Winthrop Center Pivots, Selling Condominiums - Time to Sell at 1 Franklin?
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Winthrop Center Pivots, Selling Condominiums - Time to Sell at 1 Franklin?
Property Spotlight – On the Market
22 Charles River Square – A Bit Pricey, But Great House
Well Bought/Well Sold
1 Franklin Street, unit 5103 – When Losing is Winning – Well Sold
110 Sudbury, unit 4703-4 – In the Land of the Blind, the One-Eyed Man is King – Well Bought
Winthrop Center Pivots, Selling Condominiums - Time to Sell at 1 Franklin?
At the onset of the pandemic, Millennium Partners was caught flat footed when the financing for their mega Winthrop Center project fell through. With construction already underway, the developer went scrambling to line up new financing which resulted in a scaled down project.
The residential component of Winthrop Center, a 1.4 million square foot 53 story mixed-use development (office/residential) located in the heart of the financial district, was originally slated as luxury condominiums. In conjunction with the new construction financing, Millennium notified the City in June of 2020 that rather than selling high-end condominiums, the project would “initially be a rental program.”
As it turns out, Millennium is skipping the rental program and now plans to sell condominium units – 317 of them to be exact. Make no mistake, dumping another 300+ high priced condominiums into an already saturated market will impair the value of downtown residential real estate.
1 Franklin Street – Time to Sell?
We expect that the values of the 442 units at 1 Franklin Street (Millennium Tower – yes, another Millennium Partners development located just two blocks away) will be the most negatively impacted by the Winthrop Center pivot to sell condominiums. We expect that Millennium will get aggressive with pricing of the condominium units at Winthrop Center. The developer reportedly had to pony up an additional $200 million of their own capital to secure the construction financing. Real estate developers are usually more comfortable using other people’s money, we expect that they will want to get their capital out ASAP.
New development units are fungible – if you’ve been in one, you’ve been in them all. Our work suggests that the condominiums at 1 Franklin are already struggling to hold their value, see our note below “When Losing is Winning.” With the sales effort at Winthrop Center getting ready to swing into high gear, we expect this trend to intensify. If you own at 1 Franklin and think you may sell in the next few years, we’d recommend accelerating your plans.
Property Spotlight
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.
22 Charles River Square – A Bit Pricey, But a Great House.
22 Charles River Square, a 3,966 square foot 4 bedroom single family, hit the market this week with an asking price of $5.495 million ($1,385/sf). Readers of our work know that we have a soft spot for both Charles River Square and “smaller” Beacon Hill single family homes.
Developed in 1909, Charles River Square is a private street consisting of 19 single family homes in the Georgian London tradition. 22 Charles River Square sits on the south side of the square and backs up on to Revere Street which is much less desirable than the houses on the north side which back up on to the Annie Field’s garden. Most of the houses have private roof decks and one assigned parking space.
In the past five years, four houses have sold in Charles River Square at an average price of $1,055/sf. The average price per square foot reflects the fact that most of these houses have been under long term ownership and are in need of major updating. The last two owners of 22 Charles River have made meaningful improvements and we think the premium price is somewhat warranted. If you’re looking for a Beacon Hill home, this one should be on your short list.
22 Charles River Square is listed with Campion & Company. We’d be happy to set up a showing and walk you through our valuation analysis.
Well Bought/Well Sold
1 Franklin Street, unit 5103 – When Losing is Winning – Well Sold
Unit 5103 at 1 Franklin Street has a new owner with a sale price of $5.5 million ($1,983/sf), 8% below the original asking price. The 2,773 square foot 4 bedroom unit is perched on the 51st floor and it comes with two valet parking spaces. The views from the unit are about as good as they get in Boston, and the building has very good amenities.
The unit itself is well laid out and being one of the “grand residences” it has 12 foot ceilings which give a sense of spaciousness. As for the finishes, we consider them high-end contractor grade, nothing special.
From a valuation perspective, the seller bought the unit new back in 2016 for $5.55 million. So when you add the typical transaction fees to the $50,000 hit on the sale, the loss comes out to just over $300,000 – thanks for playing! In light of our Winthrop Square comments above, this was clearly – Well Sold.
110 Sudbury, unit 4703-4 – In the Land of the Blind, the One-Eyed Man is King – Well Bought
A pair of penthouse level abutting units (4703-4) at 110 Sudbury Street traded last week for $9.5 million ($2,367/sf). The combined units cover 4,013 square feet with 4 bedrooms and self parking for four cars.
The 55 condominium units at 110 Sudbury occupy the upper levels of the building (from the 36th floor to the 47th). The lower portion of the building is rental apartments. The condominiums at 110 Sudbury have all of the obligatory amenities that you’d expect in a new, full service building and the finishes are reasonably good. The real hook is the views, which are pretty spectacular.
The longer term vision for this area is solid and being so close to the Green and Orange Lines, as well as the Greenway, are huge pluses. The problem with the long-term vision for these emerging neighborhoods is that the vision can take decades to play out, and, on average, people sell their property after 13 years (probably less when your target market includes aging baby boomers). The long-term vision will be great for the second or third owners, but doesn’t do much for the initial buyers.
We’ve been pretty vocal about our cautious stance on developments in what we consider “no man’s land,” and 110 Sudbury definitely falls into that category. We are, however, warming up to this development. One key reason is that the scale of the units is more generous compared to other developments. Additionally, there really isn’t a bad view in the place, which is a benefit of building in no man’s land, where there isn’t anything around to block your view.
We think that the valuations at 110 Sudbury are reasonable relative to other new neighborhoods. We probably wouldn’t spend $2,367/sf to live in the penthouse when, in our opinion, the view from the 37th floor is just as good and those units are trading for roughly $1,850/sf. Assuming that the buyer isn’t looking to flip the property in the next few years, we think they did ok, we’re calling it – Well Bought.
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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.