a dozen.

Newish construction on this block of Mount Vernon Street for under $1,273/sf is definitely worth a look if you’re ok with below grade living area. There’s a relocation company in the picture on this one so perhaps an attractive deal could be had.

Well Bought/Well Sold

1 Franklin, unit 3704 (Millennium Tower) – Another investor takes a loss.

1 Franklin Street

Unit 3704 at 1 Franklin, a 2,096 square foot three bedroom on the 37th floor was bought new by an investor in 2016 for $3.875 million. After renting the unit out for a bit it was put up for sale in early 2018 for $4.395 million and didn’t find a buyer. It reappeared on the market last summer for $3.995 million and finally sold last week for $3.3 million ($1,574/sf).

After the standard brokerage fee, the loss here was about 20%. When you factor in carrying costs that loss gets closer to 30% (naturally the loss would be offset by any rent that was collected). According to public records, this investor flipped two other units in the building that paid off handsomely, so their Millennium Tower saga looks more like a wash.

Since we’re dealing with investors, it should be noted that had the $3.875 million been invested in an S&P 500 index fund, the investment would have grown to about $7.4 million in the same time period. So on a relative basis, this was a horrible investment.

Winthrop Center

We’re cautions about buying into these newer buildings (see our report “The Great Boston Building Boom”) and we think it’s fair to say that the Millennium Tower developer agrees with our sentiment. This summer they received approval to change their Winthrop Center development (two blocks away) from condominiums to rental apartments. When the market improves, the 321 apartments at Winthrop Center will likely be converted to condominiums creating a supply overhang in this area.

Regarding the valuation of unit 3704, while the views are amazing from the upper floors, we’re not overly impressed with the finishes and the Downtown Crossing area has been particularly hard hit by the pandemic. We think the investor did the right thing by taking the loss, this one was – Well Sold.

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