Luxury condo project in downtown Boston receives construction financing

“It feels fantastic to be at this point now where we have everything lined up in 2024 so that we can get funding and move on to the next step,” said CEO Curtis Kemeny.

The 76,000-square-foot building on what is now the parking lot features a glass facade overlooking the Greenway and will include 29 two- and three-bedroom units — including five affordable artist lofts — and a 4,250-square-foot restaurant on the ground floor. There will be 30 dedicated parking spaces in a garage next door and 30 bicycle parking spaces.

“Aesthetically, it’s kind of the final piece of what I think the original planners had in mind for the greenway,” Kemeny said.

The site was once the site of the early 19th century trading warehouse designed by architect Charles Bulfinch, which brought goods from around the world to India Wharf.

However, this building was partially demolished in the 1950s during the construction of the elevated arterial through downtown Boston. (All that remains of the Bulfinch Building is a façade, which was incorporated into another twelve-story apartment complex near Broad Street.)

Another company, Boston Residential Development, first filed plans for 55 India St. in 2014 and received approval from the Boston Planning & Development Agency to build 44 condominiums there, filings show.

Five years later, Kemeny and BRG acquired the still undeveloped site and changed the project to its current form. These changes were approved by the BPDA on March 12, 2020.

Of course, four days later, the COVID-19 pandemic brought all construction to a halt in Boston. And when it resumed, there was little interest in financing high-end condos downtown.

Since then, the downtown housing market has recovered, but developers have also had to contend with rising construction costs and interest rates — two factors that Kemeny attributed to the project’s delay.

“It’s a very challenging financing environment for any new construction, any development really anywhere, but I think, you know, especially for condos,” Kemeny said. “The big difference is that the money was 3 percent in 2019 and has now doubled in terms of the basic form of construction financing.”

Not only have interest rates risen; The cost of many basic building materials has also increased over the past four years. That’s one reason the project — which had an estimated price tag of $72 million in 2020, according to BPDA files — will now cost about $90 million to build.

At just 29 units, that means some pretty expensive condos, although Kemeny said he’s confident they’ll sell.

“I find [the market] “showed that while the number of transactions was not as high as it could have been in the past, the dollars associated with those transactions have increased significantly as the market has tightened,” he said.

The lenders apparently agreed. Kemeny said Bank OZK — an Arkansas-based bank that has emerged as a leading construction lender in the wake of the COVID-19 crisis — is providing financing for the project, while Hickory CRE Lending and private capital sources are covering the remainder.

The ability to bring financial partners on board in 2024 also speaks to “confidence in the Boston market,” particularly downtown, the city’s waterfront and the Financial District, Kemeny said.

“I think because of the quality of this particular opportunity, we were able to attract the funding that we received,” Kemeny said. “And I think it’s a bit of a canary in the coal mine, perhaps with other projects that might follow.”

Kemeny pointed in particular to Mayor Michelle Wu’s push to drive more foot traffic to the city’s office-dominated downtown, where the local street economy has suffered a setback from the rapid adoption of remote and hybrid work scenarios in recent years.

Under a short-term pilot program unveiled last year, the Wu government is offering tax breaks to property owners who convert their downtown offices into housing.

“I think there is increasing interest in the financial district and that the mayor is also interested in helping make it more of a 24/7 community,” he said. “Now is the time when these pieces will become more important and continue to expand and grow because the foundations are now in place. That’s why we’re excited to be part of this agenda.”

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Christopher Gavin can be reached at [email protected].