Timing is everything in real estate, and sometimes it isn’t on the developer’s side.
The 903 Residences at Providence Place, which opened as apartments in 2003 then converted to condos, got caught in the market crash of the Great Recession. When the market fizzled, fewer than one-third of its 330 units had sold.
Now, after more than a decade of life as apartment rentals – another owner, Providence Homes LLC, came in midrecession and purchased the unsold condo units – the remaining apartments are in the process of conversion to condos, according to Mott & Chace Sotheby’s International Realty, which has that assignment.
So far, the sale process is going well, said Benjamin Scungio, a sales associate who manages the Providence office of Mott & Chace. He said the pricing of the units below existing condo buildings downtown is speeding that effort.
In the first six months of the conversion, about 40 units have been sold, he said. The process began in August 2018. Initially, tenant-residents were the first buyers, as they were given the first option for purchase.
At the 903, about 140 of the 330 apartments are now owned, said Scungio. In a conversion, no one is evicted. “As leases expire, we take them into our sales pool and sell them,” he said.
Since January, Providence online property records show seven condominiums have closed at the 903. The sale prices for units varied from a low of $160,000 to a high of $347,500.
Many of the sales include accompanying purchases of storage units, as well as parking spaces, for a $1 fee.
In addition to the tenants who decided to purchase their homes, new arrivals include professionals who commute to Boston who want ready access to Providence Station, as well as medical professionals, Scungio said.
In a heated condo market, conversions of buildings become more common as property owners move to take advantage.
The condo market has a shortage of supply and has tipped into the seller’s favor, but conversions aren’t happening with great frequency in Rhode Island, according to attorneys and real estate specialists.
The multifamily residential market in downtown Providence is still dominated by apartment rentals, said Jeffrey Brenner, a partner at Nixon Peabody LLP in Providence.
He cited The Edge College Hill as the latest example. The building opened in 2018 and is aimed at young professionals and students attending Providence universities.
“It’s all millennials,” said Brenner, whose office looks out over the building. “They’re looking out their windows.”
‘The 99.5 percent of naysayers … they don’t count. It’s the half percent.’
JASON FANE, The Fane Organization president
What happens as millennials age will have ramifications for the condo market. Will they purchase single-family homes, or stay in the cities, he mused.
Across Rhode Island, the market for apartments is competitive. New construction is tipping toward leases, not sales, Brenner said. “In the next five to 10 years, it will be very interesting to see what this millennial generation [wants] to do. Do they want to buy houses? Do they want to buy condos and live in the city?”
Across Rhode Island, the condo market is doing well, but the lack of inventory is actually sharper in other segments, particularly the multifamily market, said Rhode Island Association of Realtors spokeswoman Kerry Park.
As of last month, Rhode Island had 4.3 months of condominiums available for sale – reflecting the time that would pass if the typical number were to sell. Anything less than six months is considered a seller’s market. For single-family homes, the inventory is at 3.5 months, and for multifamily buildings, 2.5 months.
To attract interest from people already living in Providence, the team has sent direct mailings to people renting apartments that are comparable.
Mott & Chace is releasing the units for sale in tranches, so as not to overcrowd the market.
This month, units still available for sale have prices that range from $179,000 for studio units to $385,000 for the top-tier two-bedroom units with lofts, said Scungio.
The buildings are a quick 10-minute walk to Providence Station. The buyers want proximity to the city services, and a walkable lifestyle. The 903 is unusual for a downtown property, as well, in that it has a dedicated dog park.
The pet policy allows dogs, with certain breed restrictions.
Before selling the units, the owner is refreshing carpets and other interior finishes. But the recent construction lends itself to the conversion, Scungio said. For example, the units were constructed with open-concept living areas and big closets, the design that modern buyers expect.
The mix of apartment units and condo units within the building, at this point, has not deterred sales. “People purchase at the 903 knowing there could be renters for the next two to three years as we clear out the inventory,” Scungio said.
The units are well-priced compared to surrounding condos at buildings such as The Residences Providence and Waterplace.
“People are moving there because it’s half the price [of] the other two buildings,” he observed.
Mary MacDonald is a PBN staff writer. Contact her at Macdonald@PBN.com.
