Raffles Boston (40 Trinity Place) | 426 Stuart Street | Back Bay

I thought this tower was supposed to be apartments actually, but Simon Properties chickened out and decided to just stick with their malls. I still think they should partner with somebody else who is capable of getting this done.
 
stoweker said:
i mean, in fairness to them they're a mall owner whose stock has been getting crushed since like 2016... they do retail well. Not that it's the same but GGP did condos at the "natick collection" and look how that turned out.

development of condos for a REIT also isn't a great use of cash, it's not FFO accretive and you have to pay corporate tax on the sale of units so you have some tax loss which makes it tougher.

All that being said, they probably should've set up a condo for the air rights then flipped it to someone like Related who has a ton of experience building complex condo deals. my gut is that probably won't happen now, Boston has a ton of supply to absorb, but in the long run it'll make sense to re-introduce the concept, need to add a lot more beds to the city.
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All this being said, Simon is sitting on a BPDA-approved project with (what was) a 10-year approval shelf life and has to have been worth something. Getting an air-rights project of that magnitude approved is highly non-trivial. You would think they would at least try to sell the rights to someone else. Even if whomever that purchasing entity is doesn't develop the same building, a project change request goes through a lot more smoothly than a brand new proposal to the BPDA. We've seen a bunch of BPDA-approved projects get resubmitted for design changes and re-approved lately (e.g., GE's approved designs at Fort Point that got sold/redesigned/reapproved). It makes no sense for Simon to just sit on this massive investment and let it expire unless they still plan to do something with the parcel. If they have no intentions of doing anything with the parcel, then it makes no sense for them not to try to earn at least some return (or stop loss) on that investment by putting it on the market. Maybe I'm missing something (if so, please enlighten).
 
stoweker said:
smaller units rent more expensive on a PSF basis, but don't necessarily line up with what renter demand would likely be if you did a highrise at copley. would think your renter base would tend to be older, wealthier residents checking out the city for the first time before commiting to a condo somewhere; that would favor 2-3 BRs, with lighter studio demand. unit mix is probably densest in the 1x1, 1x1(den) and 2x2 floor plans to make it work.
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I get that, but it's also neighboring the South End, which has plenty of younger people and is next to lots of offices. Could imagine lots of small, nice apts for young professionals (and maybe split amongst them)....
 
stoweker said:
agree way too much aggregate luxury condo supply hitting the market right now. if you have the money you have a lot of options in Boston right now. I mean MLS has 144 options for condos above $3.5MM right now, and the excludes all of the unsold inventory at 1D, sudbury, echelon, st regis, raffles, that thing on lagrange, winthrop square....
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Might be a positive silver lining then, that the Harbor garage building isn't forward anytime soon. I suppose we've reached saturation in the high end condo market.
 
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Stoweker - if you dumped all of your knowledge into an online course, I would be first in line to register!

stoweker said:
for sure. but tough to keep small expensive units leased. you hit a certain point on nominal dollars (especially on upper floors) where the pricing doesn't make sense any more and people evaluate options for larger units on lower floors (or look to other buildings). also at high price point renters expect larger units / condo quality build out. you're probably not targeting young renters (unless they work for like bain cap), you're targeting wealthier people from like wellesley who sold the house moved to the city and are trying it out before they buy, and other more transient older renters (part time boston residents for work, corporate relocations, stuff like that)
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stoweker said:
for sure. but tough to keep small expensive units leased. you hit a certain point on nominal dollars (especially on upper floors) where the pricing doesn't make sense any more and people evaluate options for larger units on lower floors (or look to other buildings). also at high price point renters expect larger units / condo quality build out. you're probably not targeting young renters (unless they work for like bain cap), you're targeting wealthier people from like wellesley who sold the house moved to the city and are trying it out before they buy, and other more transient older renters (part time boston residents for work, corporate relocations, stuff like that)
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These are good points. I was thinking of what you see in NYC where relatively new luxury ish towers get chopped up for apartments split by young bankers and lawyers in Murray Hill and Downtown. Very different market (and really not a sign of success by any means), but makes you think nontetheless.
 
Just wait until the blue glass goes up on this one, just across the street from the Hancock - - it'll never be referred to as "Raffles" by Bostonians, rather as "Mini Me".
 
One Financial Center is such an interestingly shaped building and it would look so much better if it didn't have those awful ribbon windows.
 
I just really don’t like a blue glass building right next to the Hancock.
 
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