In this issue:
- Market Update – Popular Delusions & the Madness of Crowds
- 80 Commonwealth Ave., unit PH – Roof Decks and Party Wall Windows – Bad Bedfellows
- 45 Temple Street (The Archer), unit PH1 – High Fees, But Fair Deal – Well Bought
What’s Catching Our Eye
Market Update – Popular Delusions & the Madness of Crowds
A day doesn’t go by when we’re not reading about the red hot real estate market. Low inventory, historically low interest rates, stock market at record highs, and an underlying FOMO mentality is driving real estate prices skyward. Having spent so many years on Wall Street, we’re naturally a bit wary of the madness of crowds. Do these buyers understand that they’re giving away the low interest rate benefits in costly bidding wars?
As in many urban areas, things are much different in Boston proper. Currently in the Back Bay, there are 131 condominium units offered for sale vs 75 a year ago (pre Covid lock down). The previous four year average for the first week in March is 70.25 units. The number of closed condominium sales last calendar year was down 24% from a year earlier.
Looking at city wide rental data, there are currently 3,696 rental units available vs 1,704 a year ago. Keep in mind that this does not include the vast inventory of large national landlords that have in house leasing. “Investor” landlords who rent out condominium units are learning that when the rent checks stop coming in, their real assets take on the characteristics of liabilities. We’re seeing more and more investor landlords capitulating and trying to sell their units, which is adding to our inventory woes.
If you want to get a sense of the amount of vacant, or underutilized condominium units, one only needs to walk around the Back Bay at 7:00 p.m. and notice all of the dark space, often entire buildings. While pricing is soft, it is holding up better than one would expect; we chalk that up to the positive cheerleader narrative coming out of the realtor community. There are good values in the market, but buyers need to resist getting caught up in the FOMO mania – it’s not a sellers’ market in Boston.
80 Commonwealth, PH – Roof Decks and Party Wall Windows, Bad Bedfellows
After almost 1,200 days on the market, seven price cuts, and two brokers it looks like the penthouse at 80 Commonwealth Avenue has an accepted offer. The most recent asking price was $5.999 million ($1,790/sf), a 23% discount to the original price of this 3,351 square foot, four bedroom, newly renovated triplex. We’d describe the finishes here as mid-point high end, nothing special. It’s one of those units that if you’ve been in one, you been in them all.
We had a client look at this unit early in the marketing saga and there was one element that was a total deal killer. The neighboring building (82 Commonwealth) has several party wall windows (the common wall that separates adjoining buildings) at the same level of the “private” roof deck, looking right over it. This developer came up with an ingenious solution. They installed metal louvered cladding on the party wall, covering the neighbor’s windows (images can be seen here). Problem solved? Maybe, but we would think that the neighbor must be very unhappy about having their windows blocked.
Since building heights vary, party walls often extend above the roofline, sometimes by several stories. Typically a condominium will own to the midpoint of the party wall and party wall agreements were generally put in place when the buildings were originally developed. When these party wall windows were added to 82 Commonwealth in the early 1960s, it wasn’t contemplated that future owners of the neighboring building would install a roof deck.
The take away here is that buyers should be on high alert for party wall issues, particularly with respect to windows and foundation issues. They should engage the services of an attorney early in the process to help them understand the legal implications
Well Bought/Well Sold
45 Temple (The Archer), unit PH1 – High Fees, But a Fair Deal – Well Bought
With the sale of penthouse unit 1 at 45 Temple Street in Beacon Hill last week, we lost a member of the $10 million + condo club. The final sale price came in at $8.75 million ($2,522/sf), a far cry from the $10.4 million asking price. This 3,469 square foot four bedroom unit has walk out private outdoor space and parking for two cars.
The Archer is a 62 unit residential conversion from the combination of two commercial properties that most recently were part of Suffolk University’s campus. It sits directly behind the State House on the north slope of the Hill. The amenities are exactly what you’d expect to attract luxury buyers – 24 hour concierge, pet spa, a club room, wellness center, etc.
Pros: New construction, single floor living, oversized windows, very good sunlight, private outdoor space, and two onsite parking spaces.
Cons: The location isn’t the most desirable Beacon Hill has to offer and condominium fees are on the high side.
The sale price was a 16% discount to the $10.4 million asking price, but we think that original price was more of a marketing gimmick than a realistic price, this just isn’t $3,000/sf space in our book. High condominium fees right out of the gate are a cause for concern for us, but we see this as a market correct transaction, we’re calling this one – Well Bought.