For all the apartment conversions now taking place in Providence, the relative scarcity of new construction aimed at the luxury condo or apartment market has made some people question whether the city has an appetite for high-end living.
The assessment of real estate professionals? The demand is there, even if the supply isn’t.
Within two years, based on employment trends in Providence and the cost of housing in Boston, there will be more interest, said Ken Schadegg, a sales associate for Lila Delman Real Estate International, who manages its Providence offices.
Just in the past 18 months, luxury units at Waterplace have been converted from apartments back to condominiums, and are in top demand, “They sell like hotcakes,” he said. Those units, as well as condos in The Residences luxury towers near the Omni Hotel, sell in the $600s to over $1 million for top-floor units, Schadegg added.
In rental apartments, which is most of the new housing conversion underway in the city, units aimed at affluent urbanites are leasing quickly, say developers and real estate agents.
Rental apartments in the newly renovated 32 Custom House, for example, at 32 Custom House St. downtown, were fully leased in less than six weeks, according to its development team. The 10 apartments had rents that started at $1,650, and rose to $2,900.
The development team, ASH NYC, is now working on its second residential and retail project downtown, at 225 Weybosset St., a two-level, historical brick building directly opposite the Providence Performing Arts Center. That conversion is expected to yield another 10 apartments.
A more significant historic renovation, with 57 apartments aimed at professionals, is the 95Lofts, an adaptive reuse of a former jewelry manufacturing building at 95 Chestnut St. Its rental rates for studios start at $1,495, according to marketing material. The larger units will be leased at $2,550 a month. The building is expected to be ready for occupancy in April, and its developer said interest in leases is high.
Public discussion of whether Providence needs more luxury-level living has been sparked by a large-scale development proposal.
The Fane Organization, based in New York, initially proposed three towers for a parcel of the I-195 Redevelopment District overlooking the Providence River and a park that will be created to land the pedestrian bridge now under construction. That proposal, which would have involved about 1,000 luxury apartments, has now been scaled back to a single building.
It would be a $150 million project, according to company President Jason Fane, who told the I-195 commission there is a market for these apartments. He’s had calls, he said, from people wanting to buy the top-floor units.
Schadegg agreed with that assessment. “Just to have the very best of the best, there’s a market for that,” he said.
As opposed to multiple millions for oceanfront homes, a luxury condo is a relative bargain. “You’re talking a couple million dollars. That’s pretty easy money for some people to get their hands on,” he said.
Danielle Almeida, an associate at Keller Williams Realty in Bristol, had a more cautious view of the market. Her concern is if the market shifts a few years down the road, and the tendency for condos to be among the first to see those impacts.
“Eventually I think the market is going to stabilize in Boston, so we might see fewer people coming this way from Boston,” she said. As an employment center, Providence doesn’t generate the number of executives that a larger city would who might be looking for the luxury units.
While Boston accounts for about one-quarter of her sales or leases, the Providence market has professionals and others who are willing to spend $2,000 or more on rental apartments in the luxury market, she said.
This year, two new apartment buildings are already under active construction in downtown Providence – the 160-unit Commons at Providence Station – and a five-story, 30-unit building, as-yet unnamed, in the Jewelry District on Hospital Street. But both are expected to be aimed at more moderately priced rentals and will be mid-rise buildings.
More than a dozen additional historical buildings, mostly former office buildings, also are being converted, or are being proposed for conversion, to new rental units.
They include the Union Trust Co. building, at 170 Westminster St., and the 44 micro-lofts proposed for the conversion of offices at the Case Mead building, at 68-76 Dorrance St.
Realtors say the luxury market and the midincome market are entirely different, but that there is demand for both.
Benjamin Scungio, manager of the Providence office for Mott & Chace Sotheby’s International Realty, said within the luxury market, clients often fall into two camps. Some want units in the beautifully renovated, historical properties. Others want only brand-new construction.
He recently sold a condo at Waterplace to a couple from California who wanted nothing vintage or historical. “They refused to look at anything that was old or rehabbed. They wanted new. I think it just depends on the person,” he said.
For this reason, he thinks the Fane Organization’s tower, or other new construction aimed at the high end, could have great appeal. “There are people who want to live downtown. There is a struggle to find properties that meet everyone’s needs. There is going to be that segment of buyer that absolutely loves brand-new. People want to live in newer construction.”
Luxury condominiums are moving quickly, depending on the condition and location of the unit, according to Realtors.
There was a time when condos were not moving, to the point where they were converted instead to rentals. That has changed in the past 18 months, Schadegg said.
Providence now has several high-rises that have luxury units that are selling briskly, he said. The Residences and Waterplace buildings, which reach up to the low-30 stories, have had strong sales of units, he said.
Of The Residences, he said: “I sold one last year for the mid-$800s. They’re small, but they’re certainly considered luxury.” •
