Amidst concerns about whether there will be enough demand for downtown Providence condominiums, three major developments are scheduled to open during 2008 – bringing almost 400 condos into the downtown market.
Capitol Cove, The Residences at The Westin Providence and the Waterplace towers are all planned to open this year.
But Peter Palandjian, the Boston-based developer of Waterplace, told Providence Business News last week that some of the 193 Waterplace condos that are set to be completed by mid-April might be rented as apartments until the stale condo market picks up.
Currently, only about 14 units are under purchase-and-sales agreements, said Palandjian, CEO of Intercontinental Real Estate Corp.
“We’re going to continue to sell condos and look to rent up apartments in the meanwhile – just to get the lights on and get the property cash flowing while this condo slump has chilled the market,” he said. “So nothing is really changing, we’re just going to rent up units to ride this out.”
It’s a measure that the developer, which manages property worth more than $2 billion nationally, hasn’t in the past had to undertake. “But you either slash your prices or you weather it out. We’re well capitalized. We’re not going to panic,” Palandjian said.
The Waterplace condos will range from $400 to $800 per square foot, he said.
Capitol Cove developers, however, have no plans to trim their condo count.
Along Canal Street, the steelwork for the first phase of $250 million development is starting to take shape. During November 2008, 96 condos will be finished, said David Darling, spokesman for Capitol Cove LLC, the Norwood, Mass.-based developers.
The 103 condos at the Residences at The Westin Providence are set to range from $425,000 to $2.6 million and will be between 980 and 2,300 square feet. The developer, The Procaccianti Group, says the project is on schedule and that sales and interest are strong. But spokesman Ralph Izzi Jr. could not provide sales figures.
There are about 1,300 condos on the Rhode Island market, which is also under increased scrutiny outside the capital.
David Chamberland, senior vice president in charge of construction with Carpionato Properties, said plans to construct The Residences at the Crossing, a 283-condo development planned on the lot adjacent to Warwick’s Crowne Plaza Hotel are now on hold.
“We’re either going to make a decision to change the use and go with more office space, or, if the market improves, we’ll have some combination of office and condominiums or just condominiums,” he said.
Despite the changes in the Warwick project, Rhode Island Association of Realtors President Rob Scaralia doesn’t think there are too many condos in the state.
Although total sales and median prices for 2007 won’t be released by RIAR until early February, the 117 condo sales in Providence during the first three quarters of 2007 were slightly higher than the 111 sales during the same 2006 period.
But year-over-year median price for those sales fell 11.5 percent to $177,000 during 2007. During the same period, the median price of single-family homes sold in the Ocean State was $201,000.
“We came off such a high that the level of expectation couldn’t remain where it was,” Scaralia said, adding that the market is returning to a “normal” situation.
Leonard Lardaro, a professor of economics at the University of Rhode Island who compiles a monthly Rhode Island Current Conditions Index, said the state is the early stages of recession. Along with the slim differentiation between median condo and median single-family home prices, that’s a sign that the condo market will continue to decline, he said.
“You’ll get a price that’s a lot better than a year ago, but what if price continues to go down?” he said. “Then you’re upside down, as they call it. I think what you’re going to see is that housing weakness is going to continue.”
At Capitol Cove, a total 246 condos will be built during the first two phases. Sales for the first 96 will start within a few months through broker PrimeTime Communities, said Darling. With an average of 1,100 square feet, they will range from about $300,000 to $500,000. That’s more “moderately-priced” than other downtown projects, said Darling.
“We have certainly paid attention to … the market, and we believe that, where our price point is, there is still a very large need in Downtown Providence,” Darling said. “So we have no plans to change those over to rental apartments.”
Since Mayor Vincent Cianci’s second run in office, condo pricing throughout the state has been mostly on the rise. During 1992, the median sales price for a condo in Providence was just $36,000. Seven years later, during 1999, there were 39 condo sales in Providence with a median sales price of $90,000.
At that time, pricing was barely higher than the $88,500 state-wide median price, according to RIAR data. But since 1996, the median pricing for Providence condos has been lower than the state-wide averages.
And now there’s uncertainty about the fate of at least some of the projects planned for the capital city.
The One Ten Westminster skyscraper, for example, is on hold, according to a partner in the project. When it was proposed, the 40-story building originally was to house 130 condos, but during January 2007 that was condensed to 70 condos coupled with a hotel.
Evan Granoff, principal in Granoff Associates, said his group is a “passive partner” in that project, although he declined to say how much he had invested. His group completed the “groundwork,” including remediation and clearing of the site.
“But when it came to actually doing the construction we were passive on it. So …that project has been put on hold,” he told Providence Business News.
He directed calls for further information to developers O’Connor North America, but several calls from Providence Business News weren’t returned by press time. (As of last week, the project’s Web site – www.onetenprov.com – had been taken down.)
On Federal Hill, however, there have been encouraging signs at 333 Atwells Avenue, said marketing agent Doug Jeffrey. Five of the 24 condos planned there have been sold, three months before the model is available for viewing. They’re priced between $350,000 and $480,000, with an average of more than 1,000 square feet each.
Because of the well-defined culture of the neighborhood, 333 Atwells Avenue has an edge over some downtown developments, Jeffrey said. That’s what’s led to more than 20 percent being sold already, he said.
“Essentially, our predominant attraction to people is our location,” Jeffrey said. “We have an established neighborhood with established businesses. Some of them have been here for 75 years.” •
