Raffles Residences – The New Kid on the Block - $2,500 To Get the Sales Pitch
Batterymarch Group LLC is a full service independent real estate brokerage firm specializing in the downtown Boston market. More about our services here.
“The Batterymarch Insider” is a brief snapshot of our current market thinking. As always, our “terms of use” apply. We encourage you to subscribe.
In this issue:
Raffles Residences – The New Kid on the Block - $2,500 To Get the Sales Pitch
New and Noteworthy – Pivoting at The Sudbury
128 Beacon Street, unit A – Spacious Apartment, Reasonable Value – Well Bought
776 Boylston Street, unit PH2E – $21,500,000 Sale at the Mandarin – Well Sold
445 Marlborough Street - Discount to Replacement Costs – Well Bought
What’s Catching Our Eye
Raffles Residences – The New Kid on the Block - $2,500 To Get the Sales Pitch
Boston’s Back Bay is the future home for Raffles Hotels & Resorts’ North American debut. The hotel and condominium project, which is currently under construction, sits on the outskirts of Copley Square at 40 Trinity Place, just behind the Hancock Tower (yes, we know, it’s now called 200 Clarendon). This will be one of the few “hotel service” buildings in Boston. Interested in hearing more? Get out your check book because it’s going to cost you $2,500 just to get the sales pitch.
The project, which consists of 154 hotel rooms and 146 condominium units, has been in the works for years. The seemingly endless permitting process started back in the summer of 2012. One of the project’s complicating factors involves air rights as the new building is cantilevered over the neighboring University Club.
Windiest Block in the Back Bay?
Wind is another major issue the developer has had to contend with. This is said to be the windiest block in the Back Bay. When the Hancock Tower first opened, the winds caused the building to sway to the point that upper level tenants suffered from motions sickness. That problem was eventually corrected with the installation of a “tuned mass damper” (two 300-ton counter weights).
First hand accounts of the treacherous wind conditions can be read at the The Boston Planning and Development Agency’s website – Public Comments, link here. One commenter quoted a 1990 Boston Globe article describing the area as the “one place to avoid on a windy day” and explained that wind “gusts slapping at the top of Boston’s tallest building blasts down and fan out, sometimes taking umbrellas and even unwary pedestrians with them.”
One thing we’re struggling with is parking. Initial project designs provided on-site parking for 100 cars (less than one space per unit). Interestingly, the car parking was to be located on the fourth and fifth floors and accessed by a pair of automobile elevators. Midway through the permitting process, the developer scrapped on-site parking and apparently entered into “long-term agreements” with parking garages “located a short walk” from the property. This doesn’t sound like “deeded parking” to us and valet or no valet, at these price points, it’s not very luxurious.
$2,500 – A Sales Gimmick, or is the Project Oversubscribed?
As for the $2,500 to get an audience with the sales team, we were told that the fee is because demand for units is so high. We don’t buy that – we’re chalking the fee up as a sales gimmick aimed at generating some buzz (the $2,500 is fully refundable if you don’t buy). There’s actually a lot to like about this project, but let’s be honest, unless the developer packs the building with investors, these projects take years to sell out. But maybe this one will be different?
New and Noteworthy
Pivoting at The Sudbury – Renting Units
We’ve previously commented that condominium sales at The Sudbury seem to be moving at a snail’s pace. Only a handful of the 55 condominium units have sold so far. The developer is now offering condominium units on the rental market.
The folks over at The Sudbury seem to be taking a page out of Millennial Partners’ playbook. Last year, Millennial notified the City that the residential component (321 apartments) of their large Winthrop Square project will “initially be a rental program.”
So much for the idea that if you build it, they will come.
Fall Market – Some Quick Deals Out of the Gate
Like clock work, as we flipped the calendar to September, the fall selling market got underway in earnest with a slug of new listings hitting the market. It’s noteworthy that a handful of newly listed Back Bay/Beacon Hill condominium units had contracts in less than a week. The sweet spot for these quick deals is in the $2.0 to $3.5 million range.
With inventories getting close to pre-pandemic levels, we’re keeping a close eye on prices, which have been more or less flat over the last 18 months in our market. The wild card relates to continued strong demand. Have we been working through pandemic related pent up demand or does the demand story have legs? Our guess is that the answer is somewhat dependent on macroeconomic events.
Well Bought/Well Sold
128 Beacon unit A – Spacious Apartment, Reasonable Value – Well Bought
It took a couple of years, but the sellers of unit A at 128 Beacon Street finally unloaded the place for $5.3 million ($1,291/sf). The property was first offered for sale in January of 2019 for $7.9 million, so the final sale price is $2.6 million, or 33% below the lofty original asking price.
Re-developed in 2004, this 11 unit complex was once part of Emerson College’s Back Bay campus. With 4,112 square feet of living area and 3 bedrooms, the unit occupies the parlor and garden (basement) levels. A key feature of the property is the private rear courtyard and deck over the garage (two garage parking spaces are included).
For us, the appeal of the unit is the spaciousness. Developers today rarely build out 4,100 square foot units; the economics just don’t work. Additionally, the parlor level (1st floor) in these old brown stones tends to have very high ceilings. But readers of our work know that we’re not fans of living space in basements, and this unit has two bedrooms in the “lower level.” We’re also a bit wary of outdoor space that’s just a chip shot away from Storrow Drive.
The buyer secured commercial financing, so we’d expect to see the unit back on the market after a much needed rehab. It’s a good building, in a good location, and the deal looks to be market correct to us. We’re calling it – Well Bought.
776 Boylston Street, PH2E - $21,500,000 Sale at the Mandarin – Well Sold
Yes, it’s big (6,829 square feet), and pretty spectacular. That about sums it up.
This double penthouse unit sold back in 2011 for $13.2 million as raw space before being built out to its current state. At $21.5 million ($3,148/sf) it’s definitely an eye catching transaction, but it should be noted that the original asking price was $28.0 million back in mid 2019, so the final sale was 23% below the original price (is anyone picking up a pattern here?).
This was a dual agency transaction, where the same broker represented both the buyer and the seller – a no-no in our book. As we see it, the seller got the best of this one, it was – Well Sold.
445 Marlborough Street – Discount to Replacement Costs – Well Bought
445 Marlborough Street has a new owner, changing hands for $8.6 million. The most recent asking price was $7.749 million, but the final sale included an additional 780 square feet of living space in the neighboring building. By our calculation, it’s actually a modest discount to the asking price. It should be pointed out that the original asking price back in 2018 was $9.85 million (that price included the additional square footage).
The house was extensively renovated and has a very contemporary feel. It has good outdoor space and parking for four cars, two spots in the garage. We struggle with the location, as being on the west side of Mass. Ave. it gives us more of a Kenmore Square vibe.
From a valuation perspective, you’d need a bottle of aspirin to figure out what you’re actually getting (the out of town listing agent included the garage as living space). That said, for this level of renovation you’d be hard pressed to recreate this property for anything close to the sale price. On top of that, you’re talking about close to two years of “bad road” to complete the project. We’re calling this one – Well Bought.
—————
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.