View from The Modern 2
From the penthouse levels of The Ritz-Carlton, Boston Common, residents can watch the July 4th fireworks on the Esplanade, tell if the Sox are playing at home, and see if their ships have come in at the Seaport. But such multimillion-dollar views—last year Manny Ramirez's former residence there sold for $5.55 million—were constructed in a part of town that is neither Beacon Hill nor Back Bay; they were built in what is now called Midtown, formerly nicknamed our "combat zone."
Maybe it took a New York-based developer, in this case Millennium Partners, to see what Boston developers couldn't: the rare opportunity to build three residential towers—two soaring to approximately 40 stories, the third nine stories tall—on the edge of our most famous parks, just a short walk from those best neighborhoods and the Financial District. The location is actually spectacular, if you can ignore the history (peep shows and prostitution) of that parcel of real estate on the edges of Chinatown, the Theater District, and Downtown Crossing that's not quite a neighborhood of its own. "It was definitely easier for a New York developer to have the vision to pioneer a neighborhood in that spot," says Michael Carucci, managing partner of Group Boston Real Estate. "The history doesn't scare them." Millennium also had deep pockets and the ability to wait seven to 10 years for a return on its investment.
Now the rest of us have learned the lesson. It's better than okay to invest in luxury properties on the margins of our best neighborhoods; indeed, it's profitable for those seeking long-term gains. And such buildings offer what the most beautiful brownstones cannot—incredible views, concierge services, health clubs, fine dining, pet care, dry cleaners, and in the case of The Ritz-Carlton, a 19-screen movie theater.
"Buyers are attracted to the fringe because the product is new and there is perceived value," says Carmela Laurella, the broker who sold Ramirez's former penthouse last year. "Developers offer amenities like concierges, garage parking, and roof decks, so buyers never have to leave the building."
Such might be the case for the most recent success on the outer edge of the South End, The Modern 2. A 37-unit, seven-story new development on Northampton Street between Columbus Avenue and Tremont Street, the building sold out in eight months. Until The Modern 2 went up, Massachusetts Avenue was long considered the border of where luxury units could be successfully built or renovated. But this building's proximity to Symphony Hall, the Prudential Center, and the gastronomic scene in the South End make it especially appealing.
"The notion of the wrong side of the street has changed," says Ricardo Rodriguez, the exclusive Coldwell Banker broker for The Modern 2. "Density is really a factor." That is, there's no more room in Boston's best neighborhoods for new construction. While Carucci gives the immediate area a B-minus, Rodriguez says the location appealed to a wide range of young professionals, especially doctors who work at the nearby Boston University Medical Center. Another aspect also appealed: The common areas were designed by Terrat Elms Interior Design. Having the popular designers on board was "like a Good Housekeeping seal of approval," says Carucci. "It really added value to the brand." Well-known architects such as DHK Architects were attracted to the quality of construction and contemporary design.
"Rodriguez was smart," says Carucci. "The units were priced right." Condos sold for about $575 per square foot, close to the going rate for a renovated brownstone in the South End, but with more amenities. Some units garnered more than $900 per square foot once demand got going. Low condo fees bolstered by amenities like garage parking, incredible views of the city, and a Zen-like roof deck reeled in buyers. "It sold at an incredible rate for any project in this economy," Rodriguez says. "I still get calls from other agents asking what happened here."
One project that seemed to be an exception to this trend is The Residences at the W, in the heart of the Theater District. But Carucci says the W's issue was not the neighborhood, the quality of construction, or the amenities of the building, but rather "the timing with the economic crash and the short-sightedness of the lender." The developer, locally owned Sawyer Enterprises, had the vision—"it was designed right and built right," Carucci says—but the lenders were looking for short-term gains. Now the W is bouncing back, Carucci says. "The units are priced where they should be." Originally units were going for approximately $1,100 per square foot, similar to pricing at the Four Seasons, which is right on the Public Garden. Now prices have dropped to approximately $900 per square foot and units are selling.
Another luxury tower, called 45 Province, ran into similar timing and pricing issues, Carucci says, with units also starting at around $1,100 per square foot. Those prices dropped to the $800s and are now climbing back up to $1,000 per square foot.
The Ritz-Carlton residences border on the next neighborhood that will likely transform from semi-seedy retail to a luxury residential district: Downtown Crossing. Again, Millennium is likely to be the visionary with plaster and lath (as well as deep pockets), as they've just taken over the dormant excavation that was formerly Filene's. Now is the time to get in on that ground floor.
