In a not so shocking announcement, the developer of the new W Boston Condos and Hotel, SW Boston Hotel Ventures LLC has filed for Chapter 11 bankruptcy protection. This comes as little surprise to the Real Estate community in Boston as the developer made some crucial mistakes when building and marketing the property. ”We always felt the initial pricing needed to be closer to $850-$1,000 per foot for the upper floors rather than a non negotiable $1,100 to $1,350 per foot” says Joshua Golden of Luxury Residential Group. He adds, ”Do not get me wrong, the structure is spectacular and The W brand is second to none when one thinks of sleek, clean design combined with a hip sexy atmosphere. The problem was solely based on pricing and lack of deal making early on in the process.”
Bottom line, the prices were too high for the location. The developer would have been far better off dropping the prices early on when they saw the market turning downward to stimulate sales and make the building more financeable for buyers. Instead, they tried to match prices with the more desirable Clarendon Boston in the Back Bay, which ultimately was their undoing. They were not negotiable on their pricing even though evidence presented itself that buyers at the high end were migrating towards the Back Bay verse the Theater District. The developer should have kept a closer eye on the market and acted accordingly. Units with superior views at The Ritz Carlton were going for far less per foot.
The W Condos and its developers may emerge from this unscathed, but it is now hard to justify any sales moving forward without a significant price reduction, maybe even, dare we say it, a low reserve auction on a portion of the units, similar to The Bryant Back Bay which is now one of the hottest selling buildings in Boston. Time will tell, stay tuned.
** It is important to note that this in NO WAY effects on the operations at the W Hotel Boston. It is business as usual:-)
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