Home sales across the region have dried up amid a surge in mortgage rates and a paucity of supply. Boston’s high-end condo market has been no exception, even among the priciest units, where buyers frequently bypass mortgages by paying all cash.
Luxury sales in Boston fell 23 percent in the first half of this year compared with the same period in 2022, which marked the tail end of boom fueled by low rates and pent-up demand from the pandemic, according to The Collaborative Companies, the marketing and consulting firm just hired by Cronin. At the high end of the market, 10 units priced at $5 million or more were sold in the second quarter, just half the number sold a year earlier.
For Cronin, delays finishing St. Regis Residences caused him to miss that 2021-2022 boom.
Proposed in late 2015, the project was slowed by a lawsuit over waterfront access, and later by COVID-related construction disruptions. Meanwhile, it proved harder than expected to build on a compact parcel hemmed in by water, an apartment tower, and Seaport Boulevard. Especially tricky: drilling foundation pilings into bedrock some 165 feet below ground.
“It was the first job we’ve done that was built significantly off a barge,” said John J. Moriarty, founder and president of John Moriarty & Associates, which built the project where Cronin’s bars Whiskey Priest and Atlantic Beer Garden previously stood. “There was no room to keep materials on site.”
When the 22-story building opened last October — about 18 months behind schedule, according to Cronin — the condo market was in the doldrums. And today almost half of the building’s units remain unsold, an uncomfortable spot to be in for any condo developer with construction debt to pay off.
But Cronin confirmed this week that he has secured new financing from Cottonwood Group, a Los Angeles-based real estate investment firm that developed EchelonSeaport, a luxury condo and apartment complex across Seaport Boulevard from St. Regis Residences.
Cottonwood’s mortgage signals its confidence that Cronin can sell the remaining St. Regis units, and it will allow him to pay off the outstanding balance of the $345 million construction loan he received from Madison Realty Capital in January 2022. Neither side would disclose terms of the financing, though Cronin said the interest rate is lower than the rate on the construction loan.
“We are bullish on Boston given the success of our EchelonSeaport development,” Alexander Shing, Cottonwood’s chief executive, said in a statement to the Globe.
Cottonwood teamed with Sue Hawkes, managing director of The Collaborative Companies, for sales at EchelonSeaport, which was about 50 percent sold when the complex opened in 2020 and is now up to 90 percent. She also worked with Raffles Residences, a hotel and condo combo in the Back Bay that opened in June and is 80 percent sold.
In an interview, Hawkes said her purview includes assessing all aspects of sales and marketing at St. Regis Residences, including pricing. Cronin said his director of sales, Cathy Angelini, would work closely with Hawkes. He declined to say whether others on the St. Regis sales team would be laid off as a result of the deal with The Collaborative Companies.
Asked why the Raffles property sold more quickly than Cronin’s despite hitting the market around the same time, Hawkes said Raffles had been building a buyer waiting list for 11 years.
“We were fortunate to start the presale with a very deep bench,” she said. Hawkes said Raffles primarily competed with One Dalton, which includes a Four Seasons hotel, for luxury buyers who wanted to be in the Back Bay.
But Cronin sees a market opportunity now that Seaport properties that opened several years ago have sold out, including 50 Liberty and Pier 4. His closest rival in the pipeline, the Ritz Carlton Residences at South Station, isn’t set to open until 2025.
“Things have picked up since Labor Day,” he said. And the recent opening of Savr, a two-level restaurant on the premises, has made the building more appealing.
Cronin said his larger, more expensive units have sold well among cash buyers. Less expensive one- and two-bedroom units are moving more slowly, but he doesn’t feel pressure to reduce prices. Almost all the buyers are local, he said.
Recent sales have ranged from $1.7 million for a one-bedroom unit to more than $12 million for a four-bedroom-plus unit.
“No question we are in a buyer’s market at the moment,” Cronin said, “and general stock market volatility over the past 18 months has been challenging.”
Cronin has new money and new marketing muscle, but his long slog continues