The Commercial Real Estate Blog

Developers: Finding Opportunity Amidst a Pandemic

Posted by Meghan Doherty on May 28, 2020 7:55:51 PM

Construction is now back underway in Boston on most projects including any and all housing. While unemployment is on the rise and the state’s re-opening plan is in flux condo prices in Boston did jump last month. According to the Greater Boston Association of Realtors, condo prices rose 7.9%, from $630,000 in April 2019 to $680,000 in April 2020. While the future of the market is still uncertain, developers with the right knowledge and experience may be able to find new opportunities within the Boston market. We’ve compiled a few tips to assist in navigating this unprecedented time.

Finding Approved Projects

A list of approved projects yet to start construction in and around Boston could present great opportunity for developers. For many of these projects, a lot of the legwork is already complete however given the uncertainty in the market the original development team may not be able to push these projects to a groundbreaking. Perhaps the team may be looking to sell the entitlements or bring a new partner to the table. Looking for these projects on the BPDA website might seem like an easy task however spending time reviewing piles of PDF’s is a tedious task and that will only get you projects in Boston, not to mention Somerville or Cambridge or Brookline or any other suburban market.

Monitor Today's Market & Look for Deals of the Future 

Given market conditions, it may be difficult to price assets. Reviewing transactions in near to real-time can allow developers to check in on market fluctuations so when a potential deal presents itself you can be aware if it is in fact a good one. Reviewing financing records to see who is lending could also assist in finding potential savings on an existing project re-fi or potential new construction loan. Also keep in mind that while it may seem we have been stuck inside for years, it has only been a few months so any price reductions seen are just the beginning. There’s a lot more data that has to come in, especially as transaction volume has dipped significantly due to closures.

Check the Competition

Condo prices are up in Boston with inventory down as projects took a pause over the past few months. As these projects finish up, it will be crucial to monitor the market for potential oversupply in certain neighborhoods. Really understanding what phase of development nearby projects are, unit count and mix will assist in pricing projects already under construction and could also help determine what size/style of units could be best in a project still in development.

Trends

While many of you may already be moving toward smart building technologies and numerous high end amenities on-site this trend is only going to be become more popular given what is becoming the "new normal". Many residents may not be working from home requiring "future proof" networks. Health and wellness will also certainly be pushed to the top of condo buyers wish lists with buyers now considering things like air quality that perhaps they had not given a second thought in the past. 

The full impact of the COVID-19 crisis have yet to be seen however Boston's market was extremely strong prior to the outbreak and many of the fundamentals including the strong biotech sector remain in place. Developers staying on top of a turbulent market will be able to quickly pinpoint the smart opportunities.

Topics: Insider, Data, In The Know