Re: 120 Kingston, 29 Story Tower in Chinatown
Real Estate Development
Soft condo market spurs rental activity
Boston Business Journal - by Mary K. Pratt
Date: Friday, December 3, 2010, 6:00am EST .Enlarge Image
. ..The development plans for 120 Kingston St. originally called for condominiums, which is what the Boston Redevelopment Authority approved back in May 2008.
Fast-forward two years. The development team, led by Ori Ron and the Hudson Group North America LLC, now wants rental units in the mix. The BRA in October approved the change, giving the OK to include apartments alongside the condos in the 200-unit mixed-use project.
It?s a sign of the times *? at least as far as new construction goes.
Despite low mortgage rates, condos aren?t moving the way they used to. And developers are responding, adjusting their projects accordingly. In fact, the move to rental has been happening in and around the city quietly since the housing market collapsed a few years ago. The ongoing trend may have taken hundreds of new condos out of the area?s housing mix, but it has also brought new apartments to the market at a time when demand seems to be on the upswing.
?We?ve seen a number of conversions to apartments, and new projects coming in as rental,? said BRA Director John Palmieri. ?I don?t think one is better than another, but I do think rental housing is a component of a healthy housing market.?
Even in this region, which has weathered the recent economic climate better than most other areas, the decision to forgo condos for rentals makes smart business sense. Palmieri and developers alike pointed out that concerns about the economy and job security along with tightening lending standards ...
The development plans for 120 Kingston St. originally called for condominiums, which is what the Boston Redevelopment Authority approved back in May 2008.
Fast-forward two years. The development team, led by Ori Ron and the Hudson Group North America LLC, now wants rental units in the mix. The BRA in October approved the change, giving the OK to include apartments alongside the condos in the 200-unit mixed-use project.
It?s a sign of the times *? at least as far as new construction goes.
Despite low mortgage rates, condos aren?t moving the way they used to. And developers are responding, adjusting their projects accordingly. In fact, the move to rental has been happening in and around the city quietly since the housing market collapsed a few years ago. The ongoing trend may have taken hundreds of new condos out of the area?s housing mix, but it has also brought new apartments to the market at a time when demand seems to be on the upswing.
?We?ve seen a number of conversions to apartments, and new projects coming in as rental,? said BRA Director John Palmieri. ?I don?t think one is better than another, but I do think rental housing is a component of a healthy housing market.?
Even in this region, which has weathered the recent economic climate better than most other areas, the decision to forgo condos for rentals makes smart business sense. Palmieri and developers alike pointed out that concerns about the economy and job security along with tightening lending standards have put home ownership out of the reach of many.
Vince O?Neill, founder and president of VinCo Properties LLC, said he could see a dwindling condo market back in 2006, just as his company was moving ahead with its mixed-use Chestnut Green development in Foxborough. VinCo?s development plans at the time called for 70 condos in addition to single-family homes, office units and retail space.
?We got into late 2006 and we knew the condo market wasn?t doing well. We began to talk to the town about doing rentals because quite frankly at that point, the market on the sales side was evaporating quickly. And the sources of available financing for condos were evaporating more quickly than the market itself,? O?Neill said.
O?Neill said his company decided to switch 55 of the 70 units from condos to apartments to avoid getting caught in a declining market and to capitalize on a rental market that was on the rise.
?The rental market has proved good, really good. A lot of people now can?t buy homes, so that has driven more people into the rental market,? O?Neill said, adding that the units, completed just a year ago, are nearly all rented out.
Other developers voiced similar reasons for their switch.
Gerry-Lynn Darcy, director of marketing and sales for the Northeast division of Miami-based Lennar Corp., said that those reasons prompted the switch from condos to apartments at the company?s Quarrystone at Overlook Ridge property in Melrose. Initially intended as condos, the 250-unit development was switched to apartments before its 2009 opening.
?We knew the time was not right for condominiums there,? Darcy said.
However, that doesn?t mean that the market for condos is nonexistent, Darcy said. The company is planning to build 150 luxury townhouse-style condos as part of the Hingham Shipyard redevelopment. The company sold the 21 units built during its the first phase of construction in less than eight months last year, and it broke ground this fall on the second phase, with all 18 units already sold or under agreement.
Darcy said Lennar didn?t consider converting these Hingham condos to apartments because it felt they were the right product in the right place, despite the timing. She said the robust sales have proven the company correct, despite the overall market trend toward apartments over condos.
?It proves if you have a good product and it satisfies the majority of the demographic of the area, you?ll be successful if you?re priced right,? she said.
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