Apartment building ready to rise
Avalon Exeter owner says the time is right
If all goes according to plan — a rare occurrence in Back Bay construction recently — crews will begin work on a 28-story residential tower whose owners have waited more than two years for the right time to build.
AvalonBay Communities said it will start construction early next year on Avalon Exeter, a slender glass and steel building on the edge of the Prudential complex. After sitting on the project because of the recession, the company says the recent interest in the apartment market justifies moving forward now.
“We feel pretty good that the economy has stabilized, and we think the timing is good to get a building like this under construction,’’ said Michael Roberts, vice president of development at AvalonBay, which develops and owns apartment buildings across the country, including many in Massachusetts.
Located at the Huntington Avenue end of Exeter, the building will offer apartments ranging in size from stu dios to three-bedroom units, with rents ranging from $2,000 to $8,000 for penthouses. Residents will have access to a fitness center and club room, and AvalonBay will use spaces in the Prudential Center garage for resident parking, under an agreement with Boston Properties, which owns that complex.
Elsewhere in downtown Boston a handful of other long-stalled projects, reconfigured to include apartments, are also edging forward, including the 200-unit Dainty Dot building in Chinatown and the 234-unit Waterfront Place in South Boston. City officials said they are also fielding proposals for new buildings.
With the condo market stalled because of wary buyers or tighter mortgage conditions, apartments have become the one hot spot in real estate markets. Rents are up, vacancy rates are down, and lenders are far more willing to underwrite new apartments than other residential or commercial buildings.
“That’s the reality of the market,’’ said John Palmieri, director of the Boston Redevelopment Authority. “People still want to live close to work, to cultural and historic amenities. We have our economic sectors, our research and academic employee base, that are still doing well. Demand has continued to support residential rentals, and developers are better able to secure lending and debt.’’
It also helps that AvalonBay, a real estate investment trust, is able to finance the project itself.
Others cautioned against getting too optimistic about the broader real estate market. David Begelfer, chief executive of the Massachusetts chapter of NAIOP, a commercial real estate development association, said the Exeter project benefits from a “premier’’ location.
“For commercial buildings, it’s still a case-by-case basis. Most development is still pretty much on hold, unless the building has a specific use,’’ he said, such as the new office tower Liberty Mutual is building on Berkeley Street.
Underscoring that point, another building proposed and approved for the Prudential Center, the 888 Boylston office building, is still on hold. It was permitted by the city at the same time as AvalonBay’s apartment tower, and the two projects were supposed to mark the final construction phase at the Prudential complex.
Boston Properties is the developer of 888 Boylston, a 17-story tower that would host offices on the upper floors and retail space on the lower. Part of that project includes buffing up the plaza in front, adding more open space, and additional lighting, plantings, and seating.
The company said it has no immediate plans to start the project and is not planning to switch from office use.
Elsewhere in the city, Boston Properties is finishing Atlantic Wharf, a 32-story office and residential tower at the corner of Congress Street, between the Fort Point Channel and the Rose Fitzgerald Kennedy Greenway.
But Begelfer said that given how moribund construction has been in the downtown area in recent years, the interest in rental buildings is a welcome and striking shift.
“I think the market is ripe for it,’’ he said. “I would not be surprised if there ends up being competition for who gets in the ground first. Otherwise, the market could get saturated.’’
Correction: Due to a reporting error, the original version of this story gave the incorrect title for David Begelfer. He is chief executive of the Massachusetts chapter of NAIOP.