Boston is Back – Urban Market Rising Like a Phoenix
In this issue:
Boston is Back! – Urban Market Rising Like a Phoenix
New and Noteworthy – New 1 bedroom $/sf record, Mandarin “Whac-A-Mole,” 192 Commonwealth – Bring Your Sunglasses
21 Beaver Place – We See Value & Potential – Well Bought
4 Strong Place – Great House, Offbeat Beacon Hill Location – Well Sold
What’s Catching Our Eye
Boston is Back – Urban Market Rising Like a Phoenix
I had the privilege of working with Bob Farrell back in my Merrill Lynch days. Bob was our Chief Market Analyst and considered by many to be The Godfather of Wall Street research. Bob’s “10 Market Rules to Remember” are legendary in the investment world. We think Rule #9 sums up what’s going on in our urban market: “When all the experts and forecasts agree, something else is going to happen.”
Just when it felt like the urban real estate naysayers were going to be right, and Boston was going to completely miss out on the red hot real estate market, our market has come back to life. We’d chalk up the strength to plentiful effective vaccines, a Federal Reserve that has the pedal to the metal, and importantly, pent up demand.
Year-to-date, the number of condominium units that have gone “pending” in the Back Bay has spiked 35% above the trailing four year average. Buyers are out in full force with the lines to get into open houses stretching down the street.
All price points in our market are benefiting from the sudden strength. Inventory that has been kicking around for what seems like years is getting snapped up left and right. Well presented new inventory is getting multiple bids within days of listing; the mantra is “Open House Cancelled – Offer Accepted.”
For every yin, there is a yang, and we’d be remiss if we didn’t point out a report published this week by Wells Fargo titled “Boston: Housing Outlook” highlighting Boston’s Covid recovery, but cautioning that the “road ahead is long with many a winding turn.” Echoing our sentiment, the report noted the “massive pipeline of downtown multi family projects under way, so it may be some time until Boston’s apartment and condo market fully right-sizes.”
New and Noteworthy
60 Commonwealth Ave, unit 3 – New sub 1,000 sf, 1 Bedroom $/sf Back Bay record. This 590 sf first floor one bedroom closed this week for $1.015 million ($1,720/sf) after 30 days on the market. The seller here is a well known real estate professional, which begs the question - do you really want to be on the other side of a transaction with a market sharpshooter? This was definitely well sold.
Mandarin Oriental “Whac-A-Mole” – No sooner did penthouse unit 2B get a contract (last asking price was $14.5 million, $3,910/sf) when penthouse unit 2E popped on the market for $24.999 million ($3,661/sf). Interesting tidbit about penthouse unit 2B - the description indicates that there is a dedicated “crafts room,” apparently scrap booking is a thing across the economic spectrum.
192 Commonwealth Ave, unit 4 – Reports an accepted offer off an asking price of $3.999 million ($1,449/sf). There’s a lot to love about this property - 2,760 square feet on one floor, 20 windows on three sides, and direct elevator access.
So why has it taken two and a half years to find a buyer? For starters, the original price was $5.5 million, and maybe it also has something to do with the lighting. If memory serves correctly, there are over 570 recessed lights in the ceiling; let’s just say the excessive lights is an acquired taste.
Well Bought/Well Sold
21 Beaver Place, unit PH – We See Value and Potential – Well Bought.
It took almost three years, but 21 Beaver Place has a new owner with the sale booked last week at $8.3 million ($1,660/sf). The dragged out marketing of this unit can be chalked up to an overly ambitious original asking price of $11.4 million.
This 5,000 square foot 5 bedroom duplex features direct elevator access, 4 parking spaces (two garage, two outdoor), and an epic roof deck with an Endless swimming pool. The property has the benefit of being only 250 feet from the public garden, but set back from the hustle and bustle of Beacon Street.
The down side here is that the unit is in desperate need of updating, but done smartly, we think the new owner can avoid creating the dreaded white elephant. Taking a sum of the parts approach, and backing out the value of the parking, the price per square foot drops well below $1,500. This one was – Well Bought.
4 Strong Place – Nice House, Off Beat Location – Well Sold
4 Strong Place, a 2,380 square foot 4 bedroom traded this week for $3.2 million after 175 days on the market. The house just underwent a well executed, extensive ground-up renovation. The new contemporary floor plan opens up to a nice outdoor space. As an added bonus, there is parking at your front door.
The market for small to mid-sized Beacon Hill single family homes with good outdoor space has remained robust throughout the pandemic with trailing 12 month sales actually up year-over-year.
These properties offer all of the benefits of a suburban home without the dreaded commute (yes, many will be going back to their offices), or the headache of endless yard work (we have well maintained parks, where someone else cuts the grass and rakes the leaves).
Our beef isn’t with the house, it’s more about the location, or more specifically the street. The listing describes Strong Place as a “private, gas-lit cul-de-sac.” In our view, it’s more of an alley, off Cambridge Street just across from the busy main entrance of Mass General Hospital. I guess if we were being nice about it, we’d call it a dead end.
It’s a great house, but it’s an offbeat Beacon Hill location. We see significant liquidity issues down the road, and for that reason we’re calling this one – Well Sold.