Downtown/Financial district infill and small developments

[Justbuildit]

"The project did not require any variances." Music.

Curious what the all-in costs are going to be for this project. The building was quoted as being $3.8M, and another $1.6M on the retrofit. With what should be relatively low legal and regulatory fees/charges, seems like a pretty affordable way to bring 15 new units to the market even considering the ROI hit on the two affordable units (not to mention the reduced long-term tax benefit). Really hope we get more than 6 of these applications.

Let's assume it's $5.1M total, per this link, and that means cost per unit is $340,000. Yes they're small, and yes some will be sub-market, but at a current rate of even $750/sf, that's a healthy margin.

$5.1M Loan From Rockland Trust Makes Way for First Downtown Office Conversion by Boston Pinnacle

Boston — Boston Pinnacle Properties secured $5.1 million in financing from Rockland Trust for a 145-year-old building on Frankli

therealreporter.com

 

[stick n move]

110 Canal Street​

“110 Canal Owner LLC (the Proponent) is proposing the adaptive reuse and development of an existing building with vacant office and vacant restaurant space. The Proponent proposes to repurpose the building into a hotel with guestrooms on the upper floors and a ground-floor restaurant. The proposed project will include approximately 82 Hotel rooms, a restaurant, and surface parking in the existing adjacent parking lot. The proposed project does not contemplate any changes to the property footprint or building envelope. All work will be within the existing building.”


https://www.bostonplans.org/projects/development-projects/110-canal-street

 

[Justbuildit]

I don't hate it, we do need hotels, and maybe this has been in the works for awhile, but I'm really surprised that this wasn't immediately pivoted to the conversion program under PLAN: Downtown. There was some moaning about tax breaks to developers upthread, but clearly the giveaways aren't big enough if these guys are passing over a 75% tax break for 29 years to instead build a hotel. Bulfinch Triangle is squarely within the plan area, too.

Is developer sentiment that sour on new residential? Sure there's the 17% affordability requirement but I would have thought that this would pencil out since it's effectively a conversion already. Glad there's some new life to the street in any case.

 

[JeffDowntown]

I don't hate it, we do need hotels, and maybe this has been in the works for awhile, but I'm really surprised that this wasn't immediately pivoted to the conversion program under PLANowntown. There was some moaning about tax breaks to developers upthread, but clearly the giveaways aren't big enough if these guys are passing over a 75% tax break for 29 years to instead build a hotel. Bulfinch Triangle is squarely within the plan area, too.

View attachment 49920

Is developer sentiment that sour on new residential? Sure there's the 17% affordability requirement but I would have thought that this would pencil out since it's effectively a conversion already. Glad there's some new life to the street in any case.

I think the problem is the high interest rates (particularly 30-year mortgages). They not only make construction financing difficult, they make residential units hard/slow to sell.

 

[millerm277]

Is developer sentiment that sour on new residential? Sure there's the 17% affordability requirement but I would have thought that this would pencil out since it's effectively a conversion already. Glad there's some new life to the street in any case.

Can just be that the economics on the hotel are that positive.

Boston seems to be frequently ranked as the most expensive city in the country for hotel prices in recent years.

 

[Justbuildit]

That’s the only explanation I can come up with, and it makes sense. There are a number of small hotel projects in downtown and when family has visited they’re very surprised by hotel prices. I would’ve guessed the the super heavy tax breaks would have shifted the balance in favor of residential, mortgage rates notwithstanding.

Perfect location for the Garden, though, it’ll be sold out every event night.

 

[Aprehensive_Words]

I think the problem is the high interest rates (particularly 30-year mortgages). They not only make construction financing difficult

This is a big part of it. Conversions involve a lot of expensive work -- installing new plumbing, new doors, new walls, etc. etc. If interest rates and construction costs are stunting ground-up construction, you can bet it's affecting conversions.

The big fall-off in building permits (groundbreakings, not planning board/BPDA approvals) for new apartments last year means no one who has the money to break ground now has to worry about delivering into an oversupplied market in two years, in the way some people whose buildings are opening right now have to.

B&T had a good story a few weeks back on the hotel-conversion idea. Some of these old buildings are marginal for a residential conversion because of how deep they are, but hotels' BOH uses can be stashed in some of the square footage that would otherwise be wasted in a residential use.

Another Option for Vacant Office Buildings - Banker & Tradesman

New hotel construction has slowed to a crawl in Boston since COVID but a new source of room supply is emerging in conversions spurred by the city’s struggling office market.

bankerandtradesman.com