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The high life is coming to Providence
Photos at http://projo.com/luxurycondos
PROVIDENCE – Three luxury condominium high-rises soon will crest the city skyline. They promise great views, concierge services, uniformed doormen, on-site parking and the all-around easy living found in the swank neighborhoods of New York, San Francisco and Boston.
But in downtown Providence? At $400,000 to $2.5 million?
Yes, the developers say. It's just that Rhode Islanders haven't seen anything like this in downtown Providence. The smattering of high-end condos that are available don't match the level of pampering promised by the new projects.
That's one reason the developers think they will sell.
"Boston has come off a total condominium feeding frenzy," said Nicholas J. Iselin, of Intercontinental Real Estate Corp., which is building the condominium complex by Waterplace Park.
"Whereas Boston is a very well-established and potentially overbuilt market, Providence is not," Iselin said. "So for the people who want to live downtown and own property, there hasn't been anything for them. We think there is a pent-up demand for what we are offering."
Demographics seem to be working in the developers' favor. Census figures show that people are moving back to cities, including Providence, which remains a bargain compared with Boston and New York.
Older baby boomers are finishing their children's college payments and looking toward retirement. With unprecedented home equity, the boomers are in a position to trade their large houses in for expensive condos.
Add to that a growing number of single and married couples who don't have children but have the money to pay the developers' prices.
The formula has worked in other cities. The developers, and apparently their bankers, believe it can work here.
MIKE AND SYBIL Miller want to buy one of the downtown condos. Their four children have grown up and moved out of their six-bedroom house on the East Side. They are ready to downsize.
"Providence is a go-ahead city," Mike Miller said. "Everything is happening in the city, and I'd like to be there."
Before they retired, the Millers owned a poster and T-shirt company in Pawtucket. Now Mike Miller, 76, is enjoying a new career as a jazz pianist.
"A condo is an easier style of living," he said. "I just have to find one big enough for my baby grand piano and then I'd be happy."
THE THREE proposed condominium projects each cost about $100 million and will give birth to 426 condominium units, all with underground parking.
Each project has its own allure.
complex broke ground first. More moderately priced than the others,
the 193 units will range in price from about $400,000 to $1 million.
The Cranston-based Procaccianti Group began construction on its 33-story tower next to The Westin Providence last month. The 103-unit Residences at the Westin will occupy just over half of the tower; the lower floors will be hotel rooms. Priced at $400,000 to over $1 million, buyers reserved 20 percent of the units in the first two days of sales.
With four-star quality hotel services available, the developer claims the condos offer the best amenities. Condo owners can request a bartender and waitress for a cocktail party and arrange for a massage in their room for an extra charge.
"There is a level of buyer that can take full advantage of these without batting an eyelash," said Michael Voccola, of The Procaccianti Group.
One perk that competitors can't duplicate is the pedestrian bridge connecting the hotel to the Providence Place mall, a key selling point for the Residences.
Construction has yet to begin on One Ten Westminster, but that hasn't stopped people from putting deposits down on the units.
The 130-condominium skyscraper will stand between the Turk's Head building and the Arcade in the Financial District. The developers are BlueChip Properties of Boston and Granoff Associates of Providence.
At 35 stories, the glass and stone structure will be the tallest building
in Rhode Island.
One Ten Westminster is concentrating its marketing on Rhode Islanders.
A fourth condominium project sprang into the cityscape earlier this month with the announcement that the Jefferson at Providence Place apartments will be converted into condominiums. Paolino Properties of Providence and The Athena Group of New York paid $81 million for the complex and will spend $6 million renovating the 330 units. The condominiums will sell for $195,000 to $450,000.
BRAD WAUGH has already put money down on a unit at One Ten Westminster. He considers it an investment property, at least until his kids grow up and he can convince his wife to move there.
Waugh, 43, of East Greenwich, is the former chief executive officer of Watch Hill Partners and a former commissioner of the Rhode Island Convention Center Authority.
He likes the idea of condo life. "The lack of having to deal with the upkeep of the lawn or landscaping or dealing with the roof and everything associated with home-ownership is appealing," he said. "The quality of life is better being spent enjoying things and people, certainly friends and family, and you are chewing up that time taking care of your house. It gets to be a drag."
RON PHIPPS, owner of Phipps Realty in Warwick, specializes in finding homes for executives moving into the area. When The Procaccianti Group conducted initial market research into the viability of the condominiums, they hired Phipps.
A former president of the Rhode Island Association of Realtors and an active leader in the national organization, Phipps has been brokering real estate in Rhode Island since 1976.
"What's intriguing is that almost every one of these three projects is a product that we don't have anything to compare with fundamentally," Phipps said. "In Providence, there is a total void of full-service, concierge, luxury condominiums."
Phipps believes some of his clients who bought houses on the East Side and in East Greenwich will be interested in the condos.
"We take so much for granted, but where else do you have things like WaterFire, Narragansett Bay, the cultural, educational and social resources that we have here?" And there's T.F. Green Airport a few minutes away and Providence Place mall next door.
"The mall added credibility to the argument that Providence downtown is resident-friendly," Phipps said. "Once you had the conveniences of the mall, all of the sudden, you went to the next level."
Phipps predicts that buyers will scoop up the condos. Look at North Kingstown, Phipps said. Five years ago, a developer built 32 condominiums priced from $500,000 to $1 million at Quidnessett Country Club.
"People asked, 'What's the precedent? Where's the demand?' " Phipps said.
The condos filled up, and one was recently resold for $1.2 million. While anecdotal, Phipps said it exemplifies the demand for this type of condominium.
The number of proposed units in Providence is significantly higher, but in the larger picture, Phipps contends it is reasonable. There are 500,000 residential dwellings and another 83,000 multi-family units in metropolitan Providence. The 400 luxury units translate into a mere .08-percent increase, he said.
"Valet parking, the doorman who helps carry stuff up, someone to take packages and sign, the fitness centers – I think if there's one lesson that we learn is that money can be replaced but time can't," he said.
"If this lifestyle provides people more opportunity to pursue their passions and their life purposes, then it doesn't merely fill an aspiration, it fills a void," he said. "In Providence, it's amazing it has taken this long to have the option, and the fact that we will have several options bodes very well for the market."
VICTOR PRIMAVERA can't downsize yet, but he is thinking about the future. Primavera, 47, owns Danecraft Jewelry in the city's Jewelry District. He and his wife, Becky, live in Cranston and have one daughter in college and two in high school.
They dream of living in downtown Providence one day. His friends think
he is crazy.
PEOPLE ARE returning to cities, said Nicolas P. Retsinas, director of Harvard University's Joint Center for Housing Studies and a former executive director of the Rhode Island Housing and Mortgage Finance Corporation.
Retsinas helped research and write the institute's State of the Nation's Housing 2005 report, which named Providence as a model of the urban renaissance.
Providence is one of 36 of the nation's 84 largest cities that lost population in the 1970s but saw the numbers turn around by 2000, according to the report. The report puts Providence in a group with New York, Portland, Oregon, and San Francisco.
The population in Providence grew 8 percent in the 1990s to 175,900
In Rhode Island, condominium sales increased 34 percent between 2004 and 2005. Statistics released this week by the Rhode Island Realtor's Association showed that, in the third quarter sales rose another 20 percent compared to the same period last year.
Rhode Island has seen growth like this before, most notably in the 1980s when speculators drove a condo boom that turned into a condo glut. The real estate market and the state's credit unions collapsed leaving many condominium projects abandoned in the midst of construction.
Retsinas said the condominium market is now more stable than it was
For example, lenders now require developers to have a percentage of units pre-sold before approving the financing, Retsinas said.
A shift in demographics also strengthens the condominium market. Twenty years ago, married households with children were the dominant sector of the population. Today, married households with no children are the single largest sector, Retsinas said.
Also, the number of middle-aged, never-married persons living alone has climbed over 250 percent to 3.6 million households in the past two decades, the housing study reported.
Not every person, or couple, who doesn't have children buys a condo, but those without children are a strong component of the condo market, Retsinas said. The study also reported that baby boomers are entering their 50s and 60s with unprecedented home equity.
"The sheer size of the baby boom generation and the stunning amount of home equity they have accumulated guarantee that these households will keep housing demand going strong," the report said.
RICHARD G. HOLLAND grew up in Rhode Island and moved away about 30 years ago. He lives in Atlanta and returns to Providence a couple of times a year. On his last visit, he toured the sites of the new condominium towers.
Holland, 58, thinks he and his wife, Pamela, might sell their house in the next few years and buy a condo here.
"I've been impressed with what's going on in downtown Providence," Holland said.
"Thirty years ago, growing up, you really didn't want to go downtown. There was no draw. Now, with what has been done, the mall, the river area… when we've been there in the summer, there's a lot of activity."
Holland believes there are other people, like him, who have been interested in buying a place in the city but couldn't find anything, until now.
THE DEVELOPERS have commissioned market studies, polled homeowners in East Greenwich and the East Side, and analyzed other cities where downtown condominiums have succeeded – such as Columbus, Ohio, and Minneapolis – and they convinced their financial backers that the concept was viable.
Economist Art Mead, for one, isn't convinced. "I don't want to use the word bubble and scare everyone off, but that's what you see here. It's a feeding frenzy," said Mead, a professor of economics at the University of Rhode Island for 30 years.
Mead questioned whether the lenders knew about the the competing projects when they approved financing. While Phipps, the Realtor, points to condominium developments around the state as proof of the demand for luxury living, Mead wonders if there are enough baby boomers to go around.
Developers built 65 condominiums on a golf course at Carnegie Abbey in Portsmouth. The units range in price from $695,000 to $7 million. In Tiverton, a developer built 290 high-end condominiums into the hillside overlooking Mount Hope Bay. "There are a lot of people banking on this group," Mead said.
Mead also wonders whether the high-priced condos will sell if the Federal Reserve raises interest rates over the next two years. The condos are not expected to open until 2007 and 2008.
"I think the lead time is such that when the decision was made to build those condos and the conditions when they come online will be different," he said. "It could be that interest rates alone could have a severely dampening effect."
THE CRITICS have been wrong before, the developers say. People predicted that the mall wouldn't succeed, that developer Buff Chace's downtown lofts would never rent, and that downtown buildings converted into high-end condos such as the seven-story Cosmopolitan on Fountain Street would fail. The mall thrived, Chace rented 253 of 293 apartments, and the Cosmopolitan sold all 13 of its condos.
Mayor David N. Cicilline has no doubts. Cicilline suspects that Rhode Islanders suffer from "a little bit of an inferiority complex."
"If you said five years ago that people were going to spend $2 million to live in a condominium in downtown Providence, they would have put you in a straightjacket," Cicilline said. "We've got to understand that we've become that kind of city where people spend a lot of money to live because it's a desirable place to live, because of our quality of life, and because of the scale of this city. And that's good news."
These developers are experienced and sophisticated business people who have done careful market analysis, Cicilline said.
"They would not be investing millions and millions of dollars if they didn't have confidence that it was going to be successful," he said.
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