The Batterymarch Insider
In this issue:
Real estate sales data - Garbage in, Garbage out
157 Beacon St., unit 2 - Death by 1,000 cuts
20 Chestnut St., unit 1 - Price cut, $2,000+/sf for basement living?
Millennium Place, unit 1202 - Seller takes a loss - Well Bought
45 Temple St (The Archer) - Pre-Corona deals - Well Sold
What’s Catching Our Eye
City dwellers around the globe can take comfort in the positive Covid vaccine news this week. Having a light at the end of the pandemic tunnel is truly comforting and the rumors of the city turning into endless urban blight can hopefully be put to rest.
Inventory remains stubbornly high. Back Bay condominium supply stands at 9.25 months vs 3.95 months a year ago. The liquidity story in our market is unchanged, with a fair amount of activity in the mid to low end of the market, and spotty at best in the luxury world.
Backward looking data – garbage in, garbage out.
One of our pet peeves with the real estate industry is the backward looking nature of almost everything. In the investment industry, if you went into the office of an institutional investor and spent 30 minutes talking about what happened over the last six months, you’d be wasting their time and wouldn’t be invited back. They know what happened, they want to know what’s going to happen in the future.
That said, we caution market watchers with respect to how new development closings will skew some backward looking data. As example, the Archer, a 62 unit new development on Temple Street on the back side of Beacon Hill, has been closing and delivering high priced units. Many of these units were actually bought pre-construction and have been under contract for well over a year (pre virus). These delayed closings will mask underlying weakness in the market, and rest assured that the “stale” data will show up in real estate sales agents’ “everything is always great” pitch books.
157 Beacon unit 2 – Death by 1,000 Cuts?
Unit 2 at 157 Beacon Street, a run-of-the-mill Back Bay 1,572 sf two bedroom, two bath lower level duplex with parking, hit the market in early March of 2020 for $2,357,000. Seven, yes seven, price cuts later the asking price is now $1,695,000, a 28% discount to the original asking price. Even better, last month the compensation offered to a buyer’s agent was raised from 2% to 2.5%
In economics, deflationary spirals are feared because consumers hold off on making purchases today when they believe that the price will likely go lower tommorow. We’re all for price discovery, but as we see it, this one was clearly not priced correctly from the start. One thing is certain, this is a motivated seller.
20 Chestnut Street, unit 1 – Price Cut
Originally listed at $7,995,000 in early March of 2020, the price was cut this week to $7,495,000 ($2,060/sf). The sellers here paid $4,000,000 in August of 2018 and undertook a comprehensive renovation. We really like the private outdoor space, detached garage with living quarters above, and the great light the unit gets.
It’s been a while since we were in the unit, but we recall the common area entrance was on the shabby side. With all the money spent here, we wonder why the developer didn’t treat the other unit owners to a fresh coat of paint and maybe new carpet in the entry way. Time will tell if this new price does the trick, but $2,000+/sf is a bit much for lower level living in our book.
580 Washington Street (Millennium Place), unit 1202 – Well Bought
After 116 days on the market, unit 1202 at 580 Washington Street, an upper level 1,710 sf, 3 bedroom 2 bath, changed hands this week for $1,900,000. People often ask us, “How’s the market?” The seller here paid $2,000,000 over three years ago and took a $100,000 hit before fees to get out - there’s your answer.
If you work downtown (think Covid vaccine) this is an amazing location, close to the Common, and an easy walk to both Beacon Hill and the Back Bay. Millennium Place is a staffed building with valet parking, so your 1,700 sf abode will cost you over $46,000 a year in taxes and association fees. We think this is a market correct price (for now) and we’re calling this one - Well Bought.
45 Temple Street (The Archer) – Well Sold
As we mentioned above, the new development at 45 Temple Street has started delivering new units, many of which have been under contract for over a year. 45 Temple was previously owned by Suffolk University and has been converted into 62 luxury condominium units.
A big attraction to these large footprint commercial property conversions is that they offer spacious single floor living. Getting a 3,000+ square foot condominium unit in a typical Boston brownstone generally entails combining three floors. The demographic target for luxury urban property doesn’t want stairs. It will be interesting to see where the unsold units trade going forward, but we’re calling these pre-Corona deals – Well Sold.