One key to the continuing transformation of downtowns across the country is the need to have people live where they work and shop. It creates a virtuous cycle of further development as more and more people move into the city.
“Housing is a major component of creating a 24-hour community,” said Daniel A. Baudouin, executive director of The Providence Foundation. “Having residential properties, especially high end, brings buying power to the city and in turn attracts more businesses and the arts.”
Developers certainly bought into that notion in Providence, as they have built a number of condominium projects in the last few years. The most visible of those are the luxury towers built along the Woonasquatucket River: The Residences at the Westin Providence and Waterplace Luxury Residences.
But the slowing economy and the credit crunch have held up completion of a third signature tower downtown, the One Ten Westminster project, for which land was cleared but no construction has begun. Still, more modest new projects, Capital Cove (under construction) and 333 Atwells (just completed), have joined the 903 Residences in adding to the living possibilities close to the city’s core.
The result is a market that is saturated with residential possibilities even though overall sales have slowed significantly, with a possible exception in the high end.
For instance, while 18 condo units in Providence priced at more than $500,000 sold in the first quarter of 2007 (at an average price of $624,950), 19 units sold this year in the same period, for an average price of $686,900, according to State-Wide MLS Inc. Also, units priced at more than $500,000 were on the market for fewer days in the first quarter of this year than last, dropping to an average of 114 days on market from an average of 163 days last year, MLS statistics show.
The 103 condo units in the Westin tower under development by The Procaccianti Group, for instance, are filling up, said Ralph Izzi, communications director for the Cranston-based company.
So far, Procaccianti has closed sales on 22 of the units, and there are several more closing over the next 60 days, he said. There are also a handful of condo units under corporate leases, and a few that are occupied under lease-to-own contracts, Izzi said. Within the next couple of months, Procaccianti expects to have about 40 units occupied.
The units at the Westin range from $399,900 for one bedroom and one bath to more than $2 million for a penthouse unit, he said. Being close to restaurants and the arts – with sky-bridge connections to the Providence Place mall, the R.I. Convention Center and the Dunkin’ Donuts Center-Providence, as well as views that extend all the way to the Newport Bridge – the units at the Westin have sustained their desirability despite the economy, Izzi said.
“The competition is not a problem for us, because there is no other property like ours in the market,” he added.
The other high-end complex under development in Providence – the Waterplace Luxury Residences at Waterplace Park – have attracted buyers as well. The project is being completed now, with the majority of units already available. There are 193 units ranging in size and style from one-bedroom flats to townhouses and penthouses, ranging from $425,000 to more than $2 million, according to Paul Masser, COO and CFO of Intercontinental Real Estate Corp., the developer of the twin-tower complex.
Masser said the group obtained its certificate of occupancy in mid-June and had sold 11 of the 193 units by the first week of July.
“The activity has been unbelievable. We’ve been joking that we don’t have enough people to even show the units because there has been so much interest,” Masser said.
The Intercontinental Real Estate Corp. also offers a lease-to-own program, where people can sign a one-year lease and their payments for that year are credited to the total cost if they decide to buy. The company also offers straight rental contracts, Masser said.
“We are really proud of the product, and we think it will catch like wildfire, the way these types of units have across the Eastern Seaboard,” Masser said. “We expect to get to full occupancy within 12 to 15 months.”
This is the first condo project in which Boston-based Intercontinental has invested in Rhode Island. The company chose Providence because of its status as an up-and-coming city, Masser said.
“Providence has had a remarkable transformation, with all of the developments there, it is a great city. Also, there hadn’t been high-rise luxury options in the city until the Westin and our project came in, and there is a market for it,” Masser said.
The 333 Atwells project model first opened in May and of the 24 units, six have sold. In addition to patios and parking, there is a Walgreens Pharmacy at the base of the building. Units with a bedroom, bathroom and study start at $333,000.
“Most of the folks that have bought units like the idea of urban living, but in a neighborhood,” said David Monti, senior vice president and partner at RDW Group. “On Federal Hill they are surrounded by restaurants and specialty shops in walking distance.”
But the future is unclear. Sales for units costing less than $500,000 decreased to 231 in the 2008 first quarter from 377 in 2007, although the average days on market did decrease as well, to 118 from 124.
Baudouin takes the long view on the benefits of the luxury-condo construction. “If we have [high earning] CEOs living here, we may end up with more leadership and philanthropy.”
He also points out that the influx of luxury condominiums will boost the city’s tax income and may spur new business development. The only damper on his enthusiasm for the high end is the fact that the fast pace of construction stands ahead of demand at the moment. But he expects that the new properties will be absorbed over the next few years. •
