Finish carpenter David Haseltine works on one of the higher-priced condo units at 547A Congress St. last week.
Tom Moulton, developer of the 547A Congress St. project, stands in one of the units with a view of Back Cove. The condos, with wood floors and brick walls, are meant to resemble New York City lofts.
The condos at 547A Congress St. range in price from $165,000 for a studio to $650,000 for a 3,000-square-foot unit. Sixteen of the 18 units have already been sold.
Market stalls, condos follow
Last December, developers of a proposed Westin hotel/condominium complex in downtown Portland were confidently predicting that they'd quickly get deposits on the project's 97 luxury units and break ground during the summer. By March, they now acknowledge, only a dozen hopeful buyers had put down money.
"The timing was off," said Tom Niles, executive vice president for development at The Procaccianti Group. "I think people were starting to pull back and wait on the sidelines."
Timing. The widely repeated mantra in real estate is location. But market timing can be just as crucial, although not as easy to recognize.
That's especially true for the handful of major, mixed-use condominium development plans that have attracted so much publicity in Maine's largest city. These are complicated, expensive ventures that can take years to approve, finance and construct. Their fate is influenced by unforeseen shifts in the overall economy, interest rates and construction costs. To date, none has been built.
By contrast, some smaller projects that either involved renovating existing buildings or were aimed at mid-level buyers have moved forward. Faster to bring on line, they were in the right locations at the right time.
Earlier this month, The Procaccianti Group of Rhode Island asked the city for a one-year extension of its site-plan approval. The developer was essentially saying that it had missed the latest wave of demand for high-end condominiums in Portland and would position itself for the next surge.
"Markets go in waves," Niles said. "And they don't all go at the same time."
The image of real estate markets moving up and down in waves is an apt description. As early as 2004, Niles said, there was a perception that the wave was cresting in some big-city condo markets.
But Procaccianti expected the wave to continue rising in Portland, when Michael Liberty, principal in the South Portland-based Liberty Cos. and a partner in the venture, first proposed the $110 million project.
Procaccianti was banking on a mixed-use strategy to help reduce risk. Its primary goal was to build a profitable, four-star hotel in downtown Portland. To offset the cost and reduce daily room rates, developers wanted to underwrite the hotel with luxury condos, with prices ranging from $500,000 to $1 million.
This formula was familiar to Procaccianti. It recently bought The Westin Providence Hotel, which has 364 rooms. Next door it is building a 380-foot tower with retail space, interior parking, 200 new guest rooms and 105 condominiums.
Procaccianti had lined up financing for Portland, Niles said. But it wanted 30 percent of the condo units under contract before moving ahead. When that didn't happen, the company first considered scaling back, then decided to put the entire venture on hold. It also listed the site for sale -- to keep its options open, the company said.
Procaccianti now plans to tear down the former Jordan Meats plant and develop a parking lot in the interim. If it moves forward with development, the redesign is likely to feature a different mix of hotel rooms, condos, retail and office space. The company needs to envision the market in 2009, though. It will take roughly 22 months just to build the project.
Major, high-end condo projects have been difficult to develop in Portland, in part because there's really nothing comparable in the market.
That has been one challenge facing Riverwalk LLC, which is developing The Longfellow, a 116-unit luxury condo project across from the city's Ocean Gateway cruise-ship terminal. The company plans to start construction in December on an adjacent, 719-space parking garage, aided by special zoning and tax breaks from the city. It plans to begin the condos sometime next spring, with starting prices of $500,000.
To gauge demand, the developer examined sales at existing luxury condos, such as Chandler's Wharf. It reviewed where buyers came from and their current home values. It also looked at pre-sales of luxury condos in Boston, Providence and other nearby markets.
This information only helps shape rough projections, said Tim Seekamp, president of Harborview Properties, which is owned by one of the Riverwalk LLC partners. While these figures were being gathered, the aftermath of Hurricane Katrina and the global demand for building materials sent prices for concrete and steel up nearly 30 percent.
"It makes it difficult to put a number on what a project really costs to build," said Seekamp, who also was involved in marketing The Westin project.
The Longfellow, which has been in the works for roughly three years, is gaining momentum now, thanks to a recently formed partnership with Intercontinental Real Estate Corp. of Boston, a large real estate investment firm and developer.
Nick Iselin, the company's director of development and construction, said he'd like to have 20 percent to 30 percent of the condo units under contract before breaking ground, but expects it will take up to two years to sell every unit.
"We have a long time to market this product," he said.
The projects that have moved ahead so far are smaller ventures that target a niche, such as young professionals or empty-nesters who want to live in the downtown arts and business district. They include a handful of projects along and near Congress Street, including Kimball Court, 537 Lofts, Chestnut Street Lofts and 547A Winslow Lofts.
Tom Moulton, who is redeveloping the building at 547A Congress St., said he has sold 16 of the 18 available units, which range in price from $165,000 for a studio to $650,000 for a 3,000-square-foot unit. His project, which features New York City loft-style living with brick walls and hardwood floors, is nearly complete. It took 16 months to build and cost $4.5 million.
"At the time we did it," he said, "banks were willing to lend for speculative development."
The passage of time has been a mixed blessing for Jeff Cohen and Waterview Development LLC.
His company has been trying for nearly two years to build a 12-story, 94-unit project on Cumberland Avenue. He endured a court challenge from neighbors, which lasted more than a year. Now he's negotiating a construction loan and said he hopes to break ground this spring on the $25 million project. Roughly two-thirds of the units are under contract, he said, for prices ranging from $285,000 to $495,000.
The delay hurt him, Cohen said, because construction prices rose and demand softened. But in the long run, he said, the market should be in better shape when he starts building next year.
Staff Writer Tux Turkel can be contacted at 791-6462 or at:
tturkel@pressherald.com
Reader comments
Scott of Wilton, ME
Oct 17, 2006 11:22 PM
tw,
Traditional Maine values include a world class work ethic (we still speak english in our stores), close relationship to the land (we actually know the name of the stream running through the our property), hunting, fishing, public access on private land (instead of protesting and posting your land), tolerance of wildlife instead of whining when a turkey craps in your backyard, stopping to assist someone in need of help (we're not egocentric robots like many of those south of the border), weekends at the camp with family and friends, campfires on the beach, target practice in the backyard, country music, actually taking a truck off pavement and getting dirty, being able to farm without transplants complaining about the aroma of chicken manure, and enjoying bean hole beans actually cooked in the ground. We don't much care what you do, so long as you don't threaten the lifestyle we have chosen. This ethic is not as strong in southern maine, due to the dilution effect. There's a big state outside of Portland. We have respect for privacy and more tolerance than you give us credit for. Yes, we may have trailers, but you have whole towns that are slums; Chelsea, Everett, Lawrence, etc,. In other more "affluent" towns, the neighbors don't even know each others names. Perhaps you can't comprehend this since you didn't grow up in Maine. Many people from away develop an appreciation for this, while others remain numb. In regards to state employment, I imagine narsicism exists to some extent in all state governments, but by no means is it a job requirement. Maybe you ought to explore other means to enhance your resume so you will be more competitive next time you apply.
Vince of Portland, ME
Oct 17, 2006 4:38 PM
There is this odd arrogance that exists among many Mainers. I am born and raised in Maine, but I spent about 6 years in Boston. My time in Boston taught me that the only major differences between Massachusetts and Maine are the existence of high tech companies and realism.
tw
Oct 17, 2006 4:09 PM
To Steve, others,...exactly what are the "traditional maine culture and values" that have been so special? Seems to me Maine people having been screwing over other mainers for decades.
Maine crime rates were worse 20-30 years ago before rich outsiders started moving in,sex offenders in todays maine headlinenews always seem to have offenses that go back decades in the state, and every mainer knows 'you can not get a local or state job unless your related to another mainer'.
So explain why traditional maine culture and values are all that treasured? Sorry, in my opinion mainers are and have been quite mean to each other for a long time.
joan of portland, me
Oct 17, 2006 4:05 PM
Hey Joanne and tw I hate to break it to you but the people who act like you describe are bitter transplants who came here thinking they would be wealthy. For the most part their wealth has been eaten up by high cost of living or taxes, not the way they thought life should be. Native Mainers know that we don't have good paying jobs here and the cost of living and taxes is outrageous, we either stay or leave we are not bitter trailer trash. If you look back into history you will find that some of the worlds most wealthy people have been living or summering in Maine because we aren't overly impressed with them and bother them. Here in Maine there are many people who could buy and sell you a million times over but for the most part we are not showboats. Perhaps you've mistaken our respecting others space (and pride in ourselves) for jealosy. I'm terribly sorry you feel that way but I hope it makes you stay away or go back where you came from.
Joanne of South Portland, ME
Oct 17, 2006 3:24 PM
I totally agree with you tc! I've been in Maine for about 18 years now from the New York area, and I find that many Mainers give anyone with more than they have the cold shoulder. Like it's wrong if you're not as you put it "Trailer Trash Mainers".
Scott of Wilton, ME
Oct 17, 2006 2:31 PM
tw,
I need to elaborate on your comment. The perceived distain for "richies from away" is not their wealth, but the changing demographic they represent. Maine, especially southern Maine, is becoming a choice site for "the beautiful people." These folks are considered a threat to the traditional maine culture and values. People move here and attempt to change the state, rather than appreciating the qualities that have made it a great place to live for natives and those from away. Personally, I'd rather more successful people move here than those more despondent folk that have nothing to contribute, yet expect to be recipients of lifelong social services.
tw
Oct 17, 2006 1:57 PM
WOW! I thought Maine was an all American patriotic state. Your typical resident seems to hate people with any wealth above a pickup truck and a trailer for a home.
Ever consider moving to a communist country? How about North Korea?
Kate of Portland, ME
Oct 17, 2006 1:23 PM
I could not afford a 500K condo or house anywhere. Not at this point in my life, anyway. Yet, I don't see a reason to be jealous and irritated about the fact that others *can.*
So what if you pass someone in Monument Square who lives in a million dollar condo? You're just as likely to stand in line at the bank next to someone who lives in a million dollar house in Falmouth. Again, so what?
Where people choose to settle with their wealth is really not my concern. I don't think we're in danger of having Portland turn into Beverly Hills, California.
*breathe*
John of Camden, ME
Oct 17, 2006 12:52 PM
Well, Sally G, I didn't think I was whining. I was thinking of what kind of lunatic would shell out $500,000 for a condo on smelly old Congress Street?
A condo in NYC gives you access to a vast metropolis. A condo on Congress Street gives you access to morning social anomie with vagrants living in your doorwell, boarded up storefronts across the way, about 4 months of frigid snow-covered city landscape, and limited cultural resources.
In terms of value, it just isn't there. But I suppose there's a sucker born every minute for every opportunist developer trying his dernest to cash in before things peak.
tw of boston, ma
Oct 17, 2006 12:28 PM
For you former New Yorkers,i could have told years ago 'moving from NY City to Portland,Maine' is a lateral move.
Check out the higher rates of Rape,burglary,larceny theft rates compared to NY City:
http://portlandme.areaconnect.com/crime/compare.htm?c1=Portland&s1=ME&c2=new+york&s2=NY
