The Batterymarch Back Bay Index© - A Breakthrough Valuation Tool
The Batterymarch Back Bay Index© - A Breakthrough Valuation Tool
Batterymarch Group LLC is a full service independent real estate brokerage firm specializing in the downtown Boston market. More about our services here.
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In this issue:
NEW – The Batterymarch Back Bay Index© – A Breakthrough Valuation Tool
Property Spotlight – On the Market
29 Commonwealth Ave. (Haddon Hall) – You’d Think That They Are Giving Them Away!
Well Bought/Well Sold
126 Marlborough Street – Full Price - Record $/SF – Well Sold
101 Chestnut Street, unit R – All the Money, but All the Apartment! – Well Bought
What’s Catching Our Eye
NEW – The Batterymarch Back Bay Index© - A Breakthrough Valuation Tool.
Trying to nail down what’s going on with real estate valuations is for the most part a fool’s errand, largely because the data is, for a lack of better explanation, manipulated. We’re launching our first in what will be a series of reliable valuation indices – the Batterymarch Back Bay Index© (BBBI).
The BBBI tracks both valuation and transaction volume of Back Bay two bedroom condominium resales as reported by MLS. It eliminates outlier transactions (defined as price per square foot >100% of the trailing twelve month average), new development sales, and off market transactions. By eliminating the noise, market participants can get a clean view of what is actually going on in the secondary market.
Year over year, the BBBI was up just 2.6%* for 2021. With all the rah-rah about the hot real estate market coming from listing sales agents, the muted price action may come as a surprise to many. We tend to focus on the market liquidity as a barometer of market health. On that score, transaction volumes were up 24% last year, which we see as positive.
While the BBBI is geared toward the Back Bay, it is a bellwether gauge for the overall health of the downtown residential market. In the coming weeks, we will be launching the Batterymarch Beacon Hill Single Family Index© and the Batterymarch Downtown Luxury Property Index©.
Feel free to reach out to us for more information about the Batterymarch Indices and our methodology.
*1.6% of the 2021 BBBI performance was driven by four resales at One Dalton Street, so without those the price appreciation would have been just 1%.
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.
Haddon Hall (29 Commonwealth Ave.) – You’d Think That They’re Giving Them Away.
The units at 29 Commonwealth Avenue, a new nine unit redevelopment, are selling like hot cakes. Five of the nine units have sold, including the $21.75 million penthouse.
If you have your heart set on living at Haddon Hall, there are only two units left, so now is the time to make your move. Bring your checkbook, because these units aren’t cheap – unit 4 is offered at $9.24 million ($2,991/sf) and unit 5 is offered at $9.95 million ($3,212/sf). Both units are just over 3,000 square feet.
Haddon Hall was originally built as a residential hotel in the 1890s and was subsequently converted into a medical office building in the late 1920s. At 10 stories high, the building dwarfs the surrounding properties and upon completion it was seen as an eye sore. As a result, not only did the City enact height restrictions for the Back Bay, but in 1899 Boston Mayor Josiah Quincy unsuccessfully introduced legislation to have the top few floors of the building removed.
The current developer bought the building in 2017 for $30 million with the idea of converting it into a private social club. The club idea met stiff opposition in the neighborhood and those plans were abandoned in favor of the current residential development. The developer did get their club, The ‘Quin House, which is a reincarnation of the Algonquin Club located at 217 Commonwealth Avenue.
Pros: Location, Views (particularly from the upper floors), Good Sunlight.
Cons: Valuation, Limited “Robotic” Parking.
The Haddon Hall marketing pitch is pretty straight forward. It’s a great location (although traffic gets backed up there during rush hour), has decent floor plans, great views, and good sunlight. But we agree with former Mayor Quincy - the building is a bit of an ugly duckling. We normally love larger buildings, but the narrowness of this one makes it architecturally awkward in our opinion.
At these prices we think that the parking is insufficient. Each unit only gets one parking space (the penthouse gets two) in an underground robotic parking garage. These robotic parking systems have restrictive limits on the size of vehicles that they can accept and we have concerns about reliability. What would be more frustrating than waiting around for a half a day for the service technician to show up to re-boot the garage?
Our big beef is the valuation. If you’re going to drop $9.0–$21.0 million on an apartment, we think there are more attractive options. There is no question that the current demand for these kinds of units is robust. We’re concerned about what the resale appetite will be for these high ticket units as they age.
The units are listed with Campion & Company, and, as usual, we’d be happy to set up showings and walk you through our valuation analysis.
Well Bought/Well Sold
126 Marlborough Street – Full Price, New Back Bay Record – Well Sold
We got the final sale price for 126 Marlborough Street. As we predicted, it sold at the full asking price.
We’re not going to beat this dead horse, as we recently shared our views about the house and the valuation (see “The Perfect House for Willy Wonka!”). We’re highlighting it again because at $2,297 per square foot, it is a new record high price (by a big margin) for a Back Bay single family.
If you’re currently in the market for a Back Bay single family, there is no doubt that this comp will be waived in your face. In our view, this is an outlier transaction and as a comparable sale, we’d take it with a grain of salt, or reject it outright. 126 is a nice house, in a great location, but we’d say that this price was ill advised, not surprisingly, we’re calling it – Well Sold.
101 Chestnut Street, unit R – All the Money, but a Great Apartment – Well Bought
Freshly renovated Unit R, a 3,000 square foot 4 bedroom co-operative duplex apartment at 101 Chestnut Street changed hands for $6.825 million ($2,275/sf), a 6% discount to the asking price. The unit last traded in 2018 for $4.4 million ($1,467/sf) prior to the full renovation.
We don’t hide the fact that we love co-op apartments (see Co-Op Apartments, Why We Love Them Part 1) and in our book this is one of the best co-op buildings in the City. Located on the flat of Beacon Hill, this is a top notch location and one of the quieter streets in the area.
From a valuation perspective, this is definitely all the money for a Beacon Hill co-op. But this isn’t your typical contractor unit flip. We’re familiar with the seller and it’s our understanding that the unit was renovated for their use, hence the well executed finishes. The seller did well here, and the buyer got a great unit. We’re going to hold our nose on the valuation and call this one – 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.