The St Regis Residences (former Whiskey Priest site) | 150 Seaport Blvd | Seaport

kmp1284

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Ah, good clarifications, thanks! I'm annoyed and surprised that the BPDA project managers can't be bothered (at least in the case of the two projects you cite above) to delete filings after the proposals go kaput. How hard can it be to practice such an elemental act of good archival hygiene?
They should be noted as ‘canceled/on hold’ but I don’t see the need to remove them from the public record. Though I wouldn’t bet on it happening any time soon the projects could come back in the future. This was already the second time around for Copley and I’m sure there are other projects like 40 Trinity that will go on ice only to re-emerge in better times.
 

John0101

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Harbor Garage or whatever it's called is probably DOA now, no lender syndicate is going to roll the dice on a project like that at this point. Anything in seaport that doesn't have a crane up already is going to stop as unit absorption out there grinds to a halt over the next 3 years and market rents roll down across the board. Probably see a stratified "flight to quality" where Benjamin/Via do fine but the cuspy stuff like Nema, Waterside, and Park 17 struggle to (a) lease up (b) hold rate w/o a ton of concessions even on renewals.

Overall my bet is that this ends up causing floor plates to shrink for CBD as companies realize that the front office workers are just as productive at home and only need to come in like once a week for team meetings, a lot of middle office "meat grinder" work gets shifted to work from home, and it accelerates the drive to push back office functions to suburban offices in lower cost of living cities. I also think that people generally will shift away from CBD highrise living back to the suburbs where they get more space and feel safer in a less dense environment. But who knows, my crystal ball is as clear as anyone else's
Thanks for your thoughts. So far Boston's knowledge industry seems to be holding up (i.e. the pharma, tech, and fin services companies), so why do you think absorption for the new developments (NEMA, waterside, etc.) will be so lackluster without major job losses / corporate exodus from seaport?
  • As long as the offices around seaport and full and humming along, I can imagine a strong desire to live in the area
  • Public transportation into Seaport is brutal, which creates high opportunity cost for commuting into the area for work, especial for jobs with long hours
  • Until we get a vaccine, my gut feeling is that companies will do a rotation program for employees.. 2-3 weeks WFH and 2-3 weeks in the office, however, they will still need separate office space to ensure sanity conditions.
 

stoweker

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Thanks for your thoughts. So far Boston's knowledge industry seems to be holding up (i.e. the pharma, tech, and fin services companies), so why do you think absorption for the new developments (NEMA, waterside, etc.) will be so lackluster without major job losses / corporate exodus from seaport?
  • As long as the offices around seaport and full and humming along, I can imagine a strong desire to live in the area
  • Public transportation into Seaport is brutal, which creates high opportunity cost for commuting into the area for work, especial for jobs with long hours
  • Until we get a vaccine, my gut feeling is that companies will do a rotation program for employees.. 2-3 weeks WFH and 2-3 weeks in the office, however, they will still need separate office space to ensure sanity conditions.
with regard to absorption, there's a lot of new units and you may see an exodus of people from urban living if they don't feel safe in a highrise / high density living environment. either way construction lending is dead for anything not committed to for at least the next 12 months, no one can underwrite a development right now without an understanding of what the new normal looks like.
 

stefal

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with regard to absorption, there's a lot of new units and you may see an exodus of people from urban living if they don't feel safe in a highrise / high density living environment. either way construction lending is dead for anything not committed to for at least the next 12 months, no one can underwrite a development right now without an understanding of what the new normal looks like.
Albeit trivial in the scale of this pandemic, I have seen A LOT of comments that we really design our urban housing, especially in northern cities, to be inward facing. On more than one occasion, I've heard/seen people saying they'll never rent/buy without their unit having a balcony ever again, and even if they do have a balcony, it's poorly designed. Having been locked up in an apartment with no connection to the outside myself, my next search will likely weigh balconies/porches/outdoor connections in general a bit higher.
 

KentXie

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Albeit trivial in the scale of this pandemic, I have seen A LOT of comments that we really design our urban housing, especially in northern cities, to be inward facing. On more than one occasion, I've heard/seen people saying they'll never rent/buy without their unit having a balcony ever again, and even if they do have a balcony, it's poorly designed. Having been locked up in an apartment with no connection to the outside myself, my next search will likely weigh balconies/porches/outdoor connections in general a bit higher.
I remember the going consensus on this forum was that balconies were ugly and beneath Boston's architecture (a la a lot people shitting on balconies in Miami and Toronto's condo towers). Crazy how they actually serve a useful purpose. Put me down as someone who is for more balconies.
 

Czervik.Construction

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Having lived in high rises with and without balconies.... balconies are as frequently used as "amenities spaces"
We put a sofa coffee table and chaise thingy out there and used it sporadically. They are useless in cold weather (unless you smoke) and it gets windy AF, too.

My 2 cents: I prefer a view and a roof deck.
 

stefal

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I remember the going consensus on this forum was that balconies were ugly and beneath Boston's architecture (a la a lot people shitting on balconies in Miami and Toronto's condo towers). Crazy how they actually serve a useful purpose. Put me down as someone who is for more balconies.
Balconies look worse when there's no thought given to their design and they look like they were glued on to a building.

Having lived in high rises with and without balconies.... balconies are as frequently used as "amenities spaces"
We put a sofa coffee table and chaise thingy out there and used it sporadically. They are useless in cold weather (unless you smoke) and it gets windy AF, too.

My 2 cents: I prefer a view and a roof deck.
Yeah, wind and temperature are of concern.. why I mentioned that especially northern cities are designed facing inward.
Perhaps on high rises more interior and intimate and shared green spaces could be included, maybe a better version of the failed Shanghai Tower 'sky gardens' could work..
 

HenryAlan

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I prefer a roof deck over a balcony, but for something more private, french doors with a juliette porch are also better than a balcony.
 

HenryAlan

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In what way??
Just a statement of personal preference. Porches tend to be small and confining, not enough room for much comfortable furniture. But french doors can turn your entire living area in to a porch.
 

chmeeee

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Just a statement of personal preference. Porches tend to be small and confining, not enough room for much comfortable furniture. But french doors can turn your entire living area in to a porch.
I'll have to disagree with that. I lived in a unit with a French door Juliette balcony. It was just a really big window. Better than not having it, but worse than a real balcony where you could actually go outside.
 

John0101

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with regard to absorption, there's a lot of new units and you may see an exodus of people from urban living if they don't feel safe in a highrise / high density living environment. either way construction lending is dead for anything not committed to for at least the next 12 months, no one can underwrite a development right now without an understanding of what the new normal looks like.
Thanks for the thoughts / insights.

How do you think the underwriting landscape would look if there was an exodus from CBDs but if we return to the low interest rate & search for yield environment?

More senior debt on capital stack? Increase use of mezzanine? See move of stabilized core+ and value-add properties be repositioned into core?

Maybe more higher-end residential? They probably had decent rent payment rates, and once those buildings have stabilized, the developer can sell it off to an investor looking for yield. Could this be a good for up and coming work-play-live develops like Assembly, Boston Landing, Arsenal in Watertown?
 

stoweker

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Thanks for the thoughts / insights.

How do you think the underwriting landscape would look if there was an exodus from CBDs but if we return to the low interest rate & search for yield environment?

More senior debt on capital stack? Increase use of mezzanine? See move of stabilized core+ and value-add properties be repositioned into core?

Maybe more higher-end residential? They probably had decent rent payment rates, and once those buildings have stabilized, the developer can sell it off to an investor looking for yield. Could this be a good for up and coming work-play-live develops like Assembly, Boston Landing, Arsenal in Watertown?

I think the deal landscape is a capital flight is to Class B suburban apartments, suburban office (potentially... once users figure out what they want), last mile industrial, and SFR. Retail & Hospitality are toast, a lot of the non-core (not that you can call hospitality that but i digress) will probably go back to the bank then get left for the opportunity funds to pick over. NNN is also sidelined for a while until people can figure out what the spreads should look like on like an outparcel applebees.

already starting to see it in the NYC metro as people are like "get me out of here"; NYC is great until you're stuck in your 500 SF 2BR for 3 months. High end residential isn't doing so hot right now on collections - people are getting walloped by the corporate rentals (i.e. sonder, stay alfred, etc) who straight up told everyone they aren't paying bills (although as a going concern those companies [and probably AirBnB] are toast). I think you might start to see less dense non-cbd high end resi (like what you suggest, maybe add Hanover Weston to the mix if it ever happens), but who knows. Also everyone seems to have a different view point on the work aspect - why go to an office if you don't have to? Also yield expectation are typically lower on this product, so investors won't go there for yield - you're going there for more consistent cash flow (alledgedly)

With respect to capital stacks post COVID, it's going to take a long time to ramp back up into construction lending, with no price discovery, anticipated slow growth, and a likely severe impact to household formation (compounded by a smaller 20-30 YO cohort) this probably puts the skids on new ground up. When it does come back capital stack will be risk off - probably see a lot more covenants, a lot less leverage, and a lot more pref equity to bridge the gap. JVs will probably be a lot more LP friendly in the new world - if you can get anything done. Heavy lift repositioning is same but different - lot of debt fund money out there for bridge loans, they've just gotten a lot more expensive (spreads went from like L+265 to a 1.5floor+350 over nigth) so you might see a pull back in activity with the exception of "sure thing" main&main repositioning.

Related to this, thematically deal flow for PE will probably be targeted towards stalled developments coming in as rescue capital or sales of pre-stabilized assets to re-set the basis and allow for a rent roll down. I've heard value declines by anywhere from 5%-30% depending on asset class, but with no trades / no real price discovery who knows? Spot cap rates also probably have gapped out a bit (taking into account the rolldown in NOI, not just like, on march all is rosy NOI forecasts) for the "covid discount" as people UW lower 5 year NOI growth even though interest rates are at historical lows and there's a ton of cash on the sidelines. From a DCF perspective sure, your interest expense and NOI is lower so it's probably a wash but your upfront lender reserves just increased a ton and you're back end cap rate moved against you so pricing comes down to get you back to your levered return expectations (assuming that people don't adjust discount rate higher).

Anyways, my $0.02 cobbled together from a lot of conversations over the past couple of months with a lot of other PE folks.

anyways to bring this back on topic, not sure how cronin does on his own equity for this deal (if he hasn't tripped liquidity covenants yet) now that his primary source of income (bar ownership) has been shut down for 3 months with high fixed costs at the bars and high fixed costs for general conditions associated with leaving the st regis site idle. going back to the point earlier about rescue capital, this is probably one of those deals where someone comes in to give him super high-octane pref so he gets cash but has to pledge like his entire life. or it goes to MACK (who i think still owns the B piece) to workout and firesale units when they come online, their last dollar basis is like $3.5MM without all of the accrued interest on their piece...
 
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stoweker

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think i was right, heard that the mortgage holder might be prepping to put it up for sale... if so good night and good luck cronin. on the upside cheap units in seaport when the lender takes title on delivery and firesales this stuff?
 

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