A Proper Back Bay Mansionette – We Say “Yes!”
Plus: Serial Beacon Hill Flipper? & Well Bought/Well Sold
The Batterymarch Insider
360 Beacon Street, unit 1– A Proper Mansionette – We Say “Yes!” – Offered at $6.499 Million
We can’t resist highlighting units at Beacon Court (360–388 Beacon Street). In our opinion, these pre-war cooperative apartments are an amazing alternative to the ubiquitous glass-clad towers in off beat locations. Unit 1 at 360 Beacon, a 4,000 square foot, four-bedroom mansionette with one parking space is being offered at $6.499 million ($1,625/sf). The last sale here was $5.3 million ($1,325/sf) in June of 2016.
The apartment was comprehensively renovated by the previous owner. While there are a few minor things about the renovation that we would do differently, overall it’s good quality and it still feels very fresh.
There isn’t any private outdoor space or big views, so if those are deal killers, this isn’t the place for you. Some people may also object to being at the lower end of Beacon Street, but we think the positives far outweigh the negatives here.
A mansionette is defined as an apartment that is part of a larger building with two levels and that has its own private entrance. They’re common in pre-war buildings in Manhattan, but a rarity here in Boston. With a private entrance, these units genuinely live like a single-family home.
Co-Ops - The Preferred Ownership Structure
We don’t hide the fact that we think cooperative apartments are the preferred ownership structure (see “Cooperative Apartments - Why We Love Them”). Buyers are often turned off by the higher stated monthly fee compared with a comparable condominium unit, even when it’s explained that the fee includes the property tax.
According to the marketing material, the monthly fee for this apartment is $5,416. That includes property taxes and the operating costs of maintaining the property – including a live-in superintendent. If the apartment was taxed as a stand-alone condominium unit (assuming a $6.5 million valuation) the property tax alone would be roughly $5,800 a month.
Unlike a condominium, when you buy a cooperative apartment, you receive shares in a corporation and get a lease for your unit. The real estate is owned by the corporation and the property is taxed like a multifamily apartment house. Condominiums have unit deeds and the city taxes each unit separately.
If a condominium unit changes hands at a stepped-up value, the city typically marks up the assessed value based on the transaction price. That’s not to suggest that the real estate owned by cooperatives is immune to re-appraisals and higher property taxes, but the process is less efficient.
$1,625 per square foot doesn’t seem completely unreasonable for an apartment of this caliber, but it’s still about 22% above the 2016 price. Keep in mind that 2016 was pre One Dalton, Raffles, Pier 4, and the St. Regis, to name a few. The competitive landscape for luxury real estate in Boston has meaningfully changed (not to mention the interest rate environment) so we’d be more comfortable closer to the 2016 valuation.
This is a great property and gets the Batterymarch seal of approval.
360 Beacon Street, unit 1 is offered by Campion & Company
21 Branch Street – Less Than Two Months of Ownership - Another Beacon Hill Mulligan! – Offered at $3.249 Million
After less than two months of ownership, 21 Branch Street is back on the market. The asking price for this 1,832 square foot two-bedroom single family is $3.249 million, in line with the inflated last sale price of $3.225 million.
Formerly a carriage house that served 52 Beacon Street, the house features garage parking for one car, a rarity on Beacon Hill. While Branch Street is a convenient location, it’s somewhat of a glorified alley running between Beacon Street and Chestnut Street - it has an alley vibe to us.
We couldn’t help noticing that the seller of 21 Branch Street appears to have recently pulled off another do-over just around the corner at 142 Chestnut Street. That condominium unit was bought in November of last year for $2.75 million and sold seven months later for $2.899 million – net after standard fees and taxes it was a wash. We fail to see any coherent strategy behind these flips.
Smaller Beacon Hill single family homes have been a bright spot in an otherwise challenging market. This is an attractive property even with the alley vibe. Two months ago, there were multiple offers on the house, and it sold after just 13 days on the market at a 7% premium to the asking price. We tread cautiously when prices are bid up – we’ll keep you posted.
Well Bought/Well Sold
1 Huntington Ave, unit PH 1802 – Older Building, High Operating Cost – Well Sold
They didn’t get the $8.25 million they were looking for, but the sellers of unit PH 1902 at 1 Huntington Ave must be breathing a sigh of relief after finally unloading the apartment. This marketing saga dragged on for over a year and resulted in a $6.5 million gross sales price. Net after standard fees and taxes, the sale price came in at $6.21 million ($2,168/sf) or about 25% below the original asking price.
We profiled the 2,864 square foot 3-bedroom unit previously, so we won’t rehash all the details here (see “Great Unit, Mediocre Building”). The bottom line is that we like the unit but don’t care for the building. In our opinion, 1 Huntington, which looks a bit like a high-rise version of City Hall, has the worst curb appeal of any “luxury” property in the city.
In our note a year ago, we highlighted the $5,000 a month condominium fee as being on the high side. Fast forward 12 months and the monthly fee now apparently is $6,030 a month – a 21% increase in just 12 months.
While this is a staffed building, we consider it a limited full-service building when compared to a true hotel service property. If you’re paying premium monthly fees, you should be getting all the bells and whistles and the latest amenities.
As these sellers can attest, buying into a 25-year-old building with high operating costs is asking for liquidity problems down the road. Buyers need to scrutinize operating and capital budgets. The monthly fee liability was likely a very strong headwind with this transaction, it was – Well Sold.
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.