Downtown Condo Market

[Frankie811]

http://www.projo.com/metro/content/projo_2...5.12d46cad.html

[CtownMikey]

I appreciate the update on the projects.. and am glad to hear the things will be going vertical soon. Just in time for Spring season. Just in time for this state to change it's attitude about itself.

[pete11]

I appreciate the update on the projects.. and am glad to hear the things will be going vertical soon. Just in time for Spring season. Just in time for this state to change it's attitude about itself.

http://news.tbo.com/news/metro/MGB089OZXIE.html

[pete11]

I'm not sure how penalizing really helps anything? Time is already money to a developer. Holding onto the land for an extra year instead of selling condos is a pretty hefty penalty by itself. when you add the possibility of a shrinking condo market, there is a lot of incentive for the developers to get the building up as fast as possible. This isn't a public works project and as far as I know is not getting city or state subsidies like the original Westin. I'm not even sure it is legal for the city to impose penalties on private development, although I suppose they could do things like increase the price for closing off the sidewalks, etc.

But I wouldn't waste a lot of sleep thinking that the developers are moving slow because they are sandbagging or something. Either they don't have cash flow to pay contractors, or site work is much more difficult than planned. And speaking of that, I do think that local developers and the planning board have to acknowledge the difficulty of site work. Perhaps they should be taking more core samples. On this project and the Masonic Temple project the subgrade work has taken a lot longer than originally thought. I don't think that's anybody's "fault," per se, but I do think they need to extend the timelines for this portion of the projects if they want to have realistic schedules.

Brick you might be the only one on this board that gets it. In July someone (can't remember who) said that all these developers betting $100 million could not be wrong. I chuckled heartily and have quoted it often as Providence's Irving Fisher moment. Clearly it was someone who doesn't understand financing, but to get to the crux of the issue, one needs to understand what the lenders (they don't BET) uses for arbitrage (with a flat yield curve) and also how they view these condo "pre-sales" (iron clad, deposits small enough to walk away from etc...) I would think if these financiers still believed the projects to be feasible, they would be going up as fast as possible, given the fact that RI real estate is in the process of reverting back to historical means.

In related news, I believe we might have more surface parking lots in Downcity soon.

[KRC]

Brick you might be the only one on this board that gets it. In July someone (can't remember who) said that all these developers betting $100 million could not be wrong. I chuckled heartily and have quoted it often as Providence's Irving Fisher moment. Clearly it was someone who doesn't understand financing, but to get to the crux of the issue, one needs to understand what the lenders (they don't BET) uses for arbitrage (with a flat yield curve) and also how they view these condo "pre-sales" (iron clad, deposits small enough to walk away from etc...) I would think if these financiers still believed the projects to be feasible, they would be going up as fast as possible, given the fact that RI real estate is in the process of reverting back to historical means.

In related news, I believe we might have more surface parking lots in Downcity soon.

Yup, everything is about to collapse.

[pete11]

Yup, everything is about to collapse.

Didn't say that! Snarky, dismissive short answers are really not a way to foster intelligent debate. If your reading comprehension skills were sharper, you would have noticed, I was proposing that construction delays might be tied to financing problems on some of these condo projects. (and elaborated on my thoughts) If you think that is not a valid argument, dispute it. To be dismissive, and act like you might know something we don't is somewhat rude.

I am new to this board, and now I see why there are no dissenting opinions to this "Construction Boom" going on. Sorry to post anything that is not as eloquent or thought out as your posts.

[KRC]

Didn't say that! Snarky, dismissive short answers are really not a way to foster intelligent debate. If your reading comprehension skills were sharper, you would have noticed, I was proposing that construction delays might be tied to financing problems on some of these condo projects. (and elaborated on my thoughts) If you think that is not a valid argument, dispute it. To be dismissive, and act like you might know something we don't is somewhat rude.

I am new to this board, and now I see why there are no dissenting opinions to this "Construction Boom" going on. Sorry to post anything that is not as eloquent or thought out as your posts.

No problem. Sorry I didn't quite see things your way. To be honest, it was my reaction to your "I believe we can expect more surface parking lots" statement. You were the one who needs to elaborte, not me.

[brick]

I think what happens is that a lot of people on the board seem to take a SimCity view on things and not understand that there are very real drivers to the economy and that those drivers can have bad effects on what is happening.

These projects are all great and we all want them to happen, but expecting them to happen faster just because you are bored with the progress thus far (which is what a lot of the complaints seem to be) just isn't a realistic view of how these things work. I think that's where pete11 is coming from.

As for the actual issue, I know WaterPlace had financing issues early, and I know that they also had issues with the sub-grade water and had to put some extra work into holding back the river. The water issues might seem minor like "hey just build a slab" but it requires engineering, construction, and inspection work to be complete. Cotuit's pictures indicate that they are past this point and will be going vertical soon. Also, as every project has noted, it doesn't make a lot of sense to start erecting steel in the dead of winter - although this winter has been mild so far.

[Cotuit]

In July someone (can't remember who) said that all these developers betting $100 million could not be wrong.

I believe I said something to the effect of I'm sure these developers have done their homework regarding their investments and are not just throwing money at holes in the ground. I'm well aware that market conditions are continually in flux and that we can't be sure of any project until the ribbon is cut on opening day.

[pete11]

No problem. Sorry I didn't quite see things your way. To be honest, it was my reaction to your "I believe we can expect more surface parking lots" statement. You were the one who needs to elaborte, not me.

O.K. Since you think that all these proposed condo developments are going up as planned and that none of those empty lots in Downcity will ever be used for parking, then I guess its an argument. I don't think it will happen, but you seem too, and have a right to your opinion. I find it a little disconcerting that the mayor believes, now is the time to stop giving tax breaks, because of so much development. Even though most of it is residential, and adds no jobs outside of the service sector. I'm under the belief that this housing boom, lives inside of the largest credit bubble in world history. Possibly we should direct tax breaks towards professional Job expansion in Providence? Since we will have many more million$ + units to fill. Also if funding at the Westin is so secure why have they added units to the MLS, and look at the caveats they added to the "closed sales" in November. If you think I'm nuts for saying "the emperor has no clothes" then o.k. If you know anyone that is trying to sell or rent out a condo in Providence right now, ask them how it is going compared to the last time they did it.

[CtownMikey]

I kind of figured that the northeast (and rhode island) construction is just used to a slower pace than other regions. If you think about it, Gtech was delayed for so long, but if it werent reviewed by the design committee, it probably would have been done by now. I do think it is kind of crazy to label about 450 condo units as "over saturation", not that anyone said that, but that would be a reason for developers to not work so fast.

I also agree with Brick about the being bored factor. I check this site about 4 times a day hoping for new pictures or proposals, and I dont get them anymore, which is unrealistic for me to do anyways. It sometimes makes me feel as though everything that happened last January and February was purely out of hype. I don't know if people think we will have another boom after our current projects are done. The hilton tower and finishing the power block would be fantastic for the city, but this is something we have talked about too many times. I'm personally just waiting for Grants block and the Citizens expansion. Maybe even Fidelity will keep workers in Providence.

Pete, are you a brand new member who read back into a july post about this topic, or were you someone else before? I just noticed that you've only had 4 posts. So if not, WELCOME TO UP!

[KRC]

O.K. Since you think that all these proposed condo developments are going up as planned and that none of those empty lots in Downcity will ever be used for parking, then I guess its an argument. I don't think it will happen, but you seem too, and have a right to your opinion. I find it a little disconcerting that the mayor believes, now is the time to stop giving tax breaks, because of so much development. Even though most of it is residential, and adds no jobs outside of the service sector. I'm under the belief that this housing boom, lives inside of the largest credit bubble in world history. Possibly we should direct tax breaks towards professional Job expansion in Providence? Since we will have many more million$ + units to fill. Also if funding at the Westin is so secure why have they added units to the MLS, and look at the caveats they added to the "closed sales" in November. If you think I'm nuts for saying "the emperor has no clothes" then o.k. If you know anyone that is trying to sell or rent out a condo in Providence right now, ask them how it is going compared to the last time they did it.

Agreed, but I do think the city is moving much more on the job creation front. Things take time and I do believe we have quite an image problem to overcome. Fidelity (even if temporary) and GTech are certainly good things and I would hope it's the seed of something that will grow.

Personally, I really don't think these projects are in much jeapordy. They wouldn't put a hole in the ground if they weren't intending to finish. Sure, some of the ones that haven't been started may never be built (look at the proposed project next to the Hilton), but the three that have started (110, WaterPlace and Westin) will. The Westin you can bank on. Waterplace, while slower than expected, has progressed to a point where lenders will not allow what investment they have already put in the project fail. 110 is supposed to have some deep pockets, but I can tell you that they have a huge list of prospective buyers (I'm on it). It's on the order of 3 to 4 times the number of units available. Nothing is ever a guarantee, and any one of these could still fail due to unforeseen circumstances but I'm not seeing that.

[pete11]

I kind of figured that the northeast (and rhode island) construction is just used to a slower pace than other regions. If you think about it, Gtech was delayed for so long, but if it werent reviewed by the design committee, it probably would have been done by now. I do think it is kind of crazy to label about 450 condo units as "over saturation", not that anyone said that, but that would be a reason for developers to not work so fast.

I also agree with Brick about the being bored factor. I check this site about 4 times a day hoping for new pictures or proposals, and I dont get them anymore, which is unrealistic for me to do anyways. It sometimes makes me feel as though everything that happened last January and February was purely out of hype. I don't know if people think we will have another boom after our current projects are done. The hilton tower and finishing the power block would be fantastic for the city, but this is something we have talked about too many times. I'm personally just waiting for Grants block and the Citizens expansion. Maybe even Fidelity will keep workers in Providence.

Pete, are you a brand new member who read back into a july post about this topic, or were you someone else before? I just noticed that you've only had 4 posts. So if not, WELCOME TO UP!

Iv'e been lurking for awhile, but you can not get on the project board without a password, so I signed up. I like the discussions about pre-war architecture and find the people on this board to be very knowledgable. I got somewhat annoyed at the fact that this National over-hyped speculative condo market, can be viewed as real urban development. You guys do know that just adding residential units is a net loss for a community right? I believe that history will look at the turn of the 21st century as the dot com dot condo bust era. (IMO) And thank you for welcoming me, shouldnt I get flowers and a pitcher of lemonade?

[pete11]

that they have a huge list of prospective buyers (I'm on it). It's on the order of 3 to 4 times the number of units available. Nothing is ever a guarantee, and any one of these could still fail due to unforeseen circumstances but I'm not seeing that.

Be careful. the 2bed 2bath on the MLS for the Westin at over 3/4 million. The Condo fee is projected at $900 and taxes are over $11k so if you have over 2k a month before you start to pay your nut, you might want to check out some rentals that are empty throughout the city, or the 3 or 4 resales at the Conrad in the low 2's that aren't selling

[Cotuit]

There are various units at various prices throughout the city. I'm sure KRC has done his homework and whatever the price is to live in OneTen, that's where he's decided he wants to live. Why should he look in the Conrad Building? You might as well have told him to look in Minneapolis or Raleigh or Kansas City because if price were his only concern on the matter, he'd be doing much better in one of those cities.

I think most of us are well aware that any of these projects could grind to a halt if the financing falls through, OneTen perhaps most at risk since they haven't actually started building anything yet, and could easily pave the site and walk away. However, from what we've heard from the Planning Department, BlueChip's concern was how big could they go, not how much money they had. We're surrounded by examples of the fragility of the market. The postponed (perhaps cancelled) Hilton Residences, the cancelled condo project at the circular gas station site, the reduced size of 333 Atwells, the financing gap that is holding up Capitol Cove... We're also surrounded with seemingly no end of proposals all over the city.

And not the real estate bubble, but the financing bubble is a big concern for our housing market and also our economy as a state and a nation together. However, there are many of us who aren't trapped in the financing bubble waiting to get into the market. Some nice foreclosure auctions would actually do us well.

[pete11]

There are various units at various prices throughout the city. I'm sure KRC has done his homework and whatever the price is to live in OneTen, that's where he's decided he wants to live. Why should he look in the Conrad Building? You might as well have told him to look in Minneapolis or Raleigh or Kansas City because if price were his only concern on the matter, he'd be doing much better in one of those cities.

I think most of us are well aware that any of these projects could grind to a halt if the financing falls through, OneTen perhaps most at risk since they haven't actually started building anything yet, and could easily pave the site and walk away. However, from what we've heard from the Planning Department, BlueChip's concern was how big could they go, not how much money they had. We're surrounded by examples of the fragility of the market. The postponed (perhaps cancelled) Hilton Residences, the cancelled condo project at the circular gas station site, the reduced size of 333 Atwells, the financing gap that is holding up Capitol Cove... We're also surrounded with seemingly no end of proposals all over the city.

And not the real estate bubble, but the financing bubble is a big concern for our housing market and also our economy as a state and a nation together. However, there are many of us who aren't trapped in the financing bubble waiting to get into the market. Some nice foreclosure auctions would actually do us well.

You actually agree with me. The reason I chose the Conrad is because you can throw a rock from there and hit the Westin. I just dont believe people will pay 6x what it would cost to rent in the same area no matter what the amenities unless in an appreciative market. If you think there is anyone immune to a bursting of this credit bubble that is happening now (look at the sub-prime lenders especially ameriquest, fed.cfc) you are sadly mistaken IMHO, Oh and could you do a google search for me and tell me what Fannie Mae's earnings have been the past 3 quarters? P.S. watch out buying in the first wave of foreclosures, in the Nasdaq crash a lot more money was lost buying on the way down then buying at the top. I think that the type of loans that allowed us to get here won't be around by the time these are built.

Looks like I have spurred some lively debate on this issue. I want Downcity developed more than you guys know. I disagree with whats going on, I wish the historical tax credits didn't all go to residential units. I REALLY wish that when you call the cops at 2 in the morning to tell them there is a group of kids basically killing a kid on the street, the response wasn't "Well its Downcity and the bars just let out".

Thats what I wish!

[Cotuit]

The reason I chose the Conrad is because you can throw a rock from there and hit the Westin.

He said he was on the list at 110.

[KRC]

Be careful. the 2bed 2bath on the MLS for the Westin at over 3/4 million. The Condo fee is projected at $900 and taxes are over $11k so if you have over 2k a month before you start to pay your nut, you might want to check out some rentals that are empty throughout the city, or the 3 or 4 resales at the Conrad in the low 2's that aren't selling

I hear you! I'm not looking to spend quite that much which is why I'm not sure I'll get a unit at 110. Those looking into the under $600k units appear to be quite a large group. It didn't cost that much to get our name on the list, but I'm not prepared to do a bidding war (which may very well happen for the lower priced units) and overprice myself here. I truly want to live downtown and I think some of these newer projects are perfect for us, but it may very well turn out not to come to pass if someone wants a unit more than me. My pockets aren't that deep. That's one of the dangers of looking into a developing project rather than one that already exists.

I looked into the Conrad and liked it (parking was an issue though), but my snobby partner wants something new! I know, he's a fool. I'm working on it.

[AriPVD]

Thanks for posting, Pete. I think you've brought up many issues that people on here tend to ignore.

The key (and I do this for a living as a real estate developer) is to balance optimist and market realism. This is a very strange market--for the first time in recent history (if not forever), Providence is about to absord a sizable number of luxury condominiums. No one knows exactly how it will pan it--a developer could hit a home run or they could barely break even...or worse. I think we need to carefully watch market fundamentals but keep in mind that very circumstanial events can throw a project off balance. Especially re One Ten--don't believe it until the building has risen. With that said, there is still PLENTY of money looking to find its way into Providence...the question being whether this market can absorb it.

[pete11]

I hear you! I'm not looking to spend quite that much which is why I'm not sure I'll get a unit at 110. Those looking into the under $600k units appear to be quite a large group. It didn't cost that much to get our name on the list, but I'm not prepared to do a bidding war (which may very well happen for the lower priced units) and overprice myself here. I truly want to live downtown and I think some of these newer projects are perfect for us, but it may very well turn out not to come to pass if someone wants a unit more than me. My pockets aren't that deep. That's one of the dangers of looking into a developing project rather than one that already exists.

I looked into the Conrad and liked it (parking was an issue though), but my snobby partner wants something new! I know, he's a fool. I'm working on it.

I wish you luck. I am not wishing harm to you financially, just the opposite. I think the drunken liquidity days with impossible YOY appreciation is over. I would wish the only way one could "afford" one of these units would be through a 20% down traditional motgage product. There are many rental options in Downcity where you could wait out the market "uncertainty" . We'd love to have you!

And Cotuit, you seem to be really annoyed by me. Thats to bad because being a lurker for so long I found you to be very nice, and I hope its not only with people you agree with. I would guess you're more tolerant than that.

[Cotuit]

P.S. watch out buying in the first wave of foreclosures, in the Nasdaq crash a lot more money was lost buying on the way down then buying at the top.

I'm not looking to bite off more than I can chew. I won't be trying to snag some deal of a luxury property through foreclosure and creative financing. I'm just hoping if/when the financing bubble bursts, that the bottom of the market (where I'm looking) will drop so I can more comforatbly afford to own. I certainly won't let my eyes get bigger than my pocektbook.

but my snobby partner wants something new! I know, he's a fool. I'm working on it.

Are you dating my boyfriend?

And Cotuit, you seem to be really annoyed by me.

I'm not annoyed, just at work so my posts are probably more clipped. Welcome to UP by the way. Introduction by fire, how fun!

[pete11]

Thanks for posting, Pete. I think you've brought up many issues that people on here tend to ignore.

The key (and I do this for a living as a real estate developer) is to balance optimist and market realism. This is a very strange market--for the first time in recent history (if not forever), Providence is about to absord a sizable number of luxury condominiums. No one knows exactly how it will pan it--a developer could hit a home run or they could barely break even...or worse. I think we need to carefully watch market fundamentals but keep in mind that very circumstanial events can throw a project off balance. Especially re One Ten--don't believe it until the building has risen. With that said, there is still PLENTY of money looking to find its way into Providence...the question being whether this market can absorb it.

Ok I'll bite. I'm guessing your new to developing. The problem with real estate is its a 10 year cycle but its paricipants have a 7 year memory. If you are involved in securing financing for your org you will see quickly that if the lenders use arbitrage (swaps derivatives) they are having a harder and harder time making money. Last week the Japanese stopped buying 2 years. I'm probably boring the board and won't go on. P.S. the reason the stock market is tanking today is the good news this morning that brings a 50bps increase into the picture for March (good for me as you might guess I'm short a luxury builder and some sub-prime lenders). I won't even go into market psychology this spring when people realize the bubble has burst, and the fact that lenders are going to have to require tighter lending standards.

P.S. didn't RI have a real estate crash that forced credit union insolvency in the early 90's, That even allowed Downtown to get so blighted in the first place "This is a very strange market" I guess yes and no RI has had housing busts before, but I guess your right the Consumers have never been this leveraged(including the late 20'S)

[AriPVD]

I'm not sure what you're saying, Pete. I don't see how your criticism addresses my statement. Perhaps you may refrain from talking down to people on the board.

While larger finance issues (including lender's standards, foreign currency buying, national debt, etc) will eventually catch up with the local real estate market, they are not impacting the ability to secure equity and debt (cheaply I may add) at the present moment. I studied finance and know very well how macro economic trends can and will impact our local story, but I am telling you that from my present experience (in securing equity and debt for projects in Providence) there is a giant pool of money actively looking for deals. Whether or not the market can support it, and whether or not that money has long term sustainability is up in the air.

And this is the first time downtown Providence has ever seen a sizable luxury inventory...that has nothing to do with a developer's short term memory.

[pete11]

I'm not sure what you're saying, Pete. I don't see how your criticism addresses my statement. Perhaps you may refrain from talking down to people on the board.

While larger finance issues (including lender's standards, foreign currency buying, national debt, etc) will eventually catch up with the local real estate market, they are not impacting the ability to secure equity and debt (cheaply I may add) at the present moment. I studied finance and know very well how macro economic trends can and will impact our local story, but I am telling you that from my present experience (in securing equity and debt for projects in Providence) there is a giant pool of money actively looking for deals. Whether or not the market can support it, and whether or not that money has long term sustainability is up in the air.

And this is the first time downtown Providence has ever seen a sizable luxury inventory...that has nothing to do with a developer's short term memory.

Ok we'll go with that. I thought you were baiting me. Everybody seems to know what there doing. If you read my posts you'll realize cheap easy money IS the problem. All I know is that 1 condo in Providence has ever sold over $1mil and that was at the height in July (closed in oct or nov I believe) If I were a betting man I would not throw 450 onto this marketplace (but what do I know) When I/Os and option ARM's come home to roost the fall is going to be precipitous and swift. Don't believe me ? Check out the flippers trying to get out right now in Providence. What % of them do you think will be "investing" in these condos when down payments are required? Now explain to me how the Westin is going to sell condos at more $$$$ per sft than the RITZ in BOSTON with taxes being 3 times as high? I did not mean to speak down to you, I thought you were being overly simplistic in your analysis to gode me into something. Oh and everyone disagreeing with me is a great contrary indicator ala Kennedy and Livermore

Wow almost on cue while I finished typing this Bloomerg ran a story about the fed and commercial lending

http://today.reuters.com/investing/finance...ES-UPDATE-2.XML

draw your own conclusions

p.s. if you think the fed doesn't choose its words carefully the term "irrational exuberance" was uttered only oce by Greenspan at a dinner on 12-5-96 and never said those words again

[AriPVD]

My father just looked at a condo at the Ritz in Boston and it was of the most average kind there. 2 bed, 1860sf, $1.6 mil. $860 psf. This is (but as Pete notes, not too significantly) below the MEAN Westin asking price and the Ritz is certainly a higher end product in a more expensive area. Taxes however are in line with Providence taxes at $19,309 per year (on an assessed value of $1.32 million).