With huge numbers of would-be buyers, Boston needs more condos right now. But it's going to be a while before there's a big uptick in supply.
The average price for a downtown condo is now running at almost $1 million, as an inventory shortage is driving up prices. Millennium Place sold out its 256 units in record time and some are being quickly flipped for huge profits.
At the same time, thousands of luxury apartments have hit the Hub market because lenders started backing rental complexes, but now some are fearing an apartment glut.
With the demand for condos too hard to ignore, the developer of the Ink Block apartment complex under construction in the South End has already turned one building branded Sepia into 83 condos, and the builder of 45 First Ave. in the Charlestown Navy Yard wants to change its 54-unit project from apartments to condos.
Construction of two super high-end condo projects is underway. There will be 118 condos at 22 Liberty Drive on Fan Pier, and 450 condos are slated for the Millennium Tower downtown, but these projects won't be completed until 2016. Other large high-end condo projects are even further down the line.
"It always takes a while for the supply to catch up because condo financing lags the market," said Dom Lange, co-owner of Broadway Village Real Estate.
Lange said that South Boston condo development is accelerating, with three sites along West Broadway expected to be developed into condos — the Cornerstone bar, where about 50 units are being permitted, as well as the Mike's Auto Repair and Liberty Bell sites, which will add another 30-40 condos each. Another 24 units are already before the Boston Redevelopment Authority on the site of an old garage at 39 A St.
The recently approved St. Augustine's Church development will house 29 condos, there are 45 under construction at 401 West 1st St. and 18 units have just been OK'd at 728 East Broadway.
But condo prices are soaring in Southie, putting many out of reach for the middle class. And this goes for neighborhoods such as Charlestown as well, with the proposed development of 42 condos at the former armory on Bunker Hill Street.
Creating condos that the middle class can afford is tricky. Developers in the downtown areas are seeking between $650 a square foot up to almost $2,000 a square foot on the super high-end, but there's a big need for units in the $350-to-$450 per square foot range.
Construction will begin soon on a $14 million project at 248 Meridian St. in East Boston, which will house 66 moderately priced condos.
And Boston developer Urbanica plans to build 50-60 market-rate townhouses on Parcel U, MBTA land along Hyde Park Avenue near Forest Hills Station in Jamaica Plain that will sell for around $400 a square foot. Urbanica also is about to break ground on eight three-bedroom condo units at 74 Highland St. in Roxbury's Fort Hill, which the company plans to sell for about $350 a square foot.
"Construction costs are high wherever you build in the city so building condos affordable to the middle class makes the most sense in places such as Roxbury, Dorchester and parts of JP where land costs less and there's some room to build," said Kamran Zahedi, principal of Urbanica.
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