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3 Chickens & a Hippo: The Future of Residential Real Estate in Boston

Three Chickens and a Hippo

Gen X & Gen Y: The Future of Residential Real Estate in Boston

Boston real estate hippoWhen my daughter Annie was very young, she had a children’s book in which you were supposed to circle the thing that didn’t belong.  For example, if there was a drawing that showed a motorcycle, a car, a truck and a plane, you’d circle the plane.  And if there was a drawing that showed three chickens and a hippo, you’d circle the hippo.  At the recent Urban Land Institute’s Seminar, “Gen X and Gen Y: The Future of Residential in Greater Boston,” I was the hippo.

The Moderator was the renowned economics guru, Barry Bluestone, now the Director of the Dukakis Center for Urban and Regional Policy and the founding Dean of the School of Public Policy & Urban Affairs at Northeastern University.  Barry is one smart, yet self-effacing dude.  Sharing the Panel with me was Michael Cohen, a well-known research strategist who has appeared on both CNBC and Bloomberg Television and specializes in analyzing “the state of the U.S. multifamily market, both rental and for-sale product.”  There was also Biria St. John, who not only had the best name of the participants, but is also the Executive Vice President/Partner at CBRE/New England, a sponsor of the symposium and a co-leader of the New England Multi-Family Investment Sales Team.  And me.  The hippo.

Yes, there are any number of ways that my background, credentials and experience could make me worthy of being circled as the thing that didn’t belong.  For starters, everyone else was clearly more intelligent than I and steeped in statistics that supported anything that they said.  I memorized just two statistics (At age 67, that’s about the maximum that I could hold in my overcrowded mind) and forgot one of them until the program was almost over.  I then asked Moderator Bluestein for a moment to recite it, totally out of context, and the room echoed from the stony silence that followed.

Another reason why my daughter would have been correct in circling me was because everyone else was functioning in a different universe.  From professors to commentators to strategists, the Panel was heavy with theorists and analysts.  My background as somewhat of a “boutique developer,” is light on theory and analysis and exceptionally heavy on smoke and mirrors and the interpretation of goat entrails, supplemented with just the right (and often) wrong sprinkling of out-right guessing, to provide the guidance for my development company.

However, the main reason why I was an anomaly in this group was provided by the Moderator and my fellow panelists, all unanimous in their feelings that large-scale, multifamily apartment construction was going to be the dominant need and preference for a long time in Boston.  As some of you know who follow my blogs, I’m a bit of a contrarian on this issue, feeling strongly that the spate of apartment construction is going to be one of the major progenitors of the re-birth of the next condominium boom.  Not only do I have doubts about the depth of the high-end rental market, but I also think that, one day very soon, someone is going to put pen to paper and realize that they can buy a great condominium, including common area fees and taxes, for the same amount or less than they are or might pay for rent on a monthly basis.  Plus, there are the tax deductions that make owning more attractive than renting which adds to what I foresee as a rapid rebalancing act between renting and buying.

Just when it looked darkest for me as the lonely voice of condominiums on the Panel, a White Knight in the form of Ron Druker spoke up and supported my contention that the proverbial worm was about to turn.  For those of you who don’t know Ron, he is the scion of a great Boston development family who has excelled in his own right by developing Heritage on The Garden and Atelier 505, among others.  In my opinion, Ron’s claim to fame, in addition to his reputation for delivering a quality product, is his impeccable sense of timing.  Since I believe that the old real estate mantra of “Location, Location, Location,” should be changed to “Timing, Timing, Timing,” Ron is my personal hero in Boston’s development community.  When he spoke and agreed with my conclusions, this hippo sat a little taller in his chair.

Our conviction that the massive amount of rentals are about to spawn the next big condominium market accounts for our moving forward with Charing Cross, a new 55 unit condominium development on Commonwealth Avenue in Brighton.  We are convinced that a well-located (in this case, on the T and featuring skyline views of downtown Boston), well-designed (the architecture is English Jacobean and will result in its being one of the best buildings constructed in the past 75 years in this part of Boston), and well-priced (our “bread and butter” unit is a Two Master Bedroom, Two Bath condominium with deeded outside space, great views and garage parking – all included in the low to mid-$400,000 range) has to succeed.   Currently, Charing Cross is moving through the BRA’s Article 80 Permitting Process and construction is expected to begin in the fall/winter of this year.

In the final analysis, we’re all bozos on this bus and world events have a strange, but consistent way of rendering most predictions moot.  Yet, I believe that The American Dream of owning a home is alive and well – and just resting a bit before it comes roaring back.  We’re certain that Charing Cross will be there to meet the first of many successive waves of dreamers.

*     *     *

I was truly honored to have been selected to participate on this panel, especially with such august company.   Many thanks to the Urban Land Institute and to Nancy Ludwig of the Boston-based architectural firm ICON, who recommended me to the organizers.

I’ve provided a link to an article in The Real Reporter about this event and hope that I’m invited back by the ULI — many years from now –when the discussion is about the depth and longevity of Boston’s red-hot condominium market.  I’ll probably be the hippo on that panel also.

 

 

photo courtesy of canopic

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About Merrill Diamond

Merrill H. Diamond is a trained architect and a founding principal of IGNITION Residential, an interdisciplinary multi-family marketing firm. He is also a founding partner of Diamond/Sinacori, a Boston-based real estate development company founded in 1978. Mr. Diamond has been the recipient of numerous local and national awards for both development and marketing. He has served as both a gubernatorial appointee to the Massachusetts Historical Commission and to the Senate Special Commission on Historic Preservation. In addition, Mr. Diamond has been named “Entrepreneur of the Year” by Arthur Young / “Venture Magazine;” “Merchant Builder of the Year” by the National Association of Homebuilders (NAHB), and one of “America’s Most Valuable People” by “USA Today".

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