Developers of luxury condos are betting demand for upscale projects will keep going up

Construction costs are soaring. Real estate prices are dropping, and buyers are backing off. Sounds like a great time to build a super-expensive condominium project, right?

"We think residential prices are going to explode with a vengeance," said Robert Epstein, chief executive of the Abbey Group, which this month broke ground on a luxury condo tower on Province Street in downtown Boston, and is marketing the units at pre occupancy prices of the $700,000s to about $2.6 million.

"A lot of people who are balking at filling their housing needs may be very sorry," Epstein said.

Is this just the optimistic chirping of a developer trying to make money on a $175 million project? After all, the numbers would suggest a more cautious outlook.

Prices for condos in downtown Boston were down 6.9 percent in the third quarter of this year compared to a year ago, and the total number of sales is off by 19.7 percent, according to the Listing Information Service, or LINK, which compiles data from brokers.

Even more telling is that in the market for residential condos priced $1 million and more, sales are down 21 percent in the quarter so far this year, to 265, from 338 in the same quarter last year.

Some luxury condo developers have had to cut prices or resort to unusual tactics, such as the auction the owners of Folio on Broad Street held recently to unload units.

But market watchers and industry officials said Epstein and other developers of luxury condo buildings have sound reasons for being bullish. The luxury condo market, targeted toward very wealthy people, seems less susceptible to cycles that sweep through the regular housing sector.

Broker Kevin Ahearn of Otis & Ahearn, perhaps Boston's biggest residential market cheerleader, acknowledged that 2006 is "off a little bit" from the two previous, record years. But in the next breath added: "Except at the high end, which continues to expand."

For one thing, there are fewer available units. Inventories of condominiums in Boston are at a relatively low five-month supply, compared to a full year's supply of single-family homes in the suburbs, he said.

Ahearn's analysis of available data indicates 2006 will see 82 sales of residential units at $1,000 a square foot or more. While down from the 93 such sales in 2005, that still compares favorably to 61 in 2004, and only 37 in 2003. (The median price per square foot of a condo in Boston proper is now about $544.)

"You could look at this and say, 'Is the market failing? Has the bubble burst?' " said Debra Taylor Blair, president of LINK. "The bigger picture is, yes, the market is down -- however it's down from an all-time high. It's down from something that's unsustainable."

Abbey Group is marketing units at 45 Province St. at an average of $900 a square foot. At Battery Wharf in the North End, half the 100 luxury condominiums have sold for an average of $1,250 per square foot, according to sales manager David Theran.

Moreover, the Residences at the InterContinental, at 500 Atlantic Ave., are currently being marketed by Ahearn at $975 a square foot. About 80 of those have been sold, and the building opened last week for occupancy.

Just two years ago, a smaller unit at the InterContinental sold for about $700,000; recently an identical unit a few floors above sold for $900,000.

Then there's the outer stratosphere of the luxury market: Mandarin Oriental at the Prudential Center in Back Bay. Though not scheduled to open until June 2008, all but one of the 50 units have been sold, at prices that average $1,600 a square foot.

So it would appear there is not a shortage of wealthy buyers. "It's absolutely true that there will be demand for properties of that price range," said John A. Keith, a real estate broker who represents buyers.

A slender, 31-story tower with 150 condos, 45 Province will have parking on the lower floors, and the residential portion doesn't even begin until the seventh floor.

Epstein predicted the views, overlooking a neighborhood of lower, historic buildings, will be "incredible. Our 'ground floor' -- the seventh floor -- is higher than most penthouses in the city."

The architecture at 45 Province is contemporary, by Bruner/Cott of Cambridge. The exterior is extensively glass, with terra cotta panels. The interiors, designed by Celeste Cooper of New York, will have walnut cabinets and bamboo floors in the kitchens. Wolf, Grohe, and Miele appliances and fixtures will populate the kitchens, and bathrooms will have 3-by-6-foot showers -- so big they don't even require a door. Amenities include a restaurant, spa, and concierge.

This kind of luxury -- and urban units more spacious than ever, some covering 5,000 square feet -- is new to Boston.

"We definitely have a shortage of supply of the luxury penthouse unit s that you would see in New York," said Blair, the LINK executive. "They will sell remarkably well.

"Boston has shifted into selling units on a new level of lifestyle platform -- full-service amenities, garage parking, four-star restaurant at your door," Blair said. "They want almost a hotel quality of life, and that's what these new projects offer."

Abbey Group has a solid track record and has been through several real estate cycles, with 100 projects since the 1970s, including the Landmark Center redevelopment of an old Sears building near Fenway Park.

Moreover, Robert Epstein argued there are additional factors that favor proceeding with a luxury building now: 45 Province is expected to be finished and ready for occupancy in 2009, and the whole of the market should have firmed up by then. Meanwhile, high construction costs are scaring off developers of other projects, meaning there could be fewer new housing units coming on the market to compete with 45 Province.

One other downtown residential project may be getting out of the gate at about the same time as 45 Province. This month the Boston Redevelopment Authority gave the go-ahead to Hayward Place, a $200 million mixed-use development with 277 luxury condominium units, to be built on a parking lot between Chinatown and Downtown Crossing.

Epstein also sees the Boston economy remaining on an upward trajectory. "A growth economy pushes prices up harder and harder," Epstein said.

Brian Rugg, executive vice president of business development for ERA Boston Real Estate Group, said Epstein and the Abbey Group appear to have timed the real estate market cycle correctly. "The optimum time to start a project is when the market is at its worst. If he becomes one of the few, if not the only one, developing this ultra-high-luxury product 30 months from now, he will look like a genius," Rugg said.

And if you think $900 a square foot is a lot now for a downtown condo, Epstein said he expects to raise prices as marketing for 45 Province St. builds over time. By spring 2009, when the building is done, Epstein boldly predicted prices for 45 Province will reach the $1,600 -square-foot average of the Mandarin.

"We typically don't run that far behind New York, and prices in New York are $2,000 to $3,000 a square foot," he said. "Can people absorb higher costs? The answer is yes. People have got to have a place to live."

More on Boston Condos

View all of our new condos on condoDomain.com

210 South Street Lofts in Boston Big Discounts

Buying a condo in the landmark Leather District has just become a lot more affordable.
That’s because the developer of ornate 210 South St. has cut one-bedroom Unit 10-4’s asking price by $100,000 to $595,000 - throwing in a year of free parking or condo fees as well.
Unit 10-4 is one of 16 condos still available at 210 South St., a 1919 building converted into 54 one- and two-bedroom units last year.
Once hosting companies involved in leather-products design and assembly, 210 South St. retains its ornamental friezes, pilasters and arched pediments. But developers enhanced these by adding contemporary marble facing to the structure’s original columns.

A completely redone front lobby features salmon-colored marble floors, blond wood paneling and 7 a.m.-7 p.m. concierge service.
Two elevators redone in stainless steel whisk you up to the condos.
Every floor has an enclosed landing with a black-slate floor and wainscoted, painted walls. Carpeted hallways feature the building’s original mushroom columns, lit by overhead stainless-steel fixtures.
Unit 10-4 offers 1,374 square feet of living space on the building’s 10th floor.
The condo’s front door opens into a foyer with maple floors and two closets - one for coats and the other offering built-in shelves for linens.
To the left, a 9-by-6-foot bathroom features beige ceramic-tile flooring and a marble-topped Italian Aster Cucine vanity.
An angled, glass-enclosed shower has a beige subway-tile surround and walls.
VISIT 210 SOUTH STREET LOFTS

The bathroom also has a closet with a washer/dryer hookup and water tank, as well as a second closet that hosts the unit’s electric heating-and-cooling system.
Down the hall, the unit opens up into a light-filled, 27-by-22-foot living/dining area.
This wide-open space - nicely bisected by one of the building’s original mushroom columns - has five south-facing windows that provide nice city views.
The living/dining room flows into a 12-by-11-foot kitchen featuring 26 stylish Aster Cucine walnut-veneer cabinets and a built-in TV hookup.
Uba Tuba granite countertops run along two walls and extend into a peninsula island featuring an overhang that creates a breakfast bar.
The kitchen’s General Electric stainless-steel appliances include a side-by-side refrigerator, a dishwasher and an electric stove with built-in a microwave oven above. There’s also ceiling-mounted lighting, as well as recessed lighting under the cabinets.
The unit’s 18-by-11-foot bedroom features Berber carpeting, three south-facing windows and two five-foot-deep closets.
An adjacent 10-by-10-foot master bath offers a six-foot whirlpool tub, a glass-enclosed shower and an oversized Aster Cucine white vanity with marble countertops. Cream-marble tile covers the floors, walls and tub-surround.
The unit’s $513 a month condo fee includes use of the building’s basement fitness room. Nearby, you can also buy a metal-fence-enclosed basement storage space for an additional $10,000.
There’s no on-site parking, but you can rent a space at a next-door garage for about $350 per month.
As for the neighborhood,the Leather District hosts restaurants that range from a French bistro and an upscale Italian restaurant to a 24-hour diner.
Chinatown is also just two blocks away in one direction, while the Financial District - where many local residents work - is four blocks the other way.
gftailFor more information or a chance to view this property, call Judy Forbes or Allyson Sargent of The Residences at 210 South St. at 617-348-9888.

VISIT 210 SOUTH STREET LOFTS

D4, Ultra Lux

The D4 residences set an enviable standard for luxury, design and urban living. Located where Boston's exciting South End neighborhood meets the Back Bay, D4 presents 26 unique homes filled with all the exceptional features you'd expect from yoo, a leading design-oriented development company and Philippe Starck, one of the worlds most famous and talented designers.
Opening onto a soaring, light-filled private winter garden, the designs for each one-, two- and three-bedroom home - ranging in size from 750 to more than 2,000 sq. ft. - feature a remarkable attention to detail, an abundance of natural light, unrivaled materials and stunning finishes.

click here!

D4, Ultra Lux

The D4 residences set an enviable standard for luxury, design and urban living. Located where Boston's exciting South End neighborhood meets the Back Bay, D4 presents 26 unique homes filled with all the exceptional features you'd expect from yoo, a leading design-oriented development company and Philippe Starck, one of the worlds most famous and talented designers.
Opening onto a soaring, light-filled private winter garden, the designs for each one-, two- and three-bedroom home - ranging in size from 750 to more than 2,000 sq. ft. - feature a remarkable attention to detail, an abundance of natural light, unrivaled materials and stunning finishes.

click here!

Providence Condo Developers unfazed by market

The owners of The 903 Residences say the project’s recent sales strength is a success in the face of a softening housing market. So far this year, they have sold 47 of their 330 units. Citywide – excluding the East Side – a total of 73 condos sold in the first half of the year.

Barry Seidel, partner in New York-based Athena Group, which owns the property along with Providence-based Paolino Properties, said the project’s success could be credited to a number of factors: its location, a tax-abatement deal with the city, and the upgrades made to the property when it was purchased in October 2005.

But one thing remains clear to Athena – The 903 is succeeding in a market that’s reporting signs of slumping across the board.

Will things continue to go well?

The 903’s owners aren’t the only ones bullish on Providence. Even with three major condominium projects slated to come online the next few years, and a housing market that has softened both nationally and at home, developers downtown remain optimistic. The Procaccianti Group, a Cranston-based hotelier and real estate development company, last month announced it was making vast strides on its downtown condominium project, The Residences at the Westin.

As part of the addition planned when the company bought The Westin Providence from the state in 2005, Procaccianti plans to add 200 hotel rooms and 103 luxury residences in a 32-story tower next to the existing hotel.

As of mid-September, the company had reached the halfway point in the project, pouring the 16th level of the new building. And with occupancy of the condominiums not slated to begin until next fall, the company announced that 30 percent of the units already had been sold.

And, while One Ten Luxury Residences, the condominium project next to The Arcade on Westminster Street in downtown Providence, is not slated to open until 2008, the developers say they are feeling confident about the project’s prospects. Eamon C. O’Marah, a managing partner of lead developer Blue Chip Properties, said last week that sales of the 145 units at One Ten have been “significant.” Although the company wouldn’t release figures, he said it has managed to attract interest.

O’Marah noted that downtown Providence is absorbing a little more than 400 units, with the three high-rise projects coming online in a staggered schedule. In contrast, communities such as South Florida will be absorbing thousands of condominiums in a much smaller time frame.

“The market isn’t overbuilt, so therefore, we are meeting a large demand that is latent,” O’Marah said. “We have a significant number of sales, and we’re very pleased with the progress that we’ve made.” For now, the project remains the same in scope despite market trends. However, O’Marah said Blue Chip and partner Granoff Associates are always looking for ways to make the development the best it can be.

“We’re always looking at modifications and tweaks to the program to make it more successful,” O’Marah said.

WaterPlace – a $100 million, two-tower condominium project under construction on the north bank of the Woonasquatucket River, at Waterplace Park – currently has about 40 units reserved, said Robert Cole, managing partner of The Collaborative Companies, the Boston-based marketing and sales firm hired to sell condos there.

He anticipates sales will continue to be strong at the 193-unit development, largely because of the location. The city has the right infrastructure and cultural scene to continue to attract people to the downtown, he said.

But other parts of the housing market are slowing condominium sales, Cole said. With projects such as WaterPlace gearing themselves largely toward empty nesters, the lag in sales of single-family homes is harming the sale of condominium units nationwide, he said. Seidel said The 903, though not directly in downtown Providence, also has benefited from its location. Situated behind Providence Place mall, the condominium project is across from The Foundry and next to the old Providence Fruit & Produce Warehouse, which is being rehabbed as a retail and restaurant space.

With the area becoming more and more attractive, Seidel said, he expected interest to continue.

“We’re very encouraged,” he said. “As long as things keep going this way, we’re going to keep doing what we’re doing.”

For more information on Providence Condos. the 903, Waterplace, The Residences at the Westin Hotel and ONE TEN. visit www.Providence.condoDomain.com