Five years after a developer purchased the stately apartment complex for about $110 million, with plans to sell the 277 apartments in three buildings as condos, a new owner has temporarily scrapped plans to complete the final phase and instead put newly renovated units up for rent.
Improvements in the 1920s buildings included upgraded kitchens, bathrooms, and hallways, as well as more elaborate plans, soon discarded, to create a driving range, cigar bar, and cinema.
In 2008, as the housing market continued to slow, mortgage holder IStar Financial Inc. seized the Tudor-style complex from the financially struggling developers and completed two of the three 11-story towers on its own. A year later, IStar surprised the real estate industry by announcing an auction of 40 units at discount prices, in hopes of spurring sales and unloading inventory.
The values of the condos, originally slated to sell for $600 to $700 a square foot, fell to about $475 a square foot. The units quickly sold out in the first two towers.
Real estate executive Edward Zuker then purchased the last remaining tower, an 87-unit building, for $18 million and invested about $10 million in renovations, currently underway.
Zuker, chief executive of Brookline-based Chestnut Hill Realty, said he originally planned to sell the units as condos but recently decided to change his strategy, rent them out for between $2,700 and $10,000 a month, and wait for the market to turn.
The developer’s change in plans adds to a growing list of Boston-area projects that have been transformed from condos to luxury rentals over the past few years amid a flailing housing market and tight financing for condominiums.
Other examples include Harborview at the Navy Yard in Charlestown, Archstone Avenir in Boston, and Third Square Accent in Cambridge.
“They could start renting them or they would have to sell them at highly discounted prices,’’ said Sally Matheu, an Archstone vice president whose company purchased the Canal Street building from developers who had planned to sell units as condominiums. “This has been going on in many places.’’
Zuker said a strengthening rental market pushed him to change his short-term strategy for Longwood Towers, which now has 239 units. While 2009 was one of the slowest years for rentals, his company’s occupancy rate surged to 98.5 percent this year, and he’s signing leases at Longwood. “The rental market is hot as can be,’’ Zuker said.
Zuker purchased the third tower, called the Alden tower, and has rights to develop the common areas in the signature building. Despite renovations, the two other buildings continue to be plagued with problems, including water leakage and excessive humidity, he said.
Zuker said improvements at the first two towers were challenged because many tenants remained in the units as the work was being done. He says he has been able to fix problems in the third tower because he relocated all remaining residents. Now he is working with owners in the two other towers to discuss upgrades on the roofs and common areas.
Zuker, 63, said he has faced skeptical condominium owners who have watched developers come and go. He is committed to completing the job because he has lifetime ties to Brookline. He has long admired Longwood Towers, a storied building that boasts a retinue of celebrities who once called it home, including baseball legend Babe Ruth.
“If we were from Miami, Chicago, Atlanta, we would have bailed out just like IStar, held an auction, see ya later, grabbed the money,’’ he said. “My concern is solving the problems of Longwood Towers and assuring the roofs don’t leak.’’
Nobody on a newly formed advisory panel of condominium owners was available for comment this week.
Jim O’Connor was one of the few condo owners at Alden tower when Zuker bought the building. O’Connor had purchased the 800-square-foot unit for $541,000 in 2006 as an investment and rented it out. Zuker, seeking to empty the entire building, offered to relocate his tenant and rehab the unit for free.
“He offered me what I consider a wonderful deal to move out,’’ said O’Connor, 65. “I feel very fortunate that they came along.’’
John Ferrari, a former renter and president of the defunct Longwood Towers Tenants Association, said Zuker’s plan to return the third tower to rentals probably will be a success, because of the high number of people connected with Boston universities and hospitals looking for temporary housing.
“It makes sense for them to do it,’’ said Ferrari, who moved out of the building in 2006. “If they had taken that approach initially, a lot of people wouldn’t have lost a lot of money.’’
Jenifer B. McKim Boston Globe August 10, 2010
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