The downtown Boston condo market goes on trial
That's right, a federal judge is now hearing testimony on whether the Prudential should be given the green light to foreclose on the gleaming new W Boston.
Sawyer Development, which built the project, will make its case today in bankruptcy court why it should be given more time to find buyers for nearly 90 empty luxury condos. The developer has a powerful backer in its corner as well. Boston City Hall doled out $10.5 million in loan money last fall, enabling the new "lifestyle" condo and hotel tower to finally open its doors after years in construction.
The project's lender with $180 million on the line, the Pru laid out its case on Monday, no doubt bolstered by the relative dearth of sales at the posh new hotel and condo tower.
The proceedings will wrap up Wednesday, though a final decision is likely some weeks off.
Still, the threat of foreclosure is clearly a deterrent to potential buyers, who, if they have the kind of money to blow $2 million or $3 million on a downtown condo, are also savvy enough to grasp the dangers of buying into tower under threat of foreclosure.
Still, the W has sold 36 of its 123 units, the Boston Herald reports, leaving another 87 to go. Some of these deals appear fairly recent, though there's evidence that some serious discounting may already be taking place, Banker & Tradesman recently reported.
If successful, the Pru is likely to cut to the chase and put the remaining condos on the auction block, possibly through a sale or deal to another real estate firm.
And that is likely to raise the pressure on two other new downtown condo towers that are sitting half empty right now.
Potential buyers are playing a waiting game here - they are betting it's only a matter of time before those remaining downtown condo towers either slash prices are auction off their units at dramatic markdowns.
In a separate, but not unrelated development, the Bryant, a fancy new condo complex on Columbus Avenue straddling the divide between the Back Bay and South End, just sold off its last units.
How did the owners - led by New York developer Vornado, at the center of the clash with Boston's mayor over the Filene's tower fiasco - do it?
They took the auction route, including a highly unusual, second auction over the weekend to sell off the Bryant's remaining 12 units.
There were more than a few skeptics about whether the project's developers would succeed in this second bite at the apple, but the preliminary results look none too shabby.
The average sale price jumped to nearly $1.6 million, compared to $1.4 at last year's auction, while the price per square foot edged up to $800 per square foot from $700 the first time around.
Of course, even this latest round represents a dramatic markdown for the Bryant - the condos originally hit the market at well over $1,000 a square foot.
Jon Gollinger, chief executive of Accelerated Marketing Partners, which put on the Bryant auction, contends the results demonstrate the downtown condo market has hit bottom.
Interesting idea, but just not yet given the foreclosure cloud hanging over the W Boston.
But it does demonstrate the buyers, especially at the very top end of the market, are out there if the price is right.
