Back Bay vs Back Bay 2.0 – The Glut of New Development
Property Spotlight – On the Market:
Back Bay vs Back Bay 2.0 – The Mandarin vs 380 Beacon Street
Well Bought/Well Sold:
34 ½ Beacon Street, unit 1 – Yabba Dabba Doo! Cave living? – Well Sold
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.
Back Bay vs Back Bay 2.0 – The Glut of New Development
We recently highlighted how the glut of new development “luxury” condominiums in newly created neighborhoods is changing the downtown residential market. Historically, if you wanted a premium city residence, your choices were pretty much limited to the Back Bay or Beacon Hill. In recent years, however, these new developments are pulling buyers away from the traditional locations and into these new neighborhoods. The end result is increasing competition for the luxury buyer.
Listing sales agents and developers desperately want to keep the low inventory, “it’s a sellers market” narrative going, but the landscape is quickly changing. As new development projects are coming on line, they are taking longer and longer to sell out. Some developers have resorted to offering premium sales commissions to entice sales agents to bring their customers.
Back Bay 2.0
The south side of Boylston Street isn’t typically thought of as a new neighborhood - it is, after all, part of the Back Bay. However, in recent years over 600 luxury condominium units have been built on the south side of Boylston Street, and there’s a substantial inventory pipeline behind that. We view this area as a new sub-neighborhood of the Back Bay, or “Back Bay 2.0.”
For buyers, this trend is already presenting good relative value opportunities. This week we’re comparing two similarly priced offerings to illustrate our point. The first is in Back Bay, a cooperative apartment at 380 Beacon Street, unit 2. The second is in Back Bay 2.0 at 776 Boylston Street, unit W9D (Mandarin Oriental).
380 Beacon Street, unit 2 – Back Bay
Built in 1926, this development spans from 360 – 380 Beacon Street and consists of four separate buildings in a campus-like setting with walkways separating the buildings. 380 Beacon Street is a cooperative ownership structure which comes with more rules and regulations, but we see this as an advantage (see “Why We Love Co-ops.”)
Unit 2 comes with two above grade storage rooms as well as a dedicated fire wood storage room (there are five fireplaces). The unit has been on and off the market since 2019. The marketing started with an ill advised asking price of $6.4 million. Now, after three listing agents and five price cuts, we think that the current asking price is more realistic.
After fees, the seller is going to take a pretty good financial hit to get out of the property. In light of the fact that the unit needs updating and doesn’t show particularly well, we see that discount as appropriate. The wild card in updating these units is always the mechanical systems, HVAC, etc. A prospective buyer should go in with their eyes wide open and have a firm handle on renovation costs.
Make no mistake, 380 Beacon Street is a very desirable address. Prior to the new development boom, these units would get snapped up quickly.
Mandarin Oriental, unit W9D – Back Bay 2.0
Developed in 2008, the Mandarin sits on what was previously a scruffy section of Boylston Street. The condominium units sit above the hotel and the upper level front facing units have great views of the Back Bay and the Charles River. The Mandarin is all about top notch service.
Unit W9D is rear facing and looks out over a 1960s vintage apartment building and the roof top of the Prudential Center shopping mall which is connected to the Mandarin. Being south facing, it gets good sunlight and it’s quieter than facing Boylston Street.
All that top notch service doesn’t come cheap. Between taxes and condominium fees you’ll be shelling out close to $9,000 per month. If full hotel service is important, this could be the place for you. Just keep in mind that the full hotel service competition in the Back Bay 2.0 is heating up. There are 160 condominium units at the new Four Seasons just around the corner on Dalton Street, and there will be 146 new units at the soon to be finished Raffles Hotel and Residences.
Like 380 Beacon Street, we expect that the next owner will do some updating. The units at the Mandarin are close to 15 years old and in our opinion they’re getting a bit long in the tooth.
We See Value in the Original Back Bay
Call us old school, but we’d go with the Beacon Street Property. When properly updated, we think 380 Beacon Street would prove to be a more comfortable home and we see much better resale value and liquidity down the road. Additionally, with easy access to the esplanade, we’d prefer getting our steps in by walking along the river, versus walking the shopping mall at the Mandarin.
The Mandarin unit is offered by Campion & Company and 380 Beacon Street unit 2 is offered by The Agency. We’d be happy to set up showings of either property and walk you through our valuation analysis and preliminary renovation budgets.
Well Bought/Well Sold
34.5 Beacon Street (The Tudor), unit 1 – Yabba Dabba Doo! Cave Living? – Well Sold
Unit 1 at 34 ½ Beacon Street, a 2,400 square foot 2 bedroom lower level unit, changed hands for $3.644 million ( $1,518/sf), a 9% discount from the original asking price. The unit last traded back in 2016 for $1.95 million, but since then it’s been comprehensively, and tastefully, updated.
The Tudor, a 14 unit eight story building situated on the corner of Joy and Beacon Streets, was converted into condominiums in 1999. The association recently made major capital improvements to the building, including roof work, new boiler, cooling tower, and a lobby renovation. The new unit owner will get the benefit of these improvements without having lived through the angst of endless condominium meetings regarding the work.
The Tudor is a staffed building so the fees are pretty steep. Including valet parking, the monthly fee is $3,371. Monthly fees aside, it feels like most of the living area in this unit is below grade, and the south facing windows open to a busy sidewalk so we’d expect the shades will be drawn most of the time. In our view, this lends itself to cave like living – even Fred Flintstone lived above grade. We’re calling this one – 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 the real estate brokerage.