According to Kimberly Blanton in the Boston Globe (The last empty lot), Boston based developer Ted Raymond plans to develop 161-163 Commonwealth Ave in the Back Bay (click to see a satellite view of the site) into five luxury condominiums of about 4000 square feet each:
Each floor of the new project will have one 4,000-square-foot unit that will range in price from $6.4 million to $8 million - excluding interior finishes, which will cost extra. The prices put the project in the same league as the Residences at Mandarin Oriental Boston on Boylston Street, arguably the city's most chic address.
Will they sell? Well, the downtown Boston market remains robust in terms of price and there has been strong demand for high end luxury units in prime locations like this development:
In the second quarter, Boston's core downtown neighborhoods bucked the statewide trend of price declines. The median price downtown surged 5.4 percent, to $500,000, according to Listing Information Network Inc., which tracks that market. Sales dropped 15 percent, largely due to a lack of supply for prospective buyers.
However, because of the credit crunch, Raymond has to sell 3 of the 5 units prior to beginning construction:
On his lot, Raymond was forced to make a concession because of the credit crunch, which has made it extremely difficult for developers to obtain financing. During the real estate boom, developers easily obtained financing for enormous condo projects. But Raymond said he would not begin construction until he has agreements to sell three units.
That reduces some of the risk lenders take, because it shows there is interest in the project from prospective buyers before giving the developer the money to use for construction.
Although it is on Boston's own grand boulevard, Comm Ave, I have doubts of them getting this type of money per square foot without having a "special" draw like say, the river views of the Charles (100 Beacon Street), or a marquis "name" (the Mandarin), or public garden views (0 Marlborough Street). That doesn't even say anything about our current economic situation or the fact that the ultra high end market is becoming somewhat more crowded with inventory.
Don't get me wrong, the project also has a lot going for it starting with a Boston developer who has a great reputation for high quality projects. Plus more and more buyers at this level have been preferring single level living with large floor plates rather than the multi-level townhouse living that had been more popular in the past. It is a smaller "boutique" building with only 5 units that is potentially more private and exclusive than most other luxury developments but it still has the amenities like underground parking, outdoor space, custom finishes, and 12 foot ceilings that buyers look for. It may take a little longer in our current economic climate, but the units will sell.