DEVELOPMENT OPTIONS FOR LINCOLN WHARF
ON BOSTON'S WATERFRONT
by
Charles R. Myer
Bachelor of Arts
Hampshire College
Amherst, Massachusetts
1978
Master of Architecture
University of California, Los Angeles
Los Angeles, California
1981
SUBMITTED TO THE DEPARTMENT OF URBAN STUDIES AND PLANNING
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE DEGREE
MASTER OF SCIENCE IN REAL ESTATE DEVELOPMENT AT THE
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
SEPTEMBER, 1985
a Charles R. Myer 1985
The Author hereby grants to M.I.T.
permission to reproduce and to distribute publicly copies
or in part.
of this thesis document 1i $l
Signature of Author
/harles R. Myer
Department of Urban St dies and Planning
August 16, 1985
Certified by
tLyrne B. Sagalyn
Professor of Planning
As istant
and Real Estate Development
Thesis Supervisor
Accepted by
Chairman
Interdepartmental Degree Program
in Real Estate Development
1
MASSACHUSETT S INSTITUTE
OF TECHNOLOGY
SEP 0 5 1985
Sotch
Development Options for Lincoln Wharf on Boston's Waterfront
by
Charles R. Myer
Submitted
to the Department of Urban Studies and Urban
Planning on August 16,
1985 in partial fulfillment for the
Degree of Master of Science in Real Estate Development.
ABSTRACT
This
thesis
is
a
detailed examination
of
the
market
conditions and development options available for the Lincoln
Wharf
Development,
a luxury residential development on
Boston's downtown waterfront.
In August of 1985,
the Kenney
Development Company
will be designated the developer for the
2.36-acre
waterfront
site by
Boston's
Public
Facilities
Department.
The site is currently composed of two old piers,
Lincoln Wharf and the North Ferry Pier.
The thesis addresses
the
development and rehabilitation of the first phase of the
two-phase development -
pocket
development.
delayed
Lincoln Wharf and the abandoned
storage structure on the wharf,
While arduous negotiations with the City
the project and many legal and physical
currently surround the development,
coal
which will house the
have
constraints
the thesis addresses the
question now confronting the developer:
what constitutes a
luxury
residential development in this market and how should
the
development effort efficiently respond to
this
market,
while
at
the
same time maximizing profits
and
minimizing
risks.
The
question
is answered through a brief review
existing legal and physical constraints.
of
the
This is followed by
an examination of the market conditions and market context in
which
the development finds itself. From this analysis,
conclusions are drawn regarding pricing strategies, unit
size,
unit mix and distribution.
Based on this analysis and
on
the physical
and legal constraints, four fundamental
development considerations are addressed. The first addresses
the addition of two floors on the existing structure. The
second
addresses the internal organization and layout of the
building.
The third consideration addresses the question of
whether to provide unfinished or finished condominiums to the
market. Finally, the provision of some form of concierge
service
is addressed. The thesis
then concludes with a
market
plan and a review of Lincoln Wharf's
relative
relationship to comparable developments in Boston.
Thesis Supervisor: Lynne B. Sagalyn
Title: Assistant Professor of Planning and Real Estate
Development
TABLE OF CONTENTS
Introduction................ ----------.---..................
3
Chapter One
The Developer And Project Constraints.
8
...................
Chapter Two
Market Context.... .......
..........................
Chapter Three
Development Design Scenar
....
Chapter Four
Summary And Marketing Pla
....................
...
...
22
....
...
...
60
101
.115
Tables-......................
Appendix....................
.126
2
INTRODUCTION
In his last day in office in December 1983, Mayor White of
Boston
designated
Company
the
Robert Kenney of the
Kenney
Development
as the developer for two of the last three piers
downtown
negotiations
received
Boston
waterfront.
Since
then
have delayed the project which has
preliminary approval from the Boston
on
arduous
only
just
Redevelopment
Authority.
The site consists of 100,000 square feet of piers
and
located on the harbor side of the Alantic
water
Power
Station,
immediately
Boston's North End.
44
adjacent
to
Union
Avenue
Wharf
The designated development provides
units of luxury condominiums
built within the
in
for
abandoned
coal storage bunker on Lincoln Wharf and followed by a second
phase
of
18
units of
luxury condominiums
on
the
North
Ferry Pier,
just north of Lincoln Wharf.
development
includes facilities for the Boston fireboats,
public
In
addition,
the
a
park and a marina.
In the eyes of the developer and many of the residents now
living on the waterfront,
Pier
represent
Lincoln Wharf and the North
one of the last
great opportunities to create
a truly spectacular residential development within the
of
Boston.
neighborhood,
Part
this
of
an
established
development
3
Ferry
is
and
surrounded
heart
prestigious
by
downtown
Boston,
the financial district, the Government Center, North
Station,
the Faneuil
Hall Marketplace and
the historic North
End.
At the same time, located at the end of Battery Street,
both
piers
Street
are
far from the busy
activity
of
and the city and share an almost unequalled
Commercial
intimacy
with the harbor.
The
image of this development is distinguished
predecessors in
the neighborhood,
an exposed "brick and beam" look,
from
in that it will not
its
have
but one of a higher degree
of sophistication and refinement while retaining the historic
waterfront
character.
Because
of the size of the
existing
structure and the legal constraints, this development will be
smaller
than those built over the past ten years.
The image
of the development will play upon this relatively small
by
emphasizing
an
overall
quality
of
intimacy
size
and
underplayed elegance.
While
many aspects of the development are dictated by
existing
constraints both from the site and
developer
which
city,
the
is still confronted with a number of key questions
require
his
effectively proceed:
immediate
what
attention
before
he
can
and where is the market for
top-
of-the-line luxury condominiums,
are
the
the
what amenities and services
expected or should be provided,
should the condominiums
be finished or unfinished, what management considerations are
14
involved in providing unfinished units,
sizes be,
how does the existing coal
development
and
opportunities,
finally,
others?
In
the
storage bunker restrict
what can the units be sold
what distinguishes this development
other
minimize risks,
to
what should the unit
words,
from
all
in order to maximize profits
and
the developer seeks to identify and
market,
as
for,
efficiently as
possible.
respond
It
is
this
order
to
take
question that this thesis addresses.
Because
of
advantage
of
limitations
the
in
two-phased
time and in
project,
questions address only Lincoln Wharf.
Lincoln
then
Wharf,
the
North
does
Ferry Pier.
publicly
In
aforementioned
Once the first
attention
to
The proforma for Lincoln Wharf,
a proportionate
mandated
phase,
complete and the market actually tested,
developer plans to pay closer
consider
built
is
the
share of the
contributions,
the
however,
costs
for
most of which are
the
to
be
in the second phase.
an
thesis,
effort
an
interviews
to answer the question
analysis
with
addressed
by
this
has been conducted through the use
brokers
and
prospective
buyers
of
and
by
supply and anticipated supply within
the
examining
current
project's
market range. The results of this research provide
an
form
approximation of the supply and demand
the
basis
on
which
the thesis
5
conditions
question
is
which
to
be
answered. All
of the questions, however, bear directly on all
aspects of the development and therefore will be looked
in such light.
as
market
upon
Financial, legal, design and physical as well
constraints
will
be
fully
considered
in
the
evaluation of each development option.
This
thesis does not purport to be an exhaustive analysis
of both supply and demand conditions.
Beyond the limitations
of time,
(which has inhibited the use of systematic
such
direct
as
modest size
to
use
What
the research
While
groups)
does provide is
market
the
conditions.
an approximation
of market
based on conversations with brokers and a
residents
comparable
focus
of the development is such that it is impossible
statistical models in analysing
conditions
of
mailings or the use of
surveys
and an examination of the
developments
within
the
sale
specific
a number of questions have ready answers,
number
histories
market
of
area.
others
are
complex and require more extensive examination. It is not the
intent
of this thesis to answer all,
or even a few,
of the
hundreds of decisions required in such a development. Rather,
the intent is to draw conclusions about the major design
and
marketing decisions in the fullest context of the development
effort.
different
These
conclusions will serve to direct the work
members
of
the
development
team
architect, engineer and marketing consultant.
6
such
as
of
the
What
of
emerges from this analysis are
insights:
market
(1)
five general
conclusions about who
types
consititutes
and what their expectations are;
the
(2) conclusions
as
to how the developer should "position"/image the project;
(3)
conclusions about how pricing strategies, unit size, unit mix
and
distribution are made;
building's
required
internal
(4) conclusions
organization,
the
regarding
degree
of
finish
for the condominium units and whether some form
concierge
service
conclusions
about
should
a
be
market
provided;
plan
and
(5)
the
the
of
finally,
development's
relative position to comaparable projects.
Chapter
One
introduces
the development entity
current legal and physical constraints of the
Two
site.
assesses the market conditions both within the
market area and
made
and
the
Chapter
specific
Boston. From this assessment, conlusions are
regarding absorption and a pricing strategy for Lincoln
Wharf.
and
Chapter Three examines, in detail, the design program
the
physical design and
confronting
existing
drawn
in
this
structure.
Chapters
luxury
residential
Chapter
Two
financial
and
feasibility
development
Four reviews
Three
and
the
then
issues
in
an
conclusions
proceeds
to
establish a market plan. This thesis is concluded by a review
of
the Lincoln Wharf's relative position in respect to other
comparable developments in Boston.
7
CHAPTER 1
THE DEVELOPER AND PROJECT CONSTRAINTS
The
following chapter introduces the
development
entity
and the current legal and physical constraints which
define
and direct the development effort. While some of these issues
do
not
bear
directly on the design and
development,
understand
they
the
provide
development
the
marketing
background
effort
as
a
of
the
necessary
whole
and
to
are
therefore briefly reviewed below.
The Developer
The Kenney Development Company was founded in 1977,
the name of Urban Consulting Associates of Boston,
T.
Kenney,
Authority
1981,
the
and
John
of
Initially
a
by Robert
former director of the Boston Redevelopment
the Boston Public Facilities
Weis
director
under
joined
Boston's
the company after
Neighborhood
consulting firm,
financial placement,
Department.
serving
Development
which worked
on
In
as
the
Agency.
matters
of
market analysis, development management
and project coordination, the company moved its focus to real
estate development. While still providing consulting services
on
a
wide
range
Development
Company
$60,000,000
worth
construction
or
of
real
estate
is currently the
of
projects
in the design stage.
8
matters,
general
either
the
Kenney
partner
for
currently
in
These projects
range
from
a
$10,000,000
Charlestown
office
Naval
Yard
condominium
to
a
complex
$25,000,000
in
the
residential
condominium development in Newburyport, Massachusetts.
Th. -Ownership Entity:
Lincoln Wharf Associates was formed in the fall of 1983 as
a
development
designation
North
entity
purpose
was
to
Development
Composed of two
general
partners,
Company and the Harbour
Lincoln
Wharf
Associates
equally
owned
partnership.
capital,
in
addition
is
currently
For
the
Capital
purposes
to that provided by
the
Group,
structured
as
an
of
raising
Harbour
Capital
Group,
this partnership
of
interests to a limited partner for $1,000,000.
its
achieve
and development rights for Lincoln Wharf and the
Ferry Pier.
Kenney
whose sole
currently plans to sell a 10% share
The Harbour Capital Group is an investment firm which, for
the
past
ten
years,
has
placed
residential real estate in New Jersey,
For
Lincoln Wharf Associates,
providing
equity
monies
in
New York and Florida.
the Harbour Capital Group is
financing and maintaining a
management relationship to the development.
9
primarily
passive
non-
Current Project Constraints
Two
types of constraints are found in this
first
project.
are those presented by the site itself.
design
constraints and
This includes
increased construction costs
the deteriorated condition of the wharf.
the legal constraints
The
from
The second
regards
with both the city and the state.
Physical Constraints
The
five
Lincoln
story
Wharf
supported
by
heavy-timber coal
stands
1,000
on a
pocket
structure
creosote-imbedded
wood piles driven into
timber
the
on
deck
bottom
of
Boston Harbor. Just below these wood piles, encased in Boston
Blue
Clay,
Tunnel.
This
location
waters
and
is
Sumner
is shown in Exhibit 1,
map and site map.
they need to be recapped.
plan
Turnpike
adjacent
as well as
wood piles at
a
project
the
waterline
While the coal pocket storage
the structure and to recap
extensive consultation with the
Authority,
Callahan
many tons of coal over the past years,
to rehabilitate
required
the
The tidal movement of the harbor
has rotted many of the
structure has held
has
Tunnel with
the
piles
Massachusetts
the agency responsible for the tunnels.
An approved solution has been reached which provides for
recapping
exceed
of
350
piles with loading requirements
a specified amount.
estimated
a
The cost of this work
not
has
the
to
been
as $973,000 by the Gilbane Construction Company of
10
Exhibit 1
LINCOLN WHARF
LINCOLN WHARF ASSOCIATES
NOTTER FINEGOLD & ALEXANDER
11
ei
Exhibit 1
PROPOSED SITE
LINCOLN WHARF
LINCOLN WNARF ASSOCIATEE0
NOTTER FINEGOLD
12
&
ALEXANDER INC.
EXI STWOG PER
REItMT
STNG fTO
ISE REBUL
Ims
RA
STING qPLES:
REMAIN
El (ING PILES & DECK
T i REMOVED
B AT T ERY
S..- T
BAT TERY ST REET
I
E X
IT Y O F BO S T O N
-C
ING BULDINGS
A
-
RE MOV ED
","
.1o *
-5
...... ,.........................e.-.
.-COAL
SITaa~~
SIT E
S*.....'"
POCT
-
S.ga..I
n." &to&a" welft sob"ift
-06 1. LZ.1.0 6" robs01111016.
,
moa "I
&P* "o"
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ft Too"as c" $Is
txl
-adess, "
LsJ
*l*c*'''
a
" .1"
am
ma
Ida poor$
ev
/
\
PLAN OF LAND
LINCOLN WHARF AND
NORTH FERRY PIER
LotI
-4
DOCK//
.....
....
~ --~
~
-
a'&
as .f ....
t
~~~~~~
~
~.,4
~
aa
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-- -...
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5
..
opwoorw
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u.
~
le.~
BO STONMA.
m .
s
SCALE.
0.e0.-i.
UNION
--,
WHARF
- aan
34-0Me-e
as.
1.240
3
MAY
. . -, -e
SUAV?
*UIUESA
B~t-
/
... -AuC
PMaaCne,
K. CITYOF eaTON'
LINCOLN WHARF
LINCOLN WHARF ASSOCIATES
1904
NOTTER FINEGOLD & ALEXANDER INC.
.
.
H-
Providence,
incurred
Rhode
in the
include the
Island.
demolition of portions
22%
of
construction
the
structural
bays
structure
and
significant
total construction
budget.
demolition
$1,434,000
A
to
these
that
the
design
found in Table
costs,
the
summary
heavy-timber
constraints
bays
of
the
1.
ten-foot-on-center
cross the width of
the
diagonal
coal
pocket
bracing
raise
in the arrangement
of
the
The use of steel angles will mitigate the
created by the diagonal bracing,
structural
in
The total cost of this work is
residential units.
problem
wharf
costs and their relative relationships for
addition
be
of the deck and the
This work results
Lincoln Wharf Development may be
In
to
siding and other miscellaneous items on
pocket structure.
costs of $461,000.
or
significant costs
rehabilitation of this structure and
removal of the roof,
the coal
Other
would
be cost
but
prohibitive,
altering
as
it
the
would
require the rebuilding of the entire structure. This issue is
considered in detail in Chapter Four. Photographs of the coal
pocket storage structure may be seen in Exhibit 2.
Legal Constraints
A
the
host
of issues have surrounded this development
one and one-half years since the
original
over
designation.
Many of these issues have been resolved through extended and,
at
times,
arduous
negotiations
14
with Boston's
new
mayor,
r
Exhibit 2
I
-
011
iiP
16
Authority.
The
constraints and conditions for development
are
and the Boston Redevelopment
Raymond Flynn,
upon
agreed
remains
the land,
to
title
clear
One central issue,
below.
described
of
establishment
the
outstanding
bears
and
directly on the success of the entire development.
all
Commonwealth of Massachusetts is responsible for
The
to land,
These tidal lands refer
the public trust.
held in
tidelands
submerged or filled, seaward of the "primitive" low-
water mark along the coast of Massachusetts. Lincoln Wharf is
have
been
In the
such property.
on
located
granted
the Massachusetts
properties
for
State
Legislature
replace
administrative licensing process to
an
established
the
irrevocable licenses by
Two years ago,
private uses.
such
past,
the legislative that, according to an editorial in the Boston
Globe on July 28, 1985, relied more on "political muscle than
evaluation."
technical
This legislation was heralded
great opportunity for the City to
the future
insure in
use of public properties would,
the
as
indeed,
be used in
a
that
the
public interest.
As
the
States Coastal Zone Management
draft the regulations,
would only grant
uses
began
to
it became clear that the new process
revocable licenses.
limitation was to insure that,
private
Agency
would retain
The reasoning for this
in fact,
properties given to
significant portions devoted
17
to
public
out,
cloud
However,
use.
the granting of revocable licenses would
to
title
these properties.
substantially
clear
Without
for the Lincoln Wharf development,
financing
pointed
as some conveyancers quickly
title,
and any
other
such project, would be impossible.
This issue
is currently in the thick of debate.
with
can
be
a revocable licensed condition for private
use.
resolve
this
certain
Nevertheless,
amendments intended to
issue are
now being drafted.
provision
of
An alternative solution is the
The
a long-term lease with the City.
use
licenses is also not out of the question as
irrevocable
DiMasi
Representative
filed,
Company currently has a bill
Development
Kenney
are
and state officials arguing that title
conveyancers
clear
There
(D-Bos)
requesting legislative action.
of viable solutions,
of the
North
At this point,
of
the
by
District,
End
with a number
the Kenney Development Company is fully
confident of a positive resolution.
Public. Benefits
have
in which the Lincoln Wharf
environment
The
conducted
been
directly
affected
by
the
in the mayor's office and a groundswell of public
transition
interest
has been
negotiations
in
community-related
matters.
The
developer's
original proposal was the only one of the three received that
contained
public
benefits as an integral component
18
of
the
Pier,
facilities for the Boston fireboats on the North Ferry
a
new
included the construction of
benefits
These
proposal.
public promenade and a $375,000 contribution to the City's
Nevertheless,
housing program.
given the new Mayor's agenda
to open the downtown waterfront to the public through the use
of
Kenney
the
action,
the
with
renegotiated a relationship
Company
Development
this
of
questions
legal
substantial
of
legitimacy
the
regarding
was "de-designated" in August
were very
there
While
1984.
project
the
development,
avowed
private
to
relationship
city's
the
in
reorientation
an
as
and a continuous promenade as well
parks
city and was redesignated as the developer in August of 1985,
one year later.
This
sixty-two
the
maximum
of
condominiums of unspecified size to be
built
on
A maximum of 44 units may be
built
on
recent designation provides for a
most
2.36 acre site.
Lincoln
Wharf
with
more
a total height of no
seven
than
stories. Furthermore, it has been strongly suggested that the
addition
of
the sixth and seventh floors be
back,
stepped
away from the harbor. A maximum of eighteen newly constructed
condominiums
At the
may be built on the North Ferry Pier.
end of the pier, will be five public marina slips and docking
and
office
provided
at
facilities
the
for
the
Boston's
developer's expense.
19
A
two
fireboats,
minimum
of
one
parking
space per residential
access
around
upon.
Full public
unit is required.
the perimeter of each pier has
been
A public promenade is also mandated beside
agreed
the North
Ferry Pier. A landing area for the city's new water taxis has
also
These taxis,
been agreed to.
Plan,
will
direct
provide
access
the
part of
to
Harborpark
Airport.
Logan
In
addition to these requirements, a lump sum linkage payment of
$475,000
is
date
required at seven years time from the
of
designation.
14% is devoted to
development is devoted to public use,
the
parking
and
and water area is
open.
description
of the various land uses and their
to each other, see Exhibit
the
graphic
relationship
3.
many of the actual site and building
relationships
for
the
of negotiation and assessing potential issues,
the
sketched
been
purposes
a
For
land
have
82% of
is occupied by buildings.
only 18%
development
While
land area of
more than 29% of the
In terms of land use,
developer only now,
out by the project
architect
with the obstacles removed, has begun to
determine how this development should be designed within
constraints
given
and
with the objective of
downtown waterfront's finest luxury residential
20
building
the
the
development.
18......
BULDINGS
18,700
WATER/MARINA
28,500 27
EIIIIIPEOPLE/OPEN SPACE
31,900 31
i ICARS
14,200
14
CARS & PEOPLE
1,600
3
.
. .........
Lh
~
102,750 100
TOTAL
o
.....
..
.
........
.~~~~1
m 20
40
80
LINCOLN WHARF ASSOCIATES
LINCOLN WHARF
NOTTER FINEGOLD
&
ALEXANDER
INC.
CHAPTER 2
CONTEXT
MARKET
purposes
the
For
assumed.
The
first
is an examination of
existing
what
a
are
three perspectives
strategy for Lincoln Wharf,
pricing
and
market conditions
of assessing
supply
conditions
within the specific market area:
has
developed,
how have these projects appreciated in value, and
conclusions can be drawn about pricing strategies?
what
second perspective analyzes market demand:
demand
The third perspective
Lincoln Wharf?
for
waterfront projects coming on line in
substantial
they similar,
are
constitute
a
considers
the
Based on
next
this
they
do
how are they different and
competitive threat?
market
development:
years which may impact the Lincoln Wharf
three
The
what has been the
market demand in the past and what is the anticipated
how
been
analysis,
Chapter 2 concludes with a pricing strategy for Lincoln Wharf
and a projected absorption rate.
The Market Area
Lincoln
within
Wharf,
the
larger
and its specific market area,
fabric of
North
Boston's
integral part of this neighborhood,
of
Neighborhood.
Central
This
Boston
area
and
End.
As
is
set within the
the
North
End-Waterfront
is surrounded on two sides by
22
an
the following definition
and analysis of the specific market area,
context
is located
the
and
harbor
the
on
side
inland
by
North
Station,
the
the financial district and Quincy Market.
Government Center,
Centrally located, access from Lincoln Wharf to Logan Airport
subway or ferry. Freeway access,
is ten minutes away by car,
south, is no more than five minutes by car and the
north and
subway is a ten minute walk.
Since the turn of the century, this neighborhood has
been
a closely knit community of Italian descent. Characterized by
small
winding
once
housed
groceries
bakeries,
the
throughout
found
and the streets are
that
Italian
Italian.
speak
restaurants are
and
neighborhoods
residential
in
those who worked on the waterfront and
many residents still only
markets,
buildings
streets and simple brick row
often
alive
with activity as there are few yards, parks or open spaces.
the past ten years this neighborhood has experienced
Over
enormous growth and change. This growth has largely
from
Back Bay,
Downtown,
Cove
investment.
billion
made
48,000
Beacon Hill,
areas),
From
dollars
of
economically
the
North End, Waterfront and
experienced
record
1978 to 1983 and 1983 to
1988,
levels
of
over
7.1
of private development investment has
is scheduled.
or
has
to
The Central Boston area (the
downtown Boston.
resurgent
South
proximity
neighborhood's
the
resulted
This same area
the 58,000 net increase
23
is
in jobs
been
responsible
for
in Boston
over
estimates
basis
Authority
The Boston Redevelopment
1976 to 1983 period.
the
that more dollars have been spent on a
per-capita
for urban development in Boston than any other city in
the country.
Since 1975,
space has been
over twenty million square feet of
added to the city's building supply.
This dramatic growth has had a direct impact on the
End-Waterfront
population
Neighborhood.
in
to
1980,
the
while
the
on
this neighborhood's population
is
by
decreased
12%.
38% from 1980 to 1990 and
grow
is
housing
to
Based
population
projections made in 1982,
expected
1970
this neighborhood increased by 5%
overall
city's
From
North
expected to grow
46%.
This
the
need
population
for
growth
reflects an enormous influx of new residents from outside the
community; the profile of this new resident is very different
than
number
this
total
38%.
of
Boston's
total
remained constant from 1970 to
1980,
households
at the same time
neighborhood increased by 38.7%,
Similarly,
the average number of people living
the
Boston
neighborhood,
section,
Redevelopment
which
has
This trend,
Authority
report
June 1984,
within
according
on
provided the information for
Boston andA the North Enn,
the
dropped
number of families making up those households
each household dropped by 23% to 1.8.
to
While
currently living there.
those
this
this
is partially
due to an increase in the number of elderly living alone, but
is
predominately
the
result
24
of
the
influx
of
young
professionals working in the downtown area.
Brokers
nester"
and
that
it
is this market
divorced persons which has
and
the
created
"empty
the
great
to
1983,
condominium units were established in the whole
North
demand
1,022
state
for
condominiums in this area.
End-Waterfront
property,
Neighborhood
rehabilitation
construction.
This
condominiums,
based
importantly,
an
through
conversion
of
rental
of existing buildings and some new
area
on
From 1969
possesses
17%
the 1980 housing
overwhelming
48%
of
of
Boston's
stock.
these
But
more
North
End-
Waterfront condominiums are in the Lincoln Wharf market area,
an
area
total
which represents a relatively small portion of
neighborhood.
investment
in
The
and
the
private
development
this specific area has been twice that of
entire neighborhood.
building
size of
the
the
The total number of units developed per
is 29 per building in the Lincoln Wharf market area
an
average
of
15
per
building
for
the
entire
neighborhood.
h~e Specific Market Area
Lincoln
development,
the
Wharf and North Ferry,
currently
the second phase
represent the northern quadrant
North End waterfront market area,
market
of
see Exhibit
4.
the
of
This
area is defined by the harbor on the eastern edge and
25
Exhibit 4
a-
A~k~L~
id4
E1
s-4
U,
14-4
$4
I
-l
LI
P-4
I
H
-H
26
by the Prince Building and the Mariner (formerly known as the
Gerard
Freezer
Avenue
and
building),
on the western side
Commercial Street and
of
by Commercial
Alantic
Wharf
and
Christopher Columbus Park on the south.
The Lincoln Wharf market area, while physically continuous
with adjacent neighborhoods, is clearly distinguished by both
its
waterfront
investment
that
character
has
and
the
been made over
substantial
the
past
private
twenty-five
years, but most particularly in the past ten years. Beginning
in
the
mid-1950s
with Commercial
structures, both on piers and
As
with
Commercial Wharf and
Wharf,
1960s
however,
the
Prince
Building,
these
but beginning in
some condominiums were established.
It was
not,
until the early to mid-1970s with the renovation and
conversion
of the Prince Building into condominiums, that the
first
signs of a luxury
While
still very much a frontier community,
residential
neighborhood
is now among the most highly valued in the
1978,
Union
of
neighborhood,
the
if
confirmed
Mariner
the
in
this ambition
June
of
this
and
contain the city's most expensive condominiums.
of
city.
In
with
the
year,
developer's objectives are
27
seen.
neighborhood
which
Wharf
were
the opening
Lewis Wharf in 1977 heralded the formation of a
opening
warehouse
land, have been rehabilitated.
buildings were initially rental properties,
the
large
met,
this
may
Within
the
area
there
are
Union
five
Wharf,
the Mariner and two conversion properties,
Lewis Wharf,
Building
defined
Wharf market
residential developments:
luxury
substantial
Prince
Lincoln
visual
and Commercial Wharf.
contrasts
are
They
between those
the
sharply
projects
on
the
harbor side of Alantic Avenue and Commercial Street and those
on
the
city side.
Averaging approximately
on the harbor side -
projects
-
are
Union Wharf,
units,
the
Lewis Wharf
and
Commercial
Wharf
warehouses
built on piers which jut out into the harbor with
marinas adjacent to them.
in
contrast
against
rehabilitated
85
granite
six-story
stand
These horizontal structures
their
two taller
and
higher-density
neighbors across the street. They are both rehabilitated tenstory warehouses.
Existing Market Comparables
Of
most
these projects,
Union Wharf and Lewis Wharf
to Lincoln Wharf and
similar
are
the
direct
provide the most
comparative value. The Mariner, while distinctly different in
just
character,
has
therefore,
provides
prices.
rate,
high
The
Prince
placed
the
83 units
on
best indication of
the
market
current
Building has an extremely low
and
sales
turnover
one unit per year, and therefore, while indicating the
value placed on the building by its owners and
28
thus
a
very positive reflection on the market area,
comparative
developed
the 1950s and has been
unit-by-unit
basis
since
condominiumized
the mid-1960s.
As
building with both rentals and condominiums,
unlike
the
Prince
Building
improvements by
its developer,
a
address
prestigious
neighbors
so it
development
building
Commercial Wharf was a rental
data.
in
does not provide
nor
which
a
this
building,
extensive
has not established
itself as
values
of
its
is not considered in this analysis.
No
one
with this limitation,
the
is truly comparable;
the
a
conversion
received
commanded
on
intent is to arrive at a cumulative perception of the
market
conditions.
The
the
sources of information which constitute the basis for
following
analysis
include
interviews
with
three
waterfront brokers and ten residents of Union Wharf and Lewis
Wharf, and the sale histories of the discussed buildings over
the past three years.
be found in Table 2.
foot
values
and
An accounting of those interviewed may
Unless noted otherwise, all per-square-
sizes refer to the
units
themselves
and
include the deck or balcony space, as is the common practice.
Lewis Wharf
Developed
Lewis
Wharf
warehouse
by
Carl Koch,
a well-known Boston
was originally a six-story
built
on
stone
piers
29
and
slate
fill.
architect,
and
It
granite
serviced
schooners
and other freight-carrying vessels during Boston's
halcyon days as a seaport.
Rehabilitated in 1974 and
1975,
eighty-four unit development went on the market in
this
1976
and was sold out in a year and a half.
The
building
is
approximately
60%
two-bedroom
units,
averaging 1,300 square feet,
and 40% one-bedroom units,
half
square
of
which
averaging
average 850
1,120
square
feet.
feet,
the
Services
a marina,
after
the
completion
Almost
north,
of the development.
Parking
overlooking Sargent's Wharf,
occupied
the
or to
by a range of retail stores,
first
are
floors
financial
is
not
all units have unimpeded views either
Store 24 and Roche-Bobois,
on
24-hour
Amenities include
overlooking the marina and Commercial Wharf.
is
half
a bocce ball court and a small swimming pool built
provided.
the
other
include
security and a full-time building manager.
one
condominiums,
consultants.
south,
The first floor
which
include
a high-end furniture store.
floor and on parts of the
office
the
to
second
and
owned by law
These offices each have
firms
a
a
Also
third
and
separate
lobby and elevator.
Lewis
Wharf has experienced the highest sales values on a
per-square-foot
years.
size,
In
1983,
basis on the waterfront over the past
seven units,
averaging
1,000 square feet in
were sold at $219 per square foot (psf).
30
three
In
1984,
only
two
$187.
of
were sold at a per-square-foot average
units
Currently, five units are under purchase and sale agreements.
average per-square-foot value of these
The
rate of appreciation for the one
per-square-foot
The
$302.
1985, was 445.
year, from the 1983/early 1984 period to
In the period from 1983 to 1985, 71%
one-bedroom
there were two sales in 1984 and two in 1983.
units in 1985,
those two periods there was no appreciation in value
Between
For the two-bedroom units,
for that type of unit.
of appreciation in
rate
the
of the sales were for
While there were no sales of
two-bedroom units.
is
transactions
per-square-foot
however,
from
values,
1983/1984 to 1985 has been 30%. It can be concluded from this
appreciation,
of
rate
The
the
of
rate
strong
that there is a
preference for two-bedroom units in this development.
turnover
Exhibit 5,
summary
to
compared
for one-bedroom units,
appreciation
market
when
rate of these units is
relatively
but local brokers claim this is
coincidental.
the sales history of Lewis Wharf over
of
see
high,
the
A
past
three years may be found in Table 3.
Union Wharf
Very
Wharf,
similar
first
the
represents
a
size and physical
in
character
phase of Union Wharf,
unique
view on the
31
market
for our
demand:
Lewis
to
purposes,
it
was
Exhibit 5
The Turnover Rates For Selected Developments In The
Lincoln Wharf Market Area
----
---------------------------------------------------Lewis
Wharf
Union
Wharf
Prince
Building
-------------------------------------------
1983
8.3%
3.45
2.2%
1984
2.4%
4.6%
2.2%
1985
6%
3.45
2.2%
5.6%
3.8%
-------------------------------------------
Average:
------------------------
2.2%
------------------
Note:
-The
above
turnover rates for Union and Lewis Wharves
are
based
the sales histories of these projects as
documented
in Table 3, for Lewis Wharf, and Table 4, for Union Wharf.
-The 2.2% turnover rate for the Prince Building is based
on
one
sale
per
year
over
the
past
three
years.
This
information
was provided brokers.
32
developed
as
raw space and the
their own units.
with
two
The developers,
limited partners,
corridors
and
unit
purchasers
Jim Craig and Austin Heath
provided finished
rough plumbing and electrical
units
themselves
brick
walls
slab.
lobbies
and
services.
The
with
only
bare
Rough
unit
sizes
were offered as shells,
and a concrete floor
completed
ranged from 1,175 square feet to 1,800 square feet.
the market area was still considered frontier and
Because
this development concept virtually untried in Boston,
banks
for the Ritz-Carlton,
sold
Presales
began
exchange
of titles
in
in
the
The
of
the
order to test
1977
and
market.
completion
presale
sales price was $75 psf,
the time,
market,
according
issues
The
averaged
psf to finish off their respective
raised by the development approach of
rough space are discussed later,
to
which was considered high
and construction costs by the owners
between $25 to $30
and
May of 1978 with final sellout
was initally slow but momentum quickly gained.
average
The
fall
occurred in
the summer of 1979.
brokers,
at
required that the development be
quickly as possible in
as
except
units.
providing
but what is of interest
is
that 90% of the units were built out by owners as two-bedroom
units.
units
While
sold,
this is in part due to the large sizes of
it
strongly suggests that is
"empty nester" and divorced person market,
approach.
33
the
the
higher-end,
that prefers this
The second phase of the Union Wharf development, completed
in
1980,
contained twenty-seven row house triplexes at
the
harbor end of the pier. These units average 2,300 square feet
and
have
unimpeded
harbor,
Sold
views to either
the
inner
or
outer
while the end units have views in three directions.
on
a
approximately
preconstruction
90%
sold
basis,
out by completion
unique position in the market --
townhouses
these
in
units
were
1980.
Their
the only ground-level luxury
on Boston's waterfront --
was the reason for
the
success of these units.
Like Lewis Wharf, Union Wharf has a small
marina,
Unlike
24-hour
Lewis
security and a full-time building
Wharf,
within its development.
completely
devoted
scattered
among
offices
are
and,
there is no retail
however,
parking is leased to owners.
condominiums
swimming pool, a
Aside from the first floor which
the offices can
second-
and
occupied
third-floor
in
most particularly,
largely
and
use
Union Wharf also has office use
to this use,
the
manager.
by
be
and
found
residential
the triplexes.
lawyers
is
These
financial
consultants. One broker estimates that the business ownership
represents as much as 10% to 15% of the building.
Over the past three years, Union Wharf has experienced the
highest
resale prices on the waterfront.
34
In the
1983/early
1984
period,
prices ranged from $304,000 to $480,000 for an
of $240 psf.
average
From mid-1984 to
January
1985,
five
sales occurred with prices ranging from $262,500 to $825,000.
The
average
per-square-foot
sales price was
$266,
a
30%
increase in one year.
Two
units are of
resold
twice
in
particular interest as they
the past two years.
have
Unit 607 is
been
a
1,530
square foot duplex on the North side of Union Wharf. Although
its
views
Power
May
of the water are
Station,
of 1983.
$455,000
square
psf),
of 20%.
representing
an
annual
feet and faces south with water views.
at a rate of 34%
in
for
rate
of
2,286
This unit was
($210 psf).
Seven months
psf),
appreciating
annually.
single most outstanding characteristic of the resales
1983 to 1985 is that 90% of the units resold have
three-bedroom
feet.
psf)
Unit 18 is a triplex containing
later it was sold for for $575,000 ($252
from
($222
Avenue
Nineteen months later this same unit sold
sold in March of 1984 for $480,000
The
Alantic
this unit sold for $340,000
($297
appreciation
blocked by the
units
with an average size of
2,065
been
square
These units represent only 31% of the total unit
Of the three-bedroom unit resales in this period,
transactions,
triplexes.
mix.
54% of the
or 60% of the total transactions have been for
When
looking at the resales of the triplexes
35
in
the 1983/1984 period to the 1984/1985 period, the per-squarefoot
values
increase
from
$202
to
$277,
a
37%
annual
increase.
This
disproportionate relationship between the resales of
the triplexes and all other units in this period is explained
by
the
high percentage of units owned
by
businesses.
who has handled many of these sales has
broker
stated
there has been almost no sales of residential units
the
triplex
sales that have occurred have
been
One
that
and that
businesses
which have grown in size and need larger facilities.
looking at the other units sold,
When
the nature of
Unit 607 was sold
turnover
market becomes even clearer.
1983
a couple in their fifties who wanted to renovate
by
the
in
a
small building just outside the market area and move into it.
This
couple
Their
the
has moved four times in the past
eight
residences in the past have included Lewis
Prince Building.
couple,
who
unit
for.
twice
younger
this,
The sale
in the same year accounts for 20%
it
of
may be surmised that the
the
unaccounted
already
average turnover rate of 3.8% for this three-year period,
36
of
The business condominiums
for another 50% with the remaining 30%
From
and
sold their condominium in 1985 because they had
sales transactions in this period.
account
Wharf
Unit 607 was then bought by a
adopted a child and needed a house with a yard.
this
years.
low
can
be largely accounted
for by
an increased need for space
in
both residential and business use, and not due to any lack of
desire
for
the development itself.
A summary of the
sales
history of Union Wharf over the past three years may be found
in Table 4.
Mariner
Ie
Formerly a cold storage warehouse,
brick and
eight-story
existing
rehabilitated
this relatively
concrete building
over the past one and a half years.
tall
been
has
As part of
this construction, two stepped-back floors have been added to
the
top
of
Corporation,
on
Developed by
building.
the
the
Mar
the Mariner opened the doors to its model units
June 23rd of this year and began presales for
date.
completion
1986
East
a
January
The sales prices are among the
most
ambitious in all of Boston. The per-square- foot sales prices
range
from
a low of $224 for a second-floor
to North Street with views only of the street
west
psf for a 1,900
to
$500
square foot penthouse with spectacular views
The $500 per-square-foot selling price for
of Boston Harbor.
tenth-floor
facing
studio
units
and
the $450 for the
units
ninth-floor
exceeds that of any luxury condominium project in Boston. The
Season's highest per-square-foot
Four
Charles Place in
is
a
Cambridge it
is
$400.
value is
$425
Harbor Towers,
conversion building with spectacular views in
desirable neighborhood,
is
currently selling for $150
37
and
in
which
a
less
to $200
psf.
The
Mariner's
unit
($365
psf).
average selling price is $388,205
This $365 is 20% higher than the
average
current sales price at Lewis Wharf and 37% higher than
Wharf,
both
preferred
waterside
expensive
by
the
pricing
of
the
the project's notable
units
units
of
is
drawbacks.
with water views on the lower
onto Commercial Street
directly
the
found
further
The
most
floors
face
and
which is noisy
dirty.
at Union and Lewis Wharves who live more than
Residents
Commercial Street cite the noise
from
away
by
the street as the single
developments.
those
A summary
5.
complicated
created
of the market area.
unit sizes and unit distribution may be
Understanding
feet
Union
firmly established prestigious addresses on the
sales prices,
in Table
per
greatest
and
100
dirt
drawback
The awkward handling of the foyers
of
and
the galley-type kitchens combined with a second-rate level of
finish --
sprayed on stucco ceilings, exposed sprinkler heads
and
like
the
building
is
residential
-even
does not create the impression
close to being
developments,
believe. Furthermore, no
than
valet
as
amongst
the pricing
Boston's
would
this
that
finest
have
you
feature services are provided other
attendants for indoor parking,
marina.
38
and there is
no
the
Nevertheless,
within
sale.
the
deposits
twenty-three
three-week period the development has
The
studios
claim
brokers
great
majority of these deposits have
and one-bedroom units.
value obtained to date is
The highest
been
for
been
for
per-square-foot
somewhere between $400 to $450 psf,
according to the broker. This value is 12% to 26% higher than
highest
the
waterfront
the
per-square-foot
market area.
value
paid
While receiving
units within a three-week period is
response,
it
should
deposits.
In
disappear if
Aside
consumer confidence
from
provides
several
analysis were conducted.
which
unit
the
are
for Lincoln
The first
considered
can
not maintained.
Wharf.
of
the
development
Two
types
to
of
looked at the relationship
size and the per-square-foot
second
only
key observations which will contribute
strategy
of
a very strong market
market these deposits
is
the
deposits on 27%
analysis of the pricing within the
pricing
in
the ambitious sales price objectives
an
between
date
clearly noted that they
a highly speculative
Mariner,
the
be
to
the
sales
pricing
price
impact
of
and
the
available views on different units.
When
price,
analysing
unit
size
and
per-square-foot
selling
a very clear and notable set of relationships becomes
apparent.
As you will note in Exhibit 6,
proportional
relationship
between
39
there is a
the floor
the
direct
unit
is
An
Analysis
Exhibit 6
The Mariner:
Of The Relationships Between
Unit
Size,
The
P.S.F. Sales Price, The Floor Location and Unit Distribution
Analysis of Unit Size, Sales P.S.F. and Floor Hieght Based
On Average Sales Prices For The Unit Sizes Indicated.
------------------------------------------------- -----Floor
600 to
900 to
1,300 to
1,600 S.F.
Number
900 S.F.
1,300 S.F.
1,600 S.F.
And Above
------------------------------------------------------Two
$258
$309
Three
$259
$323
Four
$256
$360
Five
$321
$360
$356
Six
$352
$371
$372
Seven
$378
$382
$386
$388
Eight
$400
$400
$400
$400
Nine
$450
$450
$450
Ten
$500
$500
Analysis of Unit Size, Unit Distribution and Floor Hieght:
The following Analysis calculates the number of units within
the indicated range size.
---Two
Three
----------------------------------------------------9
3
9
3
Four
9
Five
6
3
1
Six
5
2
2
Seven
3
3
2
2
Eight
Nine
4
2
2
2
1
4
1
3
Ten
3
located
on,
on
Units
square
its
size and its
20% cheaper on per-square-foot
This
the
throughout
sales
price
behind
than
relationship
this
smaller
building.
are directly
repeats
itself
to
900
than
the
same
consistently
Unit size and the per-square-foot
related.
The
units in per-square-foot
logic
developer's
pricing is that larger units are more
valuable
A
prices.
sales
and Lewis Wharves does not
study of Union
similar
price.
basis
sizes 900 to 1300 square feet on
ranging in
floor.
sales
size from 600
the second floor ranging in
feet are
units
per-square-foot
indicate
this unusual relationship.
Similarly,
the relationship between the views offered and
interest
is
unit and its
direct. Of greater
as one might expect,
the sales price is,
view and
its
sales price:
the better the view,
sales
the larger the unit and the higher the per-square-foot
As you will note,
price.
with
those
units
this relationship
is
more pronounced
with little or no views of the
those
with an oblique view of the water as the
types
have
price range.
the
relationship between the size of
the strong
city
and
three
other
optimal views and are approximately in the
same
The logic of this pricing strategy assumes that
with an increase in locational value there is an increase
in
the desire for space. This reasoning and the logic applied to
pricing
not
units in terms of size,
is ill-conceived.
consider the top-of-the-market purchasers who
41
It does
desire
a
The results of this analysis
for example.
small penthouse,
may be found in Exhibit 7.
Qualifications
need to be made when
the
considering
of the Mariner. The writer of this thesis has
view analysis
not
do
seen each of these units and the analysis is based on
limited
of
number
floor plans,
of
visual inspection
the
For these reasons,
exterior and an inspection of four units.
value
results of the analysis are approximate and their
the
a
is in the approximate patterns they indicate.
These
Wharf
results are not consistent with the sales of
Union
significant
price
and
Lewis Wharf.
between
differentiation
There is not a
units with views to the
south or even units with limited views.
appear
in the analysis as significant.
inconsistent
locational
sales
data
with
commonly
held
north
Floor level does not
These findings
perceptions
the lack
of
information
are
regarding
value and are probably the result of the
and
and
regarding
limited
exact
locations of individual units.
Market Demand
Three perspectives are assumed in analysing the anticipated
demand for Lincoln Wharf.
The first considers the historical
demand in this market area; the second, current demand at two
42
Exhibit 7
The Mariner:
Analysis
Of The Impact Of Views On Unit Size
And Price Per Square Foot
FlR No City
#
or water
View
2.
3.
4.
5.
6.
No City
View,
Oblique
Good City
View,
Oblique
Good
Views
City
Good
Views
Of
Water
Water
Only
Water
S.F.
P.S.F S.F.P.S.F
S.F.
P.S.F
S.F. P.S.F S.F. P.S.F
607
607
607
585
$225
$237
$250
$282
958
958
889
$300
$313
$350
1,210 $350
1,210 $365
840 $344
840 $367
1,254
1,254
1,176
1,254
1,254
7.
1,198 $380
899 $378
1,378 $385
8.
9.
10.
1,210 $400
899 $400
1,094 $450 1094 $450
1,669 $500
1,254 $400
1,656 $450
1,859 $500
1,265 $408
1,371 $392
Averages:
600
$249
935
$321
914 $388
$325
$341
$384
$364
$376
Note:
prices given to
analysis is based on sales
-The above
brokers. The determination of views and view quality is based
inspection of the exterior of the building, a
on visual
limited set of floor plans and a walk through of four units
available for viewing. The data, therefore, is limited to the
extent that it shows approximate pricing patterns only.
-Headings describing no views
look across the street to other
to city, have expansive views.
to units in which one has look
building inorder to see water.
43
refer to units that
of city,
buildings. Units with views
Oblique views of water refers
out and down the side of the
comparable
developments outside of the market area;
third,
current
pricing
turnover
demand
and the
as assessed by brokers and
studies
reviewed
earlier.
by
the
Profiles
of
prospective buyers are then described.
Historical Demand
Much of what is known about market demand for Lewis
and
Union
waterfront
this
Wharf
is
brokers.
thesis,
based
Of
on
the
information
Wharf
provided
by
three brokers interviewed
for
two were directly involved with the
sales
at
Union Wharf but none were involved with Lewis Wharf. For this
reason, this section on historical demand is limited to Union
Wharf.
According to
of
Union
the
Wharf,
predominately sold to
Many
came
smaller
from
brokers, the sales for the first phase
the
rehabilitated
warehouse,
"empty nesters" and divorced
were
persons.
Lewis Wharf and the Prince Building
amount came from the suburbs of
Boston.
and
The
draw
from the market area is accounted for by the fact
many
residents
units
as
saw the opportunity to build out
very attractive.
Brokers estimate that
large
that
their
of
a
own
those
purchasing units in this building, 15% to 20% were bought for
investment
purposes,
5%
to
10% were
businesses
and
remaining 70% to 80% were those simply buying residences.
is
further
estimated
that 30%
442
of
all
transactions
the
It
were
and resulted in the selling of deposits and down
speculative
payments.
speculative market for phase two of the
The
townhouses
that
was
50%
even stronger,
of
the
units
Approximately
one
half
brokers
sold
of
were
these
and owners
paper
units
Wharf
Union
claimed
transactions.
were
bought
for
approximately another 10% were bought for
business purposes.
investment purposes, with the remaining percentile buying for
residential use.
For the entire development,
only 5% of the
sales were to families. The lack of yards, other children and
the
problem
of getting children to schools
has
eliminated
this market.
Comparable Developments Outside
developments
Four
Church Court,
considered
were
Charles Place,
for
this
analysis:
the Four Seasons and the Ritz-
The brokers for the Ritz-Carlton never responded to
Carlton.
this writer's inquiries.
extremely
those
ihe Market Area
who
reluctant
had
to
The broker for the Four Seasons was
provide any
information
condominiums.
purchased
The
regarding
following
information on Church Court and Charles Place was provided by
Erin Teach,
the broker for Church Court, and Carmine Cerone,
the broker for Charles Place.
45
Developed
completed
Teach,
and designed by Graham Gund,
in the early spring of 1984.
market
the
for
Church
Court
Church Court
According to
was
was
Erin
by
drawn
the
building's
"flashy" image and its location on Memorial Drive
with views
of the Charles River.
buyers were
the
Bay,
in
living
decidedly not from this area as those
neighborhood did not
this
Back
While located in the
like
the
building's
image. Twenty percent of the buyers were young professionals,
ages
32 to 52,
all buying one-bedroom units
divorced persons who bought two-bedroom units
and
1,270 square feet;
The
feet.
remaining percentage is unknown.
20% one-bedroom units,
bedroom
square
1,450
The unit mix is
three-
60% two-bedroom units and 20%
Prices ranged from $160
units.
averaging
twenty percent went to divorced women
the three-bedroom units averaging
bought
who
and
870
nesters"
forty percent went to "empty
feet in size;
square
averaging
to $350 psf and
the
building sold out in eighteen months.
Carmine
Cerone,
of Charles Place,
estimates that of the
seventy-seven units sold to date out of the total of
six,
25%
were sold to single young professionals
late-thirties
investors
to
looking
mid-forties,
eightyin
5%
were
50%
were
5% were families,
for long-term appreciation and
their
"empty nesters" and divorced persons ranging in age from
early-forties
to
mid-sixties.
Forty percent of the
the
buyers
had some affilation with Harvard University. The unit mix
is
15%
one-bedroom units,
bedroom units.
building
the
55% two-bedroom units and 30% three-
Carmine Cerone noted that the buyers
were not interested in
Cambridge market.
the Boston market,
in
this
only
Prices have ranged from $250 to
in
$400
psf and the development began presales in January of 1983 and
is 90% sold after two and a half years,
six months more than
the developers, Carpenter and Company, had planned.
These
two
positioning
in
construction
notable
the
developments
several
are
key
similar
in
respects.
Both
and have similar unit mixes.
And
differences in locational preferences,
buyers have similar demographic profiles.
their
are
market
of
new
despite
the
as a
group,
This unit mix
and demand profile is the same as what the waterfront brokers
project
as
the
most appropriate
for
the
Lincoln
Wharf
development.
Proj.ecting A Profile fLr Buyers
As
the
sales value analysis for Union and Lewis
Wharves
indicated, the strongest market demand appears to be for twobedroom units and three-bedroom units;
they have shown
the
greatest appreciation. Brokers, nonetheless, state that there
is
a
strong
however,
they
is
market for
one-bedroom
units.
This
market,
much more restricted in its ability to pay.
point out and as may be seen in the structuring of
Mariner,
one-bedroom
units provide a valuable
47
solution
As
the
to
less
desirable
locations in the building as they allow
the
young professional buyers a point of entry.
The
young professional is typically
ranging
in age from
purchase
the mid-thirties to
business
They
buyer
mid-forties.
is seen as an investment towards a larger
some later time.
the
a first-time
This
unit
at
desire a prestigious address close to
and social centers in downtown
purchasers
have
restricted
in the total dollar amount
limited
assets
and
as
Boston.
such,
they are
These
they
capable
are
of
paying. For this reason and because they do not require large
living
quarters,
this
market typically
seeks
one-bedroom
units ranging in size from 750 square feet to 900 square feet
(not including the balcony).
The "empty nester" and divorced persons market is typified
by a couple or a person ranging in age from the early forties
to the mid-sixties.
They work full time in Boston, commuting
daily by car or train. Most own second or third homes. Almost
all
coast
are
from New England and most have summered
of New England.
along
the
A significant number have boats.
The
primary motivation for living on the waterfront is a love
the
North
the
gone,
ocean and the historic character of Boston and
of
Boston's
End combined with the waterfront's direct proximity to
downtown
Boston business district.
With
the
children
this purchase represents an opportunity to realize the
48
desire to live by the sea while continuing to work in Boston.
Accustomed
to
overnight
comfortable
feet,
also
shown
interest
This
they
in
a
desire
wanting
ranging in size from 1,200 square feet to 1,600 square
the larger units
buyers
and
units
has
these
standards
two-bedroom
with
guests,
living
having a study/den.
limited,
but
This same market
nonetheless
even larger units of up to 2,000
accountable
square
last market is often called the "penthouse
are
looking
for
the
very
finest
in
feet.
market"
as
residential
accommodations.
Waterfront Projects Coming on Line Over the Next Three Years
Two
residential
completion
waterfront
are
projects
within the next three years;
San Marco,
between Lincoln Wharf and Commercial Street,
which
slated
for
localted
and Rowes Wharf
North
End
to be constructed in
the
is just south of Harbor Towers outside the
waterfront market area.
San Marco
The
Marco's development,
San
rehabilitated
Alantic
Avenue Power
Station
on
Commercial
Street, will supply 192 condominium units. The developer is a
non-profit
Archdiocese
community-based organization associated with
the
of Boston who have publicly committed themselves
49
to
selling
the
Construction
units
at
cost
cost,
it
is
not really a market-rate
development,
identified
high-end
however,
design
one
of
image of
to
alternative
is of interest as its
Lincoln Wharf.
to what can be done,
for
broker
compromising
the
While
are
a number of
there
architectural
solutions have been proposed to mitigate this
which
be
property
More than one
this issue as potentially
luxury
limitations
residents.
The physical proximity of
directly abuts the Lincoln Wharf site.
has
End
Because the project is being sold
potential buyers of Lincoln Wharf.
this
North
started in July of 1984 and is expected
completed by July of 1986.
at
to
considers the location of the
lobby
issue,
in
the
following chapter.
Rowes Wharf
Rowes
Wharf
represents a waterfront version of
Boston's
new combined luxury hotel and condominium developments.
Like
the Ritz-Carlton,
this
project,
luxury
Charles Place and the Four
developed by the Beacon Companies, will provide 100
condominium
units
with
amenities found in a 218-room,
include
Seasons,
everything
from
all
of
the
luxury hotel.
maid and secretarial
services
and
These services
services
to
catered meals. As part of a large complex, residents can walk
from their condominiums to first-class resturants or a health
club without ever leaving the building.
50
Construction started
in the spring of 1985,
1987,
and occupancy is expected in
summer
the same period in which Lincoln Wharf anticipates its
intial occupancy.
In terms of unit size and unit mix, 20% of
the units will be
one-bedroom units,
900
not including the balcony.
square feet,
unit
distributions
surmised
are
as
yet
The
undetermined,
to
remaining
but
it
is
by brokers that they will roughly approximate those
of Church Court and Charles Place;
bedroom
approximately 800
units and
20% to 30%
that is,
40% to 60% two-
three-bedroom or
deluxe
two-
bedroom units.
A number of important characteristics should be considered
in
assessing
Lincoln
how
Wharf.
directly
While
its
has
location
this project
Rowes Wharf will
out to the harbor,
district,
district
competitive
will
have
be
better
and is closer to the
drawbacks.
views
financial
in respect to the central
a number of potential
with
business
Beyond
the
ominous presence of the Southeast Expressway two-hundred feet
away,
which
waterfront
also
breaks the continuity between the city and
in this particular area,
this development
become associated with Quincy Market.
The
the
could
association
of a national tourist attraction with a luxury development is
potentially
a very negative one.
The image of thousands
tourists that flood this part of Boston every summer,
conducive
to
the image of high-class
51
residential
of
is not
complex.
While
by
its
"neighborhood",
very
the
size,
it
will
establish
its
own
development is not associated with
existing noted residential neighborhood.
any
Charles Place is on
the south end of the Brattle Street neighborhood and the Four
Seasons
the
is
associated with the Back Bay and will soon
Arlington-Hadassah
residential
development --
townhouses facing Boston
adjacent.
From
specialty
shops
a complex
Garden
--
of
have
luxury
immediately
a practical point of view and aside from the
at
the
Faneuil
Hall
Markets,
everyday
shopping is a problem.
Given
the project size of 650,000 square feet,
the
important distinctions between Lincoln Wharf and Rowes
will be one of scale and location.
on
its
small
most
Wharf
Lincoln Wharf will depend
size and its location within
an
established
neighborhood with great character. The image of Lincoln Wharf
as
a
small exclusive enclave within
directly
contrasts against
this enormous complex.
a
historical
setting
the new polished urbane image of
For these reasons,
project manager at Beacon Companies,
it is felt by the
Carol Gladstone, and by
this writer, that while there will be some .ross-over market,
the
two projects will appeal to different taste segments
the upper-scale market.
52
of
The Pricing Strategy For Lincoln Wharf
Four
factors are considered in the formulation
prices
for
of
sales
average
sales
Lincoln Wharf.
The first is the
per-square-foot
basis for the entire development
price
on a
and it
serves as a reference point when assessing
unit sales prices.
per-square-foot
physical
constraint
the range of sales prices:
sales price ceiling and minimum,
characteristics
consideration
within
The second is
individual
is
the
of
Lincoln
Wharf.
total dollar price which
given
a
the
The
third
acts
as
a
on both size and per-square-foot values. Finally,
these
ranges,
the
fourth
factor
establishes
a
mechanism for differentiating per-square-foot sales prices by
floor
and view location within the building.
also a function of the design program,
sales prices is
principles,
From
however,
is
is
consideration of
the following chapter. The organizing
are as follows.
the preceding analysis we have established
per-square-foot
Wharves.
made in
final
As pricing
average
value of $296 for Union
a current
and
Lewis
Assuming that the broker's evaluation of the Mariner
correct,
that units are overpriced by 20%,
a recalculated
per-square-foot
sales price for this project would be
This
3% less than the $296 average resale
figure is
$288.
figure
for Union and Lewis Wharves.
As has been discussed,
the developer intends
53
to produce a
product
that is similar to Union Wharf and Lewis Wharf,
incorporates
This
a higher degree of finish
consideration,
combined
Wharf will be the first
waterfront
sophistication.
with the fact
that
Lincoln
construction on the water-side of the
market area in
a premium --
add
and
seven years,
suggests that we can
a 10% value margin,
if
price
when
In
other
I
would
Lincoln Wharf were on the market today,
it 10%
overall
--
specifically
establishing the overall pricing of Lincoln Wharf.
words,
but
above that of Union Wharf and Lewis Wharf.
average
for Lincoln Wharf is $296
(the
The
1985
per-
square-foot average of Union Wharf and Lewis Wharf), plus $30
psf
(10%
of $296) leads us to an anticipated overall average
sales price of $326 psf,
a price
10% less than the
average
sales price of the Mariner.
The
the
in
per-square-foot sales price ceiling is a function
overall luxury market in Boston,
of
the luxury
market
the Lincoln Wharf market area and ultimately of what
product
this
is.
Brokers have varied in
Wharf
if on the market today.
and one at Union Wharf,
of $357 psf.
Rowes Wharf,
dollars.
As
I
Two units,
according
have
54
ranging from $360
one at
to
Lewis
have recently achieved values
project manager at Beacon Companies,
today's
the
their assessment of what
value might be for Lincoln Wharf
$400 psf,
of
to Carol Gladstone,
is
the
assuming $450 psf in
mentioned,
Four
Seasons
is
currently getting $425 and Charles Place has gotten $400 psf.
These
last
hotels
three projects are mixed-use
and provide
Lincoln
Wharf
a level of service and
cannot.
The
developments and Lincoln Wharf
If
one
developments
distinction
with
amenities
which
between
these
is discussed later.
accepts the presumed 10% value margin on the
top
current waterfront values of $357 psf, regardless of the $400
to
$450 per-square-foot sales claimed by the brokers at
Mariner,
This
one
figure
Mariner
and
the
arrives at the top selling price of $390
is
22% below the
13%
below
that
tenth-floor
of the
values
ninth
psf.
at
floor
the
and
is
approximately between the average square foot sales values of
the seventh and eighth floors.
is
13%
More importantly, however, it
below that of Rowes Wharf whose development comes
on
line at the same time as Lincoln Wharf.
The
third
factor
controlling factor,
the market is
is
considers
the
absolute
value
as
a
both in terms of what the maximum amount
willing to pay
and what it
is
able to pay.
assumed that for the high-end units the issue is not
It
the
ability to pay but the willingness to pay. The top achievable
value
and
is a function of both values of comparable
the
market supply at that time.
market area,
for
In the
penthouses
Lincoln
the highest value achieved to date is
Wharf
$825,000
a townhouse at Union Wharf at the end in January of 1985
55
and thus serves as a key reference point.
The issue of ability to pay comes more into play with
the
young
Brokers claim that 80% of these
buyers
one-bedroom
smaller
professional market.
units
are
single and live alone.
and
lower
highest
relative
to
towards
directed
Being younger with fewer
earning power,
income
the
these purchasers,
brackets,
have
limited
while
buying
other purchasers in this market.
earlier, one-bedroom units over the past
assets
in
the
capability
As
discussed
three years at Union
Wharf and Lewis Wharf have not shown appreciation. While this
analysis
may
be
based
on
very
limited
information,
it
indicates
a range of absolute values of between $142,000
and
$262,000.
With
$173,000,
the average absolute value of the five units
10%
down,
the
mortgage
cost
at
12%
on
sold
over the past three years, is $1,586 per month. This requires
a
gross income of $63,000 a year,
gross
income
is
covering mortgage costs.
financing terms but for $262,000,
is
$95,000.
assuming that 30% of
Given
the
the
same
the required annual income
Brokers have stated that the ceiling
for
this
market is approximately in the range of $250,000.
The fourth factor considers the approach to setting values
according
to relative location
within the building complex.
The pricing structure at the Mariner,
as discussed, provides
a valuable model but which has significant shortcomings.
56
The
Mariner's assumption is that an increase in locational
value
results
sales
price
in
but
reflects
on
not only an increase in
they
designed
an increase in
increased
increase in
in
have
their
size also.
expectations.
It
project
so
that
it
This assumption is based
is also assumed that with
locational value there is
the demand for space.
per-square-foot
a proportional
an
increase
More than one broker has spoken
of
the single person who desires a one-bedroom penthouse with an
excellent
view.
Size
and
per-square-foot values
necessarily
positively correlated.
pricing
units
of
For these
at Lincoln Wharf should
pricing structure of the Mariner.
are
not
reasons,
the
follow
the
not
The absolute prices are
a
function of the above discussion and the issues raised in the
following chapter on Development Design Scenarios.
Absorption
As
indicated
in Exhibit 8,
the absorption rate for
the
Lincoln Wharf market area and non-waterfront developments
comparable
value
Wharf
market
Lewis
Wharf
Wharf.
the
first
has been calculated.
Within
the
area the range of absorption rates
is
twice that
of the second
phase
of
Lincoln
is
of
great.
Union
This is due to the newness of the development type at
time of marketing.
The mean value as represented by the
phase of Union Wharf is 1.9 units per month less
Lewis Wharf which is 4.7.
It is,
57
than
however, much more in line
Exhibit 8
Absorption Rates
For The Lincoln Wharf Market Area
And "Comparable" Condominium Projects
Waterfront
Projects
------------
------------
Development
& Sale
Start Date
Presale
Period
(Months)
Sales
Period
(Months)
-------------------
Total #
Of Months
Total #
Absorp.
Of Units Rate
--------------------------------------------
Lewis Wharf
1977
Union Wharf
Phase One
Fall, 1977
Phase Two
Winter,
1979
9
9
18
84
4.7
8
13
21
59
2.8
0
12
27
2.3
12
--------------------------------------------
Non-Waterfront Projects
------------------------------
------------
Church Court
N/A
N/A
N/A
18
43
2.4
Charles
Winter,
29
3
32
86
2.7
N/A
N/A
12
42
3.5
Place
1983
Four Seasons
Spring, 1984
58
with
the non-waterfront absorption rates.
provides
similar
the
in
Union Wharf
most recent data and phase one
size to Lincoln Wharf,
is
also
the
most
59 units as compared
to
Lincoln Wharf's 44 units. What distinguishes Union Wharf from
all others, however, is that it was developed as rough space.
Given that Union Wharf's absorption rate is similar to
outside
of
market area
the
market area and because those
are recent and current,
2.8 units per month is
assumed
59
those
outside
the absorption rate
for Lincoln Wharf.
the
of
CHAPTER 3
DEVELOPMENT DESIGN SCENARIOS
The
following chapter discusses the key considerations in
formulating
the
development
strategy
for
Lincoln
Wharf.
Working within the established framework set by both physical
and
of
legal constraints as well as the
market
demand,
anticipated
three strategic issues
character
are
addressed.
These issues are addressed in the following section by
first
looking
at the larger organizing principles of the building,
itself:
what
determine
more
the
specific
are the fundamental design
buildings layout.
issues.
assumptions
This is then
given
building
structure.
character
should
be
of
followed
by
The first issue examines the, design
program and sketches the outline for the overall
product,
which
development
a set of design objectives and the
The second issue examines the
the individual condominium
unit:
supplied as finished or unfinished
existing
specific
whether
space,
it
given
the implications of such a decision in terms of desirability,
management and costs.
The third issue examines the provision
of concierge service,
a practice that has become more common
in the larger luxury condominium developments in Boston.
60
The Design Program
The maximum building envelope has been determined
negotiations
between
the
additional
construction
outweighed
by
the
construction cost,
and
the
city
and
the
developer.
cost of adding two
potential
sales
through
floors
values.
The
The
is
far
average
including the cost of rebuilding the pier
construction
of a new deck,
is $124
psf
of
net
sellable building area. The projected average per-square-foot
sales
value
seventh
floor.
additional
on
net
itself.
$375
for the sixth floor
The
construction
cost
two floors is $1,802,000.
sellable
investment
examines
is
of
the
square feet is
245%.
The
and $390
of
building
the
the
The sales return based
$4,415,000,
following
a
return
analysis,
organization within the seven
In the following section,
on
on
therefore,
story
three fundamental
building
design
objectives are reviewed. Based on these objectives and on the
market analysis,
final unit sizes,
distribution and mix are
determined.
Design Considerations
Three
the
fundamental design considerations serve to organize
building.
The first
objective is
to have
units which would provide views north and south.
considers
the
optimal
location of the lobby
61
floor-through
The
and
second
elevator
within
the building.
The third reviews the
allowable
unit
widths and sizes given the existing structural bays.
Circulation and Unit Layout: A Marketing Problem?
The
use
of
central-loaded
floor-through
corridors.
units precludes
This
provides
the
several
use
of
distinct
advantages. Central-loaded corridors at Union Wharf and Lewis
Wharf
are described by residents as long,
like.
By dividing the building in half, these corridors also
dark
and
hotel-
create a pricing differential between north- and south-facing
units,
The
even though this was not seen in the market analysis.
decision to not use central-loaded
supported
this
corridors is
further
by both the very shallow units they would create in
relatively narrow forty-three
the lost revenues due to unit area
foot wide building and by
displaced by corridors.
The circulation problems created by this objective are
as
numerous as the advantages. Primary vertical circulation will
be by an elevator which services the third
plus
individual
directly
unit
service to those
and sixth floors,
condominiums
abutting the elevator from the second floor to
units
the
sixth. Horizontal circulation occurs on the north side of the
building on the third and sixth floors.
Vertical circulation
from
second,
fifth
the third and sixth floors to the
will
be from four vertical stair
62
fourth
towers on the
and
north
side,
entered from the third and sixth floors.
These stair
towers will be private and shared by no more than two units.
The travel scenarios are as follows.
or
sixth
floor
one simply goes up the elevator
floors and goes to their residence.
destination,
To get to the
To get to
third
to
these
a fifth floor
one goes up the elevator to the sixth floor and
walks down the hallway to the stair tower that services their
condominium and then goes downstairs to their residence.
The
same
floors.
One
get
the
has
scenario applies to the second and fourth
to
second
go
downstairs from the third floor to
to
floor and go upstairs from the third floor to get
to
the fourth floor.
Two
problems arise with this organization.
The first
is
the conceptual and practical problem of going up the elevator
and
then
desired
having
to go
destination.
going down,
up or
down stairs
Conceptually,
to
reach
this going up and
a flight of stairs sounds laborious.
the
then
On the other hand,
corridors and stairways will be on the
side
then
seems confusing and cumbersome. Practically, the
problem of carrying groceries first up the elevator and
up
the
north
outermost
of the building with excellent views to the marina
and
inner harbor. The doorway, entry and the stairway itself will
be
designed to serve as the formal entry
While
the
stairway
is shared with one
63
to the
neighbor,
residence.
for
all
intents
and purposes it is private and it is
people
will
furnish
reminiscent
luxury
them
as
such.
stairs
is
of shared furnished foyers at elevator stops
in
below,
once
to their unit,
other
that
arrangement
developments in New York.
discussion
This
expected
As will be evident in
the owner has gone up or
the
down
the
they will not be required to use
any
stairs to reach the kitchen.
The
second
corridors
problem
is
more
difficult
to
solve.
The
on the third and sixth floors separate the units on
those floors from the views on the north side. The layouts of
the
units themselves will be directly affected.
kitchen,
study/den
windows
side
and bathroom,
or high windows,
of
the
anyways,
as
the
which can have either
will necessarily
condominium.
This
Uses such a
is
the
occupy the
logical
living room and master
bedroom
no
north
location
would
be
located on the south side with better light and views.
In
the organization described above,
2% of the total
represent
3%
central-loaded
floors
two,
square
feet.
affected
gross square
of
the total
footage
gross
corridors represent
and the vertical stairs
square
footage.
Adding
or side-loaded corridors on the north side
four and five would displace 2,970 of
on
sellable
The average per-square-foot value of the three
floors is $305,
which means
that the use of
this
organization would result in a net loss of $670,000 or 12% of
the
profits based on the proforma for
$670,000
the
stairs.
In
Redevelopment Authority
addition
to
this,
If they were removed, it
side
of
the
development
building,
were
this
would
be
to maintain the same
feet as the above scenario,
virtual
not
using this
more traditional one,
Boston
stair
required
since it
circulation
to the entire
of
amount
horizontal expansion of the
Therefore,
the
is highly unlikely that the
would approve adding horizontal corridors
a
This
has acknowledged the vertical
city
square
units.
does account for the $236,250 saved by not building
vertical
towers.
finshed
if
the
sellable
would be seen as
existing
system
structure.
and going to a
a corridor on each floor, would result
in the signficant loss of sellable square footage.
This cost analysis combined with both the unquantified but
significant
highly
attractive
marketing
paid
value of providing views north and south and
concerns raised.
to
mitigate
are
outweighs
Careful architectural
the
attention
substantially
problems perceived by the market.
series
building ---
significantly
the entries of the stair towers will
Location af Lobby
The
hallways,
the
of
A
Elevatorevents
that
lead up
the crossing of the site,
to
entry
either by foot or
important architectural and marketing
65
the
of
car
considerations
in
the orchestration of a sense of dignity and anticipation.
The location of the entry, the lobby and the elevator plays a
critical
also
role in this event.
These
vital to the building image.
building
elements
Residents of Lewis
are
Wharf
have described long evenings in which the refurbishing of the
building's lobby
an
efficiency
elevator
been discussed at great length.
standpoint,
are
structure
have
key
the
the
organizing
building
location of the
elements
approach,
but
as
lobby
they
also
From
and
not
the
only
internal
organization of the building as well.
Two
schemes are considered for the location of the
and elevator.
entry
The first places the lobby and elevator at the
western end of the building. This location capitalizes on the
required
vehicular entry which passes under the building
this point.
building
This is
is
automobile
provides
a
passengers,
required because the western edge of the
adjacent
entry
at
is
to the property
available.
This
line
and
no
automobile
covered entryway for cars to stop and
groceries
or luggage.
other
entry
drop
off
From a security point of
view, this single point of entry for both cars onto the wharf
and people into the building is optimal.
The
second scheme places the lobby in the center
building,
with
views
away from the San Marco development,
of
the outer harbor.
66
This
scheme
of
the
facing south
serves
to
disassociate
Commercial
the
the
visitor from the adjacent development
Street and provides a greater sense of
and
entry
visitor is required to pass under the building and
out
onto
marina.
first
the
pier with full view of the
harbor
then
and
It also minimizes interior travel distances.
as
the
In the
scheme the maximum corridor distance one would have to
walk
is
160 feet on the third floor,
while in
scheme this distance is reduced to 80 feet.
the
second
A covered entry
for automobiles would be provided on the middle of the
south
side.
The cost between the two schemes in terms of lost revenues
is marginal. The per-square-foot pricing differential between
the
two
square
locations
feet
elevator
location
at
is approximately 25%.
The cost
of
42
(6'x7') times the six floors displaced
by
the
the
central
west end is $60,000
$77,000,
consideration
is
a
difference
in
elevator
either
would
condominiums
servicing
increase
be
and
at
scheme,
be
in
but
servicing
the
$17,000.
the private elevator stops
units on non-corridor floors two,
occur
of
and
low-end
the central
first
two
This would
location
the
one-bedroom/studio
location
they
would
be
the more expensive two-bedroom condominiums.
The
in value generated by a private elevator stop
will
much greater in the central location and will
account
final
servicing
four and five.
in the
A
for the pricing differential.
67
For this
more
reason,
than
in
addition to the others above, the central location is assumed
in the following analysis.
Designing
Structural
A
Under
Bays
key
existing
Physical
Constraints:
Unit
Widths
determinate in the layout of Lincoln Wharf is
structural
bays
that
cross
the
width
building.
These measure 10'-0" center to center
cost
altering
of
prohibitive.
within
the
heavy
timber
Modules of half bays,
this module,
15'-0",
An-a
20'-0",
of
bays
is
however, do work. Working
are
10"-0",
so on with half bays measuring 5'-0".
These unit widths when combined with the 43'-0" depth of
building provide a limited set of options.
indicated in Exhibit
the
because the
structural
the available unit widths
and
the
the
These options are
9.
A survey of existing comparable developments has indicated
that
is
the 15'-0" unit width(14'-0" clear inside
seen
by
the market as a
marginal
dimension.
Cerone, at Charles Place, found that a 141'-6"
windows along the entire length
drawback
marketing
The developers of
when building the new triplex townhouses at the
end of the wharf,
were very concerned with the 18'-0"
of these units(17'-0"+/-,
successful,
Carmine
room width with
to be the largest
for some of their smaller units.
Union Wharf,
dimensions),
current
clear).
owners
68
width
While the development was
note the narrowness
of
this
Exhibit 9
Lincoln Wharf:
Possible Unit Sizes Given Existing Structural Bays
Floors Two, Three, Five and Seven:(no corridor)
Size
Total S.F.
Decks
Total with Deck
15
20
25
30
35
40
45
x
x
x
x
x
x
x
43
43
43
43
43
43
43
645
860
1,075
1,290
1,505
1,720
1,935
Floors Three and Six:
15
20
25
30
35
40
45
50
x
x
x
x
x
x
x
x
38
38
38
38
38
38
38
38
570
760
950
1,140
1,330
1,520
1,710
1,900
113
150
188
225
263
300
338
758
1,010
1,263
1,515
1,768
2,020
2,273
(with 5'-0" corridor)
113
150
188
225
263
300
338
375
683
910
1,138
1,365
1,593
1,820
2,048
2,275
69
width.
For these reasons and given the building depth, where
possible, the minimum width of any given unit is no less than
20'-0" or 19'-0" inside surface to inside surface. (It should
be
noted
will
be
demising
that square foot calculations for
based
sales
purposes
on dimensions taken from the center
of
the
walls and exterior walls and not inside surface
to
inside surface dimensions.)
Project Plan:
Unit Distribution Ann
kix.
Like the Mariner and the other rehabilitated buildings
the
waterfront
have
While
market area,
in
the optimal market
objectives
to be tempered by the realities of existing
structure.
the desired unit mix,
according to some
brokers
and
developers, may be approximately 20% to 30% one-bedroom units
and
40%
to
percentage
60%
two-bedroom
units,
with
the
occupying deluxe penthouse units,
remaining
the actual unit
mix and even the final unit count is subject to
the
market.
In other words, the goal is not to necessarily build 44 units
nor is it to
necessarily meet a predetermined unit mix.
Residential And, Non-Residential
The
first
floor
is devoted to two
discussed,
the
space
residential unit.
per
requirement
city
Uses
has required
In
As
a minimum of one
order to
within the limitations of
70
uses.
the
has
parking
accommodate
wharf,
been
this
eighteen
enclosed
parking spaces are provided on the south side of the
first floor. Given the market for enclosed parking -per
space
for
an 9'x18' space or $216 psf
--
$35,000
this
is
an
efficient use of this space.
Two options have been considered for the north side of the
first
floor.
serve
as
duplex.
The first is to make 20'x23' bays which
a
bedroom for the second
floor,
thus
would
making
The problems with this scenario are twofold.
a
Public
access around the pier is mandated and a first floor bedroom,
no
matter how sensitively treated,
will have the perception
of being a security problem. Furthermore, the addition of 460
square
feet to the second floor units
which,
as
discussed
below, are targeted to the young professional market, means a
total
square
footage of 1,320.
This unit size is
far
too
large for this market and a first and second floor unit could
not
be
sold
to
the "empty nester"
and
divorced
persons
market.
The
second
condominiums.
Wharf,
this
square-foot
option
For
has
is
to
the
this
space
as
the developers at Union Wharf
been highly successful with
values ranging from $225 to $300,
have not been pleased by this.
part
sell
At Union Wharf,
office
and
Lewis
current
per-
but residents
this is
in
a result of office condominiums which have been sold on
second
and
third
levels
71
of
the
building.
At
both
buildings,
At
Lewis
the great majority of owners are small law firms.
Wharf,
these
units are
serviced
by
elevator so that there is no overlapping of use.
also
has
retail space on the first floor.
their
own
Lewis Wharf
This use
ranges
from the high-end furniture store, Roche-Bobois to a Store 24
on Alantic Avenue.
more
pointedly,
their
building.
some,
as
not
Again, the residents have commented, even
on the unattractiveness of this use
The presence of retail stores is
compatible
with the high-end
within
seen,
image
by
of
the
with
the
and
the
development.
At
Lincoln
Wharf
residential
use
this space would
as
entry
on
the
overlapping of use would be minimal.
shared
work
north
well
side
The lobby would not
be
and office users would approach the building from the
north side by the marina so that the overlapping of use would
be minimal.
With a good view of marina,
highly attractive.
space,
the spaces would be
Based on the broker's evaluation of
per-square-foot
values
of
$250
could
be
this
readily
obtained.
The
residential
organized
on
marketing.
the
the
--
floors
through
principles set forth in
seven
the
--
chapter
are
on
As was discussed, the obvious relationship between
floor the condominium is
selling
two
price
is direct.
on,
the views offered and
the
Five zones are identified in
the
72
building.
These zones are defined by relative privacy, floor
level and views.
inland
and
The zones are as follows:
end of the building faces the San
The western
Marco
development
has restricted views to the north and south.
which
This zone,
lacks privacy from the access street and the
moderate-income development,
five
the
1.
adjacent
is defined by floors two through
and by the enclosed fire stair required at each end
building.
constructed
bridges.
ends,
on
2.
is
fire stair on the harbor
the
outside of the
side
building,
will
be
attached
by
The second floor, between the west and the east
the
restricted
The
of
next
privacy
least
attractive
and views.
3.
because
The
units
midsection
of
have
the
building, floors two through five, will have good views which
improve
as
you go up
and out towards the
will also increase as one goes
The
harbor.
Privacy
up the different floors.
eastern end of the building,
floors two
through
4.
five,
will enjoy a higher degree of privacy than the midsection and
will
have
excellent views of the harbor.
The units at
the
very end will have unobstructed views in three directions. 5.
The
penthouse
have
harbor
units on the sixth and seventh
floors
complete privacy and will have excellent views
and the north and south waterfront.
will
of
the
The stepped back
massing provides for very large decks for two units.
Based on
condominium
the market analysis, four approximate ranges for
sizes for the two markets
73
are
identified.
The
following
sizes do not include deck/balcony areas.
young professionals,
the
the range is between 800 and 900 square
feet.
The
three
ranges in the two-bedroom unit size.
"empty nester" and divorced persons market
approximately 1,150 to 1,300 square feet.
for,
For
seeks
The smallest
is
This size provides
in addition to the master bedroom, a very small bedroom
and den/study.
1,500
The mid-sized range is approximately 1,300 to
square feet and represents a very generous two-bedroom
suite in all respects.
Finally,
the range with 1500
square
foot and above represents the top of the luxury market. These
ranges,
when
determined
combined
with
by structural bays,
the available
unit
sizes
provide a limited but
as
clear
set of options. The meshing of these pieces within the stated
guidelines has resulted in the following organization.
The
the
the
second floor is divided
aforementioned organizing principles.
first zone --
790 square feet.
on
zone
into three zones according to
the
third,
3 --
The western end --
has two small one-bedroom units
averaging
These two small one-bedroom units are
fourth and fifth floors.
also
The eastern end
has two small two-bedroom units
at 1,263
--
square
feet apiece(25'x43'). Because of the relative lack of privacy
and the
occupied
fact that it is the second floor,
by
feet(20'x43').
six
one-bedroom
A summary table
74
units
the midsection is
totalling
860
square
of all unit sizes, including
deck sizes, is provided in Exhibit
Except
for the western end,
the units on the third floor
increase in size as the locational
overall average unit depth,
small
two-bedroom
feet(25'x38').
In
western
is decreased five feet
The midsection is occupied by
units
averaging
1,138
square
two medium-sized two-bedroom units averaging
floor units
addition
end,
to
are larger than those of the third
the two one-bedroom units
six generous two-bedroom units at
feet(30'x43')
square
The
feet each(30'x38').
The fourth
floor.
increased.
The eastern end is, according to the strategy,
more ample with
1,365 square
value has
however,
by the corridor on this floor.
four
10.
are
provided.
foot deck.
1,515
This includes an
The fifth floor is the
at
the
square
average
225
same as the fourth
floor.
The sixth floor,
has
being the first of two penthouse floors,
two large two-bedroom units averaging 1,620 square
feet
at the eastern end. This is the first of the two floors which
step back.
feet
One unit has the rooftop deck of over 700
while
bottom
the
half
feet(20'x43' and
with
the
remainder of the floor is occupied
of
four
duplexes
averaging
20'1x38' due to the corridor).
upper half,
735
by
the
square
When combined
which constitutes the seventh
these units have an average total of 1,645 square
75
square
floor,
feet,
not
Exhibit
10
Lincoln Wharf
Summary of Square Foot Calculations
% of
% of
Total
Total
Gross
Net
67,795 S.F.
60,127 S.F.
100%
89%
100%
45,010 S.F.
66%
75%
52,387 S.F.
7,377 S.F.
77%
11%
87%
12%
Total Office
Total Parking
4,140 S.F
3,600 S.F.
6%
5%
7%
6%
Total Circulation
7,668 S.F.
Summary:
Gross
Net Sellable
Total Residential
W/0 Balcony
Total Residential
W/Balcony
Total Balcony
11%
Approximate Unit Sizes and Distribution:
Number of
Size
w/o Balc.
Floors 2,3,4 & 5:
One Bedroom
8
790
Floor 2:
860
6
One Bedroom
Two Bedroom
2
1,075
Floor 3:
3
1,140
Two Bedroom
1,330
2
Two Bedroom
Floor 4 and 5:
Two Bedrom
12
1,290
Floor 6 & 7:
2
1,620
Two Bedroom
Two Bedroom
4
1,825
Totals:
39
Total
S.F.
% of
790
6,320
12%
1,010
1,263
6,060
2,526
12%
5%
1,365
1,593
4,095
3,186
8%
6%
1,515
18,180
35%
2,020
1,945
4,040
7,780
8%
15%
52,187
100%
Size
w/Balc.
Unit Count:
14 One Bedroom units
25 Two Bedroom units
- 35% of total unit count
- 65% of total unit count
76
Total
including the deck.
for these units is
It should be noted
415 square feet.
for three reasons. The most
that the average deck
Duplexed floors are used
important reason is
their
high
desirability by this end of the market, according to brokers.
The
second reason is based on a combination of the
back
massing requirements and the circulation system.
the objective of maximizing sellable floor area and
unnecessary circulation requirements,
efficient
use
organization
four units
Two
for
there is
these
a decided
on the top floor
problems
arise
that
the
Lastly,
marketing
best
out of this organization.
Fireplace
flues are considered
especially
in
Church
Court,
greater
flues
identified
drawbacks
require
aligned
the project's
in
Erin Teach,
the marketing
straight
This
runs.
feature,
the broker for
as one of the
of Church Court.
runs.
the
which, for reasons
an important market
units.
vertical
One of
vertically.
the lack of fireplaces
straight
are available.
carefully
in
having
sizes floor by floor is
stacked vertically
the upper-end
in
this
instead of two flats.
demising walls are not
are
avoiding
with
advantage
creates a problem for the plumbing stacks
cost,
Given
the duplex is a highly
floors.
compromises incurred in changing unit
of
stepped-
Fireplace
A number of solutions
Stacks and flues can run up through units
done.
This exploration requires the attention
architect.
77
if
of
Summary
The
very
relative efficiency of the described organization
good.
Total circulation accounts for a respectable 11%
of the gross square footage.
is
occupied
Of
the
sellable.
Of this total circulation,
by the vertical
the gross square
feet.
is
footage
stairs;
and
indicates
add 3%
save 4.8% of net sellable
total 69,113 gross
This
these stairs
a
square
to
square
footage,
highly efficient
25%
use
89%
is
of
the
existing structure.
In
is
terms of
unit mix and distribution,
equally efficient.
unit
the organization
The market objective of
mix of approximately 20% to 30%
obtaining
a
one-bedroom units,
40%
to 60% two- bedroom units and 10% to 20% penthouse units
has
been roughly
met.
The unit distribution, based on the above
scenario, is 36% one-bedroom units, 47% two-bedroom units and
15%
penthouse units.
due
to
the
building and
unit
mix within
The high count on one-bedroom units is
the undesirable
locations both
the mid-section
on the western end of
of the second
floor.
The
while reflecting
the
incremental increases in value as one goes up and out on
the
building,
the
of
each of these ranges,
provides
market.
a varied and positive set of options for
Two sizes of one bedroom units
two-bedrooms units
for a total of seven
sizes.
78
and
five sizes
different
unit
Finished
Luxury
Boston
residential condominiums have been provided
market
approach
occupy;
done
in
two
creates
fundamental
ways.
The
a unit which is complete
involves
From a developer's
not only
in the
traditional
and
ready
the second produces unfinished or raw space,
at Union Wharf.
choice
or Unfinished
as was
perspective,
questions of market
to
this
demand,
but
those of project and risk management. In terms of the market,
the issue is one of
wishes
to
have
control,
over
the
necessary to achieve it.
each
how much control the developer
ultimate
product
and
what
is
The following three sections address
of the two options discussed above and the
concept
of
combining both approaches in single development.
As
will
be
development
found
evaluation
the
relative
This is
and management
partnership
relationships
due to differences
fees.
As this
thesis
relationship
between
the
change
substantially,
partners
development
returns
Development
Company,
of
the
different
different returns on investment
only between the different
partners.
the
in the
scenarios,
not
between
seen
and
in
is
scenarios,
but
among
different
the
equity
contributions
the
assumes
the
following
the
active
79
position
general
of
relationship
in the different scenarios
the
also
not an evaluation
because
are
does
not
discussions
of
of
the
partner.
Kenney
This
provides clarity to the comparative analysis.
Finished Condominiums
Finished
of
condominiums can be provided in varying
completion.
In
addition
providing
100% complete units,
provided
anywhere
"designer
the
ready",
option
finishes
tiles,
sale
from 95%
to
the
common
practice
to 99%
this approach
complete.
Often
called
provides the market
of
carpeting and paint colors.
the
floor
During the purchase
these items are then selected by
and the developer installs them.
with
items,
such things as the kitchen and bathroom
period,
of
the luxury market units can be
to select out of a limited set
for
degrees
and
the purchaser
Completion of this work and
its acceptance by the purchaser occurs prior to the
exchange
of title.
For
that,
the developer the central issue is based on the axiom
as
the number of available choices to
increases, so do the requirements of
the potential for liabilities.
is
one
costs
expectations --
of
the
purchaser
project management
and
On the market side, the issue
given the
substantial
purchase
combined with a high-end market that is accustomed
to
having its desires met. This problem becomes less of an issue
as the value of the unit increases because,
explains,
units
"no
where
options"
purchasers
is
are
as Carmine Cerone
only an issue in
the
stretching
resources
80
their
lower-end
and
cannot
these
afford to make changes.
purchases,
In the relative high-end
the buyers can afford to make the
of
changes
they desire.
Ian Market Perspective
Providing
a
finished
condominium has
advantages to the purchaser:
of occupancy is assured,
product is a given.
the
design
already,
residence.
the ultimate
traumatic,
is not added
experience
in
to
the
of purchasing a
new
All of the liabilities remain with the developer.
is to be completed at the same time,
of on-going construction in an occupied building
not present.
is
and most importantly,
The anxieties and difficulties found
As the total development
issues
distinct
final costs are known, the date
and construction process,
often
several
are
The disadvantage with this traditional approach
the sacrifice of control
over the determination
of
how
is
the
the unit is to be designed and built.
ue Supply Perspective
The
single
increased
detail
in
largest
profits from this approach.
the following section.
increased
risk
lies
disadvantages
the
advantage to the
developer
This is discussed
With these profits
and project management problems
of
this
approach.
Charles
provides a good example of the management problems
81
and
in
comes
herein
Place
incurred.
As Carmine Cerone explains,
construction
period
the
early on
during the presale and
developers were
willing
to
changes for purchasers. This willingness, however,
proportionately
responsibility
which
and
issues.
associated
requested,
the
this
high
costs raised in
difficult.
Cambridge
Seven Associates,
in
understand
building itself.
the
unit
the
three ways.
the
most particularly,
schedule
a
and
problems
result
changes
and
of
constraints
required
they
interior
were
not
from
architects,
were
Some were inexperienced and
design
Almost all
who
project
on the architect and the developer.
construction
The
making
owners,
presented
repeated
Cambridge Seven Associates. This became
and,
completion
Architects
hired
by
decreased
not understanding the complications
designers
not
of
declining interest were
Owners,
became
problematic
degree
was shifted to the purchasers.
prompted
several
with
make
by
assistance
did
the
from
a substantial burden
Finally, these designers
the clients had no sympathy for the
and coordination requirements of
the
general contractor, Turner Construction.
Turner Construction was a direct recipient of most of
problems.
handling
Aside
from managing a major construction
the myriad of redesign issues
became an enormous problem.
substantial
changes,
in
effort,
individual units
Fifty percent of the units
90%
of
82
the
which were done
during
made
the
construction phase of the development. These changes included
significant
which
alterations
in the HVAC
and
plumbing
directly impacted the construction efforts
Construction.
plumbing
Construction
result
in
Other
union
made
is
chase
which serviced twenty
a very linear process
significant
delays
delivery
construction
and
added
to
because a
the site.
and
effected
other
On
an
units.
deviations
can
costs.
non-union truck
three
of
of
driver
occasions
crews walked off the job because
crews hired by unit owners
resulted
Turner
construction problems included a one-day strike
construction crews
a
of
For example, one unit owner who wished to move
the location of a half-bathroom within his unit,
entire
systems
union
non-union
working within the building. This
in tension with the unit owners who,
not only
had
contractual agreements and schedule expectations, but did not
want to pay the 25% to 35% higher union scale wages.
These
and
other problems forced the developer to
course in the middle of the project.
and deadlines were set.
Schedules were developed
Owners were forced to make decisions
within specific periods of time or lose the right to
This threat
change
choose.
forced owners to act.
Four types of problems are identified from this experience
at Charles Place. The first concerns the sensitive problem of
83
the
typical
unit purchaser's relative ignorance of
and construction,
combined with a determination to get what
they want and to have paid well for it.
with
the
two
scales
of
rough
The second has to do
and
finish
construction
proceeding at the same time and the overlapping of
unrelated
design
different
architects and contractors on the same
site.
The
third problem relates to the developer's early willingness to
please without the proper safeguards.
This resulted in high,
and
While
sometimes
unmet,
problems
are
measures
could
expectations.
unavoidable,
in
another
some
of
project,
several
be taken to mitigate these problems
increase project
these
and
to
control.
Eossible ProjeFt Control Measures Ear Lincoln Wharf
The
first
measure is
For Lincoln
Wharf,
position
as
decision
not
chapter.
it
With
enhanced
by
architect
this
is
to
to not have
on project
is
as much based on marketing
control.
no
presales,
general
project
change
a
element
the marketing effort.
marketing-based
in
to
and
the
is
final
greatly
allowing
proceed
In order to provide
a
key
this
incomplete; walls will be
but not painted and bathroom and kitchen
84
the
unhindered.
degree of choice for the purchaser is
service specific items will be left
primed
The
control
orders
contractor
Maintaining
in
of condominiums.
have presales is discussed
minimizing
and
choice
presales
tiles
will
not
be
installed.
selected
known
by
to
kitchen
Final
be in stock with identified costs.
considered
wood
because
If
floors
items,
a substitution
it
becomes their
at their
predetermined
cost.
and mutually
not done by the purchaser,
and
reference
list
the
insists
task
All
will
set
of
will
not
on a product
responsibility
as
be
and
not from
the
to provide
choices must occur within a
If
this
they lose the opportunity
of contractors will
items
complications
agreed upon schedule.
becomes
be
Items such
or carpeting
of the potential for
the purchaser
preselected
service
tiles
the purchaser from a preselected
cabinets,
delays.
paint colors and
their
is
for the
responsibility.
be provided
A
as a courtesy
only.
From
provided
from
the
by
management perspective,
a small general
this service
contractor or by a
small
the general contractor for the development.
provided
will
by this service will be part of a general
All
In other words,
team
items
contract
with the general contractor and will be bid as specific
items.
be
unit
the contract will include line items
for each possible selection so that all costs are known. This
allows
the developer to give the purchaser a fixed and known
cost during marketing.
This
work
will
occur after the 10%
85
purchase
and
sale
deposit so that in the event
cost
of
improvements
deposit.
once
In
title
complete.
will
be more
transferred,
Delay
improvements
of
have
can
these
no
be
clear
must
not been made or are unacceptable to
the
cause for delay claims or
93A
Any form of written
The items provided for selection,
only
have
limited
be
the
purchaser must select,
a required
date
by
which
claims
conditions
such as
or
therefore,
time
the
the items available for selection must
in the number of trades involved
specific work required.
must
improvements
the
will not be acceptable to the purchasers
their lawyers.
also
and
releases the developer from these conditions,
not
by
because
give
guarantees,
must
covered
purchase by the developer
(product not as advertised).
which
than
order for the developer to be free
is
purchaser,
of default by the purchaser, the
Ample time for contingency
be accounted for in the scheduling.
The
and
the
purposes
conditions of
such an arrangement will be clearly acknowledged in a written
agreement between the developer and the purchaser.
Unfinished Space
Two
luxury
residential
projects
in
Boston
have
been
developed offering unfinished space in the past five years -Union
Wharf
studded-out
services
and the Ritz-Carlton.
Both
projects
space with rough plumbing and
to
the
individual
86
units.
provided
rough
electrical
Lobbies,
hallways,
elevators and all other common spaces were provided complete.
In addition to the studded-out space, windows, exterior doors
and balconies were necessarily provided.
Vhe Market Perspective
The
primary
owner's
freedom
chooses.
the
opportunity
part
are
approach
allows
An architect
managing
experiences.
Small
the
as
great
scale
overall
residential
can
be
are very high and
Because of this arrangement,
it
on
have
projects
process
very
there
general
final construction
are not known until
after
the purchase.
unit
construction
come
into
the
has
freedom,
and contractor
costs
construction
he/she
of attention and work
Expectations
can
unit
finished
often problems with either the architect or the
contractor.
in
the
savings on the
of the purchaser.
and managed.
is
the unit purchaser also
amount
owners
difficult
this
space
and build the unit
a very substantial
be hired
with
design
to make significant
While
requires
the
to
As will be discussed,
product.
to
advantage to unfinished
The
conflict
timing of
with
the
of other units and disturb those already living
building.
Issues
of liability,
in
terms
of
the
building and the unit, are transferred to the unit purchaser.
Not
being
familiar
with the
complexities
of
residential
construction, these purchasers are relatively ignorant of the
various problems which
can be incurred.
87
In short,
with the
higher
degree of freedom comes a higher degree
of
exposure
and risk.
These problems,
demand
while present,
at Union Wharf.
Union Wharf,
of whom
Of the five residents interviewed at
all are original purchasers,
that they would do it again.
unit
found
did not hinder the market
While all of them mentioned the
construction as difficult and not
the
experience
of
unproblematic,
building their
own
ultimately
very
purchasers
collectively building their own units
exciting.
all felt
The
shared
unit
experience
they
to
be
of
the
created
a
sense of community in which people shared ideas and looked at
each
other's condominiums.
discussed
high
The very low turnover
in the last chapter,
rate,
is in part explained by
initial commitment required by building one's own
as
the
unit
and the degree of satisfaction it creates.
Purchasing
unfinished
construction loans.
space
requires
acquisition
and
The loan required is essentially a small
developer's loan and banks can be highly resistent to provide
such financing.
high
personal
accommodating
According to one broker,
wealth
as
of these purchasers,
banks
in order to please substantial or
substantial clients.
higher
however, given the
The financing costs,
88
be
potentially
however,
the management requirements by the bank
greater.
will
will be
are
far
Ihe Developer's Perspective
This
in
approach substantially reduces the development
several key respects.
months
shorter.
potential
The construction period
Fewer
for
trades
management
on
the
problems
site
and
risk
is
three
reduce
the
strikes.
The
construction costs are reduced by 20% and the financing costs
are reduced by 29%.
stage
of
construction
greatest
delays
required,
claims
the
are
unfinished
the
As the finish work is the most difficult
occur,
liability
in that
so
many
which
the
trades
are
problems of delay claims
significantly
avoided.
While
the
and
93A
sale
of
units substantially reduces the legal exposure of
developer,
reponsibility
orderly
can
to manage and the one in
the
and
developer still
the
unit-by-unit
has
the
professional
marketing incentive to
maintain
construction
within
process
an
the
building.
Nevertheless, substantial
approach.
Blakely
The
and
had
obtaining
a
Department
different
occurred
Ritz-Carlton,
completed
Raymond,
many
by
Buildings.
times
even
initially developed by
John Hall
problems,
certificate
of
at
problems have occurred with this
of
the
and
largest
occupancy
from
Saint-James
of
which
the
Purchases of units were
and the construction
greater
Ted
intervals.
89
of
Gerard
Boston's
made
individual
Some
people
was
at
units
bought
condominiums
time.
and then left the city for extended periods of
Not
anticipating
the
need to
fully
complete
the
sprinkler
systems and to install all of the
detectors
as required by the Fire Code and necessary for the
required
smoke
Certificate of Occupancy, the developers were confronted with
a
major
problem
condominiums
but
of having people ready to
live
not legally allowed to do so.
in
their
All of
the
condominium owners had to be contacted
and arrangements
were
made
safety
This
to
satisfactorily complete the
systems.
problem resulted in a series of delay claims and 93A claims.
Union
problems
Wharf did not have this type of major problem;
the
it
the
corridors,
access
faced were much more mundane --
lobby
monopolized
and elevator
by
from
damage
contractors,
contractors so that
to
elevator
residents
were
forced to use the stairs, and so on. Getting materials in and
out
of
the
building was eventually solved by
the
cranes and "cherry pickers" which loaded materials
into
the
units from both sides of the
building
was relatively complete,
corridors
were
All
stated
and
of
three
building.
the lobby,
brokers
in the waterfront
directly
Once
the
elevator
and
market
area
have
a "definite" demand for unfinished
space
recommend this approach for Lincoln Wharf.
this
of
restored.
that there is
what
use
market
will
90
pay,
however,
The question
is
much
more
difficult
both
to answer with
only two comparables in the
of which are more than four years old.
advice of the brokers is not reassuring as
in
their
broker,
evaluation of what was an
achievable
was
estimate in today's market.
finished
less
definite,
were
realistic.
space,
claiming
this
per-square-foot
especially
an
sales prices of $200 to $250
psf
that
of
when considering
was
was
figure
reduction
psf
The second broker
Assuming
achievable,
felt that $250
$250 psf is the
is 36% below
highest sales price at Lincoln Wharf,
$390
$140
is
top
that
psf.
very
sales
of
the
The implied
substantial,
construction costs
and
the margin
scarificed.
The
construction costs and soft costs for finishing rough
is
approximately
condominium
of
$45
to
run as high as
$50
psf
good quality and relatively
finish but with few customizations.
and
three varied
who stated that the top sales price of $400 psf
accurate
space
all
the
One
for
of profit
Relying on
price.
possible
price
city,
for
a
high
finished
grade
of
This figure could easily
$75 psf for a condominium with luxury features
a high level of customization.
A figure of $100 psf
is
possible.
Employing
analysis
provides
and
these
construction
distinguishing
costs
between
in
a
cost/benefit
potential
markets,
several key insights into the pricing of unfinished
91
space.
For the value-conscious purchaser,
it is crucial
to
the marketing effort to create a cost-saving incentive, given
both
the
This,
merits
of course,
purchaser
whose
and complexities of such
an
undertaking.
is much less of a concern for the
top-end
primary goal is to build the exact
product
desired, to a certain extent regardless of price. Given these
characterizations
and their associated per-square-foot
of construction of $50 and $75 respectively,
$100
and assuming
a
per-square-foot sales price reduction on the pricing of
finished space, both purchasers are given
and
margins for construction overuns.
Exhibit
11,
For a
purchaser for $150
of
cost
20%
1,000 square unit sold
psf,
($50,000).
spending
$75
savings of
the most
10%
savings incentives
As you will note
to a value-conscious
this reduction results in a
For
the
high-end
psf in improvements,
this
savings
purchaser,
who
is
this reduction realizes a
($25,000) for the same unit.
expensive units, in
in
When looking
at
scenario, of $290 psf, the
actual dollar amount saved is the same but
the percent saved
is
total price.
reduced in relation to the increase in
the
value-conscious
buyer the savings are 25% and
high-end buyer the savings are only 6.25%;
saved
the
remains at $25,000.
sales
prices
are approximately 20%
however,
the amount
the
being
These are significant savings and
suggested by the brokers.
the developer,
for
For
more
When calculating
the $100
92
than
those
the returns to
reduction on per-square-foot
Exhibit 11
Cost/Benefit Analysis For Purchaser
Of Unfinished Unit At $100 P.S.F. Reduction In
Price From Finished Space
Savings Generated From Purchasing Lower Cost Unit:
---------------------------------
----------
Value
Conscious
Buyer
Top-End
Buyer
--------------------------------------------
P.S.F. Sales Price
Finished
$250
$250
P.S.F.
Reduction
($100)
($100)
P.S.F.
Unfinished
$150
$150
Construction Cost
P.S.F.
$50
$75
$200
$225
Total P.S.F.
Unit
Cost
Size
Total Cost
For Unfinished
1,000 S.F.
1,000 S.F.
$200,000
$225,000
Total Cost For
Same Unit but
Finished
$250,000
$250,000
Total Amount Saved
From Not Buying
Finished Space
$50,000
$25,000
93
sales
the
prices results in a very significant 31%
reduction
return on investment when compared to that for
space.
For
Table
6
a
summary see Exhibit
12.
unfinished
finished
Please note that
the cost reductions and proforma
space are carefully detailed.
in
assumptions
in
for
Summaries of
hard
and soft costs are provided in Table 7.
When solving
gives
for a
the same
reduction in
return
on investment
Kenney Devlopment Company,
words,
a
the value is $104-
space to the
psf.
on investment.
return
In
other
have
to
psf in order for the developer to gain the same
The equity requirements for the
approaches vary greatly,
the
as finished
value which
$390 per-square-foot finished unit would
sell for $286
return
per-square-foot
on
as may be seen in Exhibit
investment calculations
is
an
12.
two
While
appropriate
measure for comparison because the equity requirements are so
different,
between
total
when
the
different
return
unfinished
given
$2,588,569,
less
for
at
the
profits
for
by
finished
61%
the highest
the
the
scenarios becomes even
space
is
recommended
brokers,
distinction
clearer.
$6,596,789
space the return is $4,477,086,
calculating
prices
looking
the total
32%
and
less.
unfinished
return
less than that for finished space
is
and
The
for
When
sales
only
40%
when calculating the return on investment to the Kenney
Development Company.
94
Exhibit 12
Lincoln Wharf:
Investment Return Summary
Summary
of Return On Investment
Scenarios
For the
Three
Development
-------------------------------------------
Equity
Gross
Return
R.O.I.
-------------------------------------------
Finished Space:
KDC
HCG
Limited
$303,665
$303,665
$1,000,000
$3,102,176
$2,859,229
$635,384
1022%
942%
64%
--------------------------------------------
Unfinished
Space @Minus
$104
P.S.F.:
----------------------
KDC
HCG
Limited
$201,983
$201,983
$1,000,000
$2,079,090
$1,961,997
$435,000
1029%
971%
44%
--------------------------------------------
Unfinished
Space @Minus $140
P.S.F.:
-------------------------
KDC
HCG
Limited
$201,983
$201,983
$1,000,000
$1,229,257
$1,112,164
$247,148
609%
551%
25%
Note:
Lincoln Wharf Associates:(LWA)
-KDC - Kenney Development Company - 45% interest in
-HCG - Harbour Capital Group - 45% interest in LWA
-Limited - Limited Partner - 10% interest in LWA
-For
-For
LWA
Proformas
for the three scenarios, see Appendix
Proforma Assumptions for each scenario, see Table 7
95
With
risk.
the
increase in profits,
With
unfinished
space
there is the increase
the
construction
reduced
by
20%,
reduced
by
30% and the equity reqiurements
the construction and financing
These are substantial incentives,
demand
but in a
is high and the supply is low,
confident
in
assuming
a
higher
substantial
profit incentive.
comparables
and
margin
what
the
is
costs
are
33%
less.
market where the
profile
Furthermore,
create
brokers
period
the developer can
risk
given the need to
between
are
in
be
given
without
the
recent
incentives,
suggest
and
the
what
is
necessary to justify the approach in terms of profits is
great.
too
The risks in this market call are far greater than the
management
and
liability
risks
found in the
approach
for
finished condominiums.
Finished and
Unfinished
This option of combining both approaches offers the
of
both approaches without the benefits of either.
both
solve
types of units within the single development
the
number
of finished units would be less,
not necessarily
finished
unit
problem of building control either way.
be out of the development
units in
worst
Offering
does
While the
the developer
any sooner.
will
Selling
a building which will have ongoing unit-by-
construction for as long as two years will create
difficult
not
relations
within
96
the
building,
even
if
very
done
strategically.
As has been suggested,
types
who
of markets.
the two approaches draw
different
The finished units will appeal to
people
are busy or do not have the need or desire to design and
build
will
their own unit.
have
Significant portions of
this
no desire to be associated with any
efforts.
From a marketing standpoint,
becomes
muddled
with
these
two
construction
the development image
markets
desiring
different
products.
These problems combined with
found
the
prices discussed in
in
sale
market
the
very
the
last
risk
section
renders this approach as unacceptable.
Building Services & Amenities
At Charles Place,
at Rowes Wharf,
providing
a
condominium
amenities
the Four Seasons and, more importantly,
the large luxury mixed-use developments
wide
range of in-house hotel services
owner.
as
In
addition
swimming
pools
provided
at
whether
Rowes
Lincoln
Wharf market area,
and
full-time
Charles Place.
Wharf
and
to
these
health
will contain
such
services,
clubs
It is not known
at
service
at Lewis Wharf.
this
time
In
the
security
been
pick-up
Both Union and Lewis Wharves
97
such
also
these services have
limited to valet parking at the Mariner and laundry
the
are
features.
in addition to 24-hour
building managers,
to
are
have
small
swimming pools as well Clearly,
the overhead costs of
the large developments are great and far beyond the reach
Lincoln Wharf,
is
decidedly
which is not part of a large hotel.
not
the
intent of the
marketing
of
Also, it
effort
to
compete with Rowes Wharf.
Nevertheless,
market
from
Rowes
consideration.
of
for
the
small but
Wharf,
these
More importantly,
anticipated
services
crossover
will
be
a
however, it is the intent
the development effort to distinguish this development in
terms of quality from all others in the Lincoln Wharf
area that have preceded it.
services is an
provide
important distinguishing feature.
with
services
deveplopment.
manager,
outside facilities will be
have
will
An
a
Rather than
which is completely
laundry,
quality catering,
dogs
From this perspective, providing
in-house services,
relationships
market
in-house
made.
relationship
facilitator,
High-
cleaning and like
cobbler, maid,
structured
unfeasible,
not
will provide this coordination and
the
with
the
building
management.
If
need to be walked or plants watered while residents are
away, this will also be done. A unit owner can also call this
facilitator
owner
and
and
ask that dinner be arranged
guests.
Billing
will be
handled
for
the
through
unit
the
monthly condominium association fees as an additional charge.
98
There
are a range of condominium fees in the Boston luxury
residential
market.
For
a
two-bedroom unit
at
the
Four
Seasons, the condominium association fee is $2,000 per month,
according
to
the
broker
for
the
development.
This
fee
includes only the basic common area cleaning and maintenance,
plus
access
to the main heating system.
Each unit has
its
own electric meter. Valet parking is also provided. A similar
two-bedroom
and
provides
heating
at Charles Place has a $400
unit
essentially
the
or valet parking.
approximately
residents
$400
same
services
At Union Wharf,
per month.
per month
but
interviewed have expressed a
without
the fee is
Both local brokers
fee
and
concern about
also
the
high
condominium fees. The assessment of the Lincoln Wharf market,
in this regard,
spend
see
is fairly clear. While people are willing to
substantial sums of money for a condminium,
as
an
investment,
they are not willing
which they
to
pay
high
monthly charges.
Calculating for the added cost of a facilitator,
assuming
that Lincoln Wharf will have the same approximate association
fees
as
Union Wharf which has approximately the
area but more units,
for
a person.
Wharf
an annual salary of $25,000 is
assumed
this cost is $37,500 annually. This works
to $940 per unit per year or $78 per month.
as
land
Considering overhead expenses and using a low
multiplier of 1.5,
out
same
a base reference,
99
this would add
an
With
Union
approximate
average
of 20%
owners.
This
encumbrance
services
to the monthly association fees paid by
unit
additional cost is not seen as any significant
on
the purchaser who is not interested
provided,
except possibily the young
in
the
professional
market. While the fee is still well within the relative range
of comparable projects in and outside of the market area, the
ultimate decision of whether to provide this service,
could possibly impact the young professional market,
on
interest
rates
and
market conditions at
the
as
it
depends
time
of
maketing.
If
one
considers
that
eventually
the
condominium
association will decide on the ultimate merit of the
within
the building,
operations,
one
once the building has achieved
this issue may be seen
for the developer.
service
normal
as primarily a marketing
Half of the residents interviewed on
the waterfront stated a strong interest in such a service.
summary
chapter
of
is
the decisions made in this and in
made
in
the following chapter.
100
the
A
previous
CHAPTER 4
SUMMARY AND MARKETING PLAN
The
is
two
following chapter contains three
sections.
The first
a brief review of the conclusions drawn in the
preceding
chapters.
The second section considers the
development
"image" and the market plan. Because the supply of housing is
sensitive
to
interest rates,
this factor is
also
briefly
considered in this section. The thesis is then concluded by a
characterization of the development and its anticipated sales
prices
in the larger context of the waterfront
market
area
and Boston as a whole.
Review
Chapter
Three,
formation
and
The Market Context,
maturation
of
the
discussed
highly
the
desired
rapid
luxury
residential
neighborhood
growth
and
change has been a direct result
the
market
area's
highly attractive waterfront location and its
direct
in the Boston's
North
of
End.
proximity to Downtown Boston's resurgent economy.
analysis
of
perception
appreciation
Union
of
Wharf
continued
found
in
and Lewis
Wharf
sales values achieved to date.
101
the
These sales
The market
confirmed
growth through the high
the resales and
This
high
rates
this
of
absolute
histories,
when
combined with the low turnover rates,
characterization
very
limited
ambitious
of
this market as one of high
supply.
sales
confirm local brokers'
demand
The ultimate success of the
prices
and their
pricing
and
Mariner's
strategy
will
provide a key reference for Lincoln Wharf in the near future.
Chapter
Three also reviewed historical and current demand
in the market area.
characterized,
divorced
Two distinct markets were identified and
the young professional,
person.
Two
comparable developments
market
area were also reviewed
Court.
These
what
--
outside
Charles Square and
developments provided valuable
constitutes
larger
the "empty nester" and
a luxury residential
in
Boston-area market and how they have fared.
then followed by an evaluation of developments
drawn
Finally,
This
and the other
strategy
provided
the
base
the
This was
coming on line
Distinctions were
between the San Marco Development and
Lincoln Wharf.
Church
references as to
development
on the waterfront in the next three years.
the
Rowes Wharf and
a pricing strategy was established.
conclusions
discussed
assumptions from which
the
above,
development
scenarios in Chapter Four were established.
Four
conclusions
were
drawn
in
Chapter
Four.
cost/benefit analysis of the addition of two floors onto
A
the
existing coal pocket storage structure showed that this would
be a profitable option. A detailed assessment of the question
102
of
unfinished versus finished
space determined that finished
space,
while
risks,
was
higher
profit
units.
It was also because of the wide gap between the sales
prices
suggested
analysis
gain
creating
ultimately less of a risk.
margin
same
found in the
by
determined
the
increased management
the
and
This was due to
provision
brokers
and
what
of
as
finished
space.
proforma
order
A
the
building's
internal
organization was
of the market and
established
the
broad
design
building
principles
conclusions
circulation system,
in
terms
for
were
made,
of
relative
based
efficiency.
the
drawn
on
Having
project,
more
regarding
the
the location of the lobby and
unit size and unit distribution.
evaluated
lieu
And finally, a critical examination of
perceptions
detailed
to
building
facilitator was determined to be a desirable feature in
of concierge service.
the
finished
the
was a minimum sales price in
return
liability
elevator,
These conclusions were then
building
efficiency
and
financial implications.
The Market Plan
The
the
been
intent of this section is not to review
item-by-item
many distinct features Lincoln Wharf offers.
discussed
Instead,
disparate
the
throughout the thesis
and
These have
reviewed
above.
intent is to identify the means by which these
features
come together in concert
103
to
provide
a
cohesive whole;
all
other
image,
a marketing "image" which serves to organize
elements in the market plan.
the
market
plan
consideration of presales,
is
Under this
established
guiding
through
the
the identification of an agent to
handle sales and the marketing devices to be employed in this
effort.
The Marketing Image
As a member of the established and prestigious
community,
waterfront
the image of Lincoln Wharf is to be distinguished
from its predecessors in the market area by it's small
timber
construction
harbor.
Physically
and
intimate
separated
from
relationship
the
size,
with
busy
the
traffic
Commercial Street and the tumultuous goings-on of
of
the
city,
this small enclave offers the tranquility of the harbor steps
away
from the North End neighborhood and Downtown Boston.
resident
of
Lincoln Wharf can easily walk to
financial district,
or
Bruins
game
work
in
A
the
the Government Center or go to a Celtics
at North Station.
Unlike
the
urbane
and
polished image of Rowes Wharf, Lincoln Wharf will be historic
in character and continuous with its surroundings. And unlike
the "brick and beam" look of Union and Lewis Wharves, Lincoln
Wharf will provide a more finished and sophisticated image.
Most
importantly,
however,
104
the market is drawn to
the
waterfront by a love of the sea and the casual lifestyle that
it
represents.
opportunity
To
to
this market,
Lincoln Wharf
offers
realize the desire to live by the sea
the
while
still working in and enjoying the benefits of Boston. Lincoln
Wharf
will
elegance.
boating
than
have a quiet demure and a sense
Saturday
attire,
the
will
be
blazers
This
is
will
found
at
underplayed
seen
some
as
casual
shits,
rather
non-waterfront
sense of casualness and waterfront
expressed
materials
attire
topsiders and short-sleeved
blue
developments.
afternoon
of
in the
be
architecture.
among
the
finest,
The
but
life
choice
discreet
of
in
execution.
The image of restrained elegance and waterfront casualness
will
characterize
elegant but
will
the marketing effort.
underplayed.
be emphasized.
Brochures will
be
The sense of respite and discretion
The waterfront location will be
played
upon through the use of a sailing yacht for a sales office in
the
Lincoln
advertised.
character
developers
expressed
Wharf
This
marina.
The
accentuates
of the development.
of
Charles
purpose.
Place,
development
the
exculsive
Carpenter
and
will
and
a
waterfront
be
precious
Company,
did not advertise
As Don Zagorian,
not
for
the
this
broker,
observes, word will travel and the lack of advertisement will
add a distinct
aura to the development image.
105
Presales
Presales
or
limited
presales
generating market interest.
can
profits
purchasers,
another
discussed
for
The use of presales can also
and raise the specter of change
as
device
Limited presales, in particular,
build market anticipation.
limit
are
in the preceding
orders
from
chapter.
In
market where the annual rate of appreciation ranges from
to
40%,
due
to
presales can mean that potential revenues are
the
high rate of appreciation
during
a
20%
lost
the
presale
a
presale
period.
When
period,
rate
solving
for
by
a number of assumptions are necessary. Given the high
of appreciation,
period
the revenues generated
a relatively short six-month
presale
is assumed in order to limit the risk from misjudging
the market rate of appreciation. The
units per month, calculated
proforma
for
significant
a
50%
absorption rate of 2.8
in Chapter 3 is also assumed. The
six-month
presale
period
results
savings in financing costs but only
increase in profits
($554,130).
This
10%
in
a
10%
increase in profits
can
be easily matched or improved upon when calculating
the
rate of appreciation.
On the other hand,
the problem of change orders,
a
for
while raising
the use of presales does
mean
that
the developer is out of the project six months earlier.
This
is
a substantial
consideration.
106
Because
the
profit
margin
between
because
this
the two approaches is relatively
margin is a result of market
close
and
conditions,
the
ultimate decision of whether to use presales or not weighs on
the
If
market conditions during the early construction
appreciation
presales
rates
will
are low and
make economic
sense.
interest
In
rates
period.
high,
today's
market
then
they do
not.
An
In-House Broker?
Who
sells
marketing
more
the development is a central question
plan.
A number of approaches are
traditional
the
available.
The
approach would identify one broker from the
local community to handle sales.
this
to
These brokers are expert at
market and provide an excellent
resource.
Commissions
from sales generated from other brokers would be
split.
total
of
commissions
$845,426, or 16%
An
house
Lincoln Wharf at a rate
5%,
approach considers the hiring of
This person must have significant
with luxury residential developments in Boston.
an
was
paid a regular salary with
based on the success of the sales.
paid
Even if
in-
experience
Graham
used such a person for Church Court and Bulfinch Square.
broker
is
of the total profits.
alternative
broker.
for
The
significant
Gund
The
bonuses
such a person were
a total of $100,000 for the fourteen-month period,
the
developer would save 88% of the proceeds that would otherwise
107
go to the brokers.
The advantages of such an arrangement
beyond financial considerations.
allegiance
to
the
go
This person would have sole
development and would have
an
intimate
knowledge of the developer and the development.
There are problems with this approach. The Mariner went to
a Brookline broker, Condo World,
to handle sales. Commissions
from co-brokering in the local community have been limited to
a
low-
fixed
animosity
rate,
among
influential,
great
and
efforts
by
the
developer.
the local brokers.
the
potential
the Mariner.
As
these
There
against
on
that
par
with
relations
generate
house
created
brokers
are
the
is
marketing
is little question that
choice will disappoint some local brokers.
however,
has
for a negative market image
could significantly work
of
This
It is
any
critical,
co-brokering commissions for Lincoln Wharf be
common practice so as
with
sales
person.
local
brokers.
to
This
encourage
approach
positive
will
and reduce the money saved by using
Nevertheless,
the
money
saved
both
an
in-
will
be
substantial.
Interest Rates
The issue of changing market conditions is critical to the
marketing
whole.
the
plan
Clearly,
formulation
and to the success of the development
as
a
many of the assumptions discussed so far in
of the marketing plan are based on
108
optimal
market conditions:
high demand, limited
rates
that
years
and are now at a seven-year low.
market
supply
have been in steady decline over
and interest
the
to this development,
interest
rates
over
is a significant
which
the
few
In the Lincoln Wharf
area the supply will continue to be low.
concern
past
developer
What is
of
increase
in
has
no
direct
control.
A substantial portion of the anticipated
"empty
this
nesters" and divorced persons.
market demand are
The great majority of
market is leaving homes in the suburbs or
condominiums
on the waterfront to live in Lincoln Wharf. If interest rates
are high, this market will not be able to sell their existing
homes.
the
As you will note in Exhibit
average
13,
the
cost of
condominium at Lincoln Wharf at
rates
of 12.5%,
Going
from
month
to
current
an interest rate of 12.5%
financing costs.
interest
fixed
with a 20% down payment is $3,414 a
to 13.5% adds
Assuming the purchaser
leverage more than 20% of the purchase price,
in
owning
rates
$135,194 to $146,000,
requires
or 8%.
an
increase
month.
$273
can
a
not
this 1% change
in
income
from
A two percent increase over the
current rate requires an annual salary of $156,000,
or a 16%
required increase in salary from the base case.
While
many of these purchasers have substantial equity in
109
Exhibit
13
Lincoln Wharf:
The Impact of Interest
Rates On the Average Condominium
Interest
Loan
Equity
Monthly
% Change
Rate
Amount
Required
Payment
Monthly Payment
11%
*327,774
*81,943
*3,005
-12%
11.5%
*3,141
-8%
12%
*3,278
-4%
*3,414
0%
13%
$3,551
4%
13.5%
*3,687
8%
14%
*3,824
12%
*3,961
16%
"
12.5%
14.5%
"
in
Note:
-Quoted Averages are from proforma for finished space, see
Appendix for support data.
-Loan Assumptions:
-Thirty-year mortgage
-Base case interest rate is 12.5%
-20%
Equity
-Average Unit Size is 1,309 S.F.
-Average Sale Price is $313 p.s.f. or $409,717
110
their existing homes,
costs
represent
increased
a
maximum
interest
families
which means that the quoted
rates
amount,
on this
the
market
who are trading up to the
real
is
financing
impact
on
the
nesters" and divorced persons.
market
is
If this young
unable to assume the increased
the
able
to sell their homes and move to Lincoln Wharf.
relationship
Incremental
narrow
costs,
"empty nesters" and divorced persons will
on the other hand,
between
income
increases
in
and
interest
the young professional
there is
the
cost
rates
will
of
the
family
financing
then
professional,
young
homes being sold by
"empty
young
of
not
be
For the
a
direct
financing.
incrementally
market.
Clearly, if the market demand becomes soft due to a change
in interest rates,
then the marketing effort will shift
the confident and passive one described to a more
one.
A
more
possibly
the
aggressive approach
an increase
purchaser
financing.
This
in
would
employ
the number of options
and would even consider
marketing
position
will
market conditions
sales.
Rowes Wharf,
for example,
sales prices as it
in
comes on the market,
order to maintain its
advertising,
available
at
the
lowers it
111
in
of its
time
of
projected
so may Lincoln Wharf
10% to 15% pricing advantage.
measures assume a moderate increase
to
seller
be a function
and the exact
If
aggressive
some form of
competition
from
interest rates.
These
Once
level
the
title
of
is exchanged and
must
be completed.
increase in interest rates than
of
measures
substantial.
will
be
begins,
investment is such that there is no turning
project
type
construction
A
a
that already
serve minimize
more
back,
serious
explored,
risk
the
become
more
hard cost-cutting look at construction costs
made.
considered.
which
Assuming
the
Once
The
again,
increase
in
unfinished
space
interest rates will
will
be
create
a
market which is much more interested in cost-saving measures.
At
the same time and as we have seen,
loosing
potential
profits
the developer,
with
this
development
risk.
approach,
significantly
reduce
period
be shortenned by three months and
would
financed would be reduced by 30%.
while
The
could
construction
the
amount
Presales would commence as
early as possible so that purchasers could
take advantage of
the most current interest rates. Again, as we have seen, this
would also significantly reduce the financial exposure to the
developer. Similarly, arrangements would be made to construct
the
model
showrooms and to begin the marketing
soon
as
risk
management,
possible.
development
The type of
are
effort
measures employed in
necessarily a function of
stands
increase.
112
at
efforts
the
time
where
interest
as
such
the
rates
Lincoln Wharf and the Boston Market
The
relative
sales
prices
positioning
and
market
of Lincoln Wharf in
image
to
terms
comparable
of
luxury
residential developments in the market area and in Boston is,
while
ambitious,
does not
nor
does
it provide the height
at the Ritz-Carlton.
Mariner,
sales
Lincoln
offer the luxurious services of the large
developments,
found
not at the very forefront.
of
Wharf
mixed-use
prestige
And unlike the positioning of the
Lincoln Wharf is not seen as commanding the highest
prices
in Boston,
but one that assumes a very
close
second position.
Lincoln
Wharf will position itself,
comparable
gem;
developments discussed,
the last
in contrast
to
the
as a discreet but exotic
and most treasured along the waterfront.
This
positioning combined with the development image of restrained
elegance
and
distinguish
top
casual
waterfront
living
Lincoln Wharf from Rowes Wharf.
will
clearly
Lincoln Wharf's
selling price of $390 per square foot acknowledges
close
second
position by being 13% below
price of Bowes Wharf.
the
top
this
selling
This top selling price is 3% below the
top
selling price of Charles Place and 8% less than that
the
Four
Seasons.
developments
and
The
unit mix is very similar
provides variety in the size and
units.
113
to
of
these
type
of
As with
interest rates, the luxury residential market has
experienced enormous change over the past ten years. Over the
next two years, during the design and construction of Lincoln
Wharf,
will
many of the conditions assumed in this thesis can and
change.
achieved
The ultimate sales values and absorption
by the Mariner in the coming year will offer a
reference to the Lincoln Wharf development.
114
rate
key
TABLES
115
Table
1
Lincoln Wharf
Summary of Construction Costs
At the request of the developer and based on preliminary
design documents provided by the project architect,
Notter,
Finegold
&
Notter,
Inc.,
the Gilbane Building Company
of
Providence, Rhode Island provided a line item estimate to the
Developer on
October 9,
1984.
This estimate projected
construction costs for the first quarter of
1985.
According
to the developer, the rate of construction cost increases has
been
less
than
that projected by the
estimate.
For
this
reason, the estimate is considered valid for today's dollars.
In some instances,
the estimate does not fully break-down
costs into distinguishable elements. For this reason, certain
gross
assumptions have been made based on
the
construction
experience
of
this writer.
The construction
cost
summary
below,
breaks
apart only costs which in some manner bear on
the subject of this thesis.
Summary:
Construction Totals:
Finished
$7,475,288
Unfinished
Item:
$5,146,965
Total
Cost
% of
Total:
Finished:
Demolition:
$461,000
Piles & Deck:
$973,000
Concrete:
$1,427,650
Masonary:
$10,790
Misc. Metals:
$198,800
Rough Carp.:
$454,180
Finish Carp.:
$550,000
Caulking(68%):
$7,480
Roof & Flash.:
$56,000
Glass & Glaz.:
$35,000
Interior Fin.:
$318,000
Gypsum:
$262,000
Misc.:
$20,655
Res. Equip.:
$112,000
Elevator:
$65,000
7%
15%
23%
0%
3%
7%
9%
0%
1%
1%
5%
4%
0%
2%
1%
116
%
Saved
Amount
Saved
When
Unfinished:
When
Unfinished:
68%
$374,000
75%
85%
100%
100%
$329,000
$222,700
$20,655
$112,000
Table 1
Page 2
Item:
% of
Total:
Total
Cost
Finished:
%
Saved
Amount
When
When
Saved
Unfinished: Unfinished:
-----------------------------------------------------
----
Plumbing:
HVAC:
Fire Protect.:
Electric:
Site Imp.
5%
5%
1%
9%
1%
50%
80%
$160,000
$255,000
65%
$370,000
$6,292,330 100%
28%
$1,753,555
$320,000
$319,000
$72,000
$569,000
$60,000
--------------------------------------------
Sub-Total:
General
Conditions
And Contigency:
Finished
Unfinished
$6,292,330
(1,753,555)
Sub-Total:
Gen. Cond.(8%)
$6,292,330
$503,386
$4,538,775
$140,284
Contingency(10%)
$6,795,716
$679,572
$4,679,059
$467,906
Total:
$7,475,288
$5,146,965
117
Table 2
The
Following
is
an accounting of the brokers
interviewed
for the analysis of the Lincoln Wharf Market Area.
Brokers:
Kevin Ahearn
Otis & Ahearn, Inc.
Altantic Avenue
Boston, Massachusetts
Roland Kelsch
Waterfront Reatlty, Inc.
Lewis Wharf
Boston, Massachusetts
Don Zagorian
Don Zagorian Associates, Inc.
Union Wharf
Boston, Massachusetts
118
LEWIS WHARF
-
Table 3
RESALE PRICES OVER THE PAST THREE YEARS
Lewis Wharf:
786 N
L615
L326
815 N
L314
1000 N
L622
973 N
1320 small
L538
L637
1064 small
1064 small
L637
3/1/1
3/1/1
4/2/1
4/2/1
5/2/2
4/2/1
4/2/1
6
3
3
6
5
6
6
5.31.83
7.21.83
7.29.83
8.2.83
9.2.83
12.2.83
12.2.83
$142,500
$160,000
$155,000
$180,000
$298,000
$250,000
$380,000
$181
$196
$155
$185
$226
$235
$357
L324
L617
825
786
3/1/1
3/1/1
3
6
6.28.84
4.13.84
$150,000
$150,000
$182 South/Marina
$191 North Harbour
L514
L435
L532
L431
L638
1050
1300
1170
1200
1064
4/2/1
5/2/2
4/2/1
N/A
N/A
5
4
5
current
current
current
current
current
$235,000
$360,000
$400,000
$372,000
$380,000
$224
$277
$342
$310
$357
North End
Marina
Marina
South Harbour
South Harbour
North Harbour
North Harb*ur
South Harbour
South Harbour
South Harbour
North/North End
South Harbour
Notes:
-Rehabilitated in 1974 and 1975 as finished space
-Buildinq completed and marketing started in 1976
-Sold out in 1978, eiqhteen month sellout
-Unit six: 40% one bedroom units, 60% two bedroom units
-Averaqe sizes: 50% of one bedrooms, 850 S.F., 50% 1,120 S.F., two bedrooms 1,300 S.F.
119
Table 4
UNION WHARF - RESALE PRICES OVER THE PAST THREE YEARS
Unit #: S.F. Balc.:
w/Balc.:
# of RasFlr.:
bedr./bath
Date of Total Sales Price Views:
Sale: Price:
P.S.F.:
------------------------------------------------------------
Union Wharf:
U607
U302
US
1530 Deck
1786 Y
2311 Y
6/2.5/2 5&6
6.5/3/2 3
6.5/3/2.Triplex
5.27.83
9.15.83
10.14.83
$340,000
$340,000
$460,000
$222 partial water
$190 city
$199 North Harbour
U23
U18
U7
U18
2283
2286
2281
2286
6.5/3/2.Triplex
6.5/3/2.Triplex
6/3/2 Triplex
6/3/2 Triplex
1.17.84
3.8.84
7.84
10.84
$450,000
$480,000
$500,000
$575,000
$197
$210
$219
$252
U27
U503
U607
2296 Y
1288 N/A
1530 Deck
6/3/2.5 Triplex
4/111
5
6/2.5/2 5&6
1.85
1.85
1.85
$825,000
$262,500
$455,000
$359 water
$204 street
$297 partial water
Y
Y
Y
Y
North Harbour
South Harbour
water
water
Notes:
Indented units have been sold twice in the past three years
Phase One - Unfinished Space
Phase Two - Unfinished Space
-Rehabilitated in 1976
-Construction started in early 1979
-Presales began in the Fall of 1977
-Presales began before construction start
-Building completed in May of 1978
-Development sold out in summer of 1979,
-Buildings completed in 1980
-Development sold out in 1980,
twenty-one month sellout
-Unit six: 10% one bedroom units,
twelve month sellout
-Unit six: 100 three bedrrom triplexes
90% two bedrooms
-Average sizes: 1,175 to 1,800 S.F.,
A few at 2,000 S.F.
-Average size: 2,300 S.F.
120
Table 5
The Mariner - Sales Price, Unit Size and Mix Analysis
Average Unit Size:
Average Cost(w/Balc.):
Average Total Cost:
Total # of Units:
Total S.F.:
Unit mix:
One Bed.
Two Bed.
Three Bed.
1,064 Square Feet
$365 P.S.F.
$388,205 per unit
54%
35%
12%
83 units
88,344 S.F.
Average Floor Prices:(with Balcony)
Floor
Floor
Floor
Floor
Floor
Two
Three
Four
Five
Six
$265
$275
$303
$336
$360
Floor
Floor
Floor
Floor
Seven
Eight
Nine
Ten
$383
$400
$450
$500
Average Unit Sizes by Floor:(with Balcony)
Floor
Floor
Floor
Floor
Floor
Two
Three
Four
Five
Six
807
807
772
978
978
Floor
Floor
Floor
Floor
Seven
Eight
Nine
Ten
1,281
1,370
1,782
1,764
Note:
-Summary based on data provided by East-Mar Corporation, the developers, to brokers.
Formerly Known as the Gerard Freezer Building
Located at 316 Commercial Street in Boston's North End
Presale marketting commenced on June 23, 1985
Completion Date: January, 1985
Ten Story Building
Total Commercial Square Footage: 27,794 S.F.
121
Table 6
Lincoln Wharf:
Proforma Assumptions
All
three
proformas
have
been
constructed
under
the
following assumptions.
Items which have been altered because
of the different
development approach are noted at the end.
The
proforma
assumes
100% financing
based
on
the
Developer's
current
informal understanding
with
financing
sources.
As
all
calculations
in the thesis are
based
on
current
dollars,
a
12% interest rate with a
1% financing
charge is assumed.
It
is also assumed by the developer
that
the
loan used during the marketing phase will
be the same as
the construction loan.
As
you will
note,
the soft costs have been
broken
down
into three columns. The first
indicates the total
anticipated
soft costs by the developer.
The second indicates those soft
costs
to
be
spent prior to the exchange of title
and
the
placement of financing.
The exchange of title,
the placement
of
financing
and the commencement of construction
are
all
assumed to occur on the same day.
The third
column indicates
the soft costs to be spent once construction commences. These
costs are included in the financing costs.
An
accounting of the different
soft costs is as
follows.
Architectural
and engineering costs are calculated as 5%
of
the construction cost.
Survey and testing,
insurance, legal
and accounting, permits, marketing and real estate taxes have
been
provided by the developer.
Development management
and
contingency expenses are 5% of the total
development cost.
The
cost of acquisition is also 100% financed.
This
is
clearly
noted
in
the
proforma.
When
calculating
the
proportionate
amount
of soft costs devoted to each
of
the
forty
condominiums and other revenue generating items in the
proforma,
a
figure
of
$749,792 is
used
for
acquisition
costs.
This
figure represents 68% of the total
acquisition
cost
and
is based on the percent of gross
square
footage
devoted to each of the two phases of this
development.
This,
and
other
square
foot
calculations are
provided
in
the
proforma.
This
breakdown is also
provided in the
proforma
but
is based on the total
acquisition cost for both
phases.
All
square footage counts are based on the calculations
for
Lincoln Wharf found in Exhibit 10,
and those provided by the
architect for
the second phase.
The
Proformas may be
found
in the Appendix.
122
The
construction costs are based
on the calculations
found
in
Table 1.
The construction period for finished units
is
fourteen months as provided by the Gilbane Building
Company
in their
constuction cost estimate.
The
cost
of
the
public
contributions
--
the
linkage
payment
of $475,000 and the fireboat facility for $70,000(as
estimated by the Gilbane Building Company) -- is considered
in the profroma breakdown of soft and hard costs. The linkage
payment
is due in seven years from the date of designation
and the expenses for the fireboat facility is expected in two
years. The 68% share of these two items for Lincoln Wharf has
been calculated
for present value at 10%.
This is may be
found in the proforma breakdown of hard and soft
costs.
present
value
of these contributions is considered
in
The
the
calculation of
total costs. The summary of hard and soft
costs
found in Table 7 is based on actual development
costs
and therefore does not include the cost of public benefits
but does include the full acquisistion cost.
Unfinished Space
The
following
items
have
been
changed
based
on
the
discussion of this approach in Chapter Three.
The construction period has been reduced by
20%. This time
saving is based on discussions with the
Developer and
a
detailed review of of the construction items affected. This
reduction
in time is less than the cost savings for this
approach,
29%.
This disportionate relationship is explained
by the large construction items which are not impacted by the
change in approach -- demolition and the
reconstruction of
the
piles and deck
--
and the unchanged mobilization
period
at the beginning of the job.
The change in construction costs is detailed in Table 1.
Other
items
affected include management fees
which
are
reduced
from 5% to 3.5%,
contingency costs are reduced from
reduced
by 29%,
construction
are
taxes during
5% to 4%,
insurance by 20% and the architectural fee is reduced by 20%.
The disporportionate decrease found many of these items are a
reflection of the reduced economies of scale.
123
Table 7
Lincoln Wharf:
Summary of Hard And Soft Costs For "Finished" Units
Total
Cost:
Cost P.S.F.
For Net
Sellabe S.F.:
% of Total
Cost:
--------------------------------------------
Hard
Costs:
77% of Total Costs
------------------
Acquisition Cost:
Construction Cost:
Construction
Interest:
Marketing
Interest:
$1,100,000
$7,475,288
$18
$124
$744,367
$12
6%
$356,661
$6
3%
9%
60%
--------------------------------------------
Soft Costs:
23% of Total Costs
------------------
Marketing
Commissions:
All Other:
$422,713
$1,360,152
$7
$42
3%
20%
$209
100%
--------------------------------------------
Total Cost:
$11,459,182
Note:
-Summary based on Proforma for finished space.
-The two following summaries are based on the two
proformas
for unfinished space in the Appendix
-Per-square-foot
calculations
based on total
net
sellable
square feet
as calculated in Exhibit 10.
-All cost quoted will
be actual expenses.
Future costs such
as
public
contributions
are
not
included
in
the
calculations.
124
Table 7
Page
2
Summary
of Hard And Soft Costs For "Unfinished" Units
At A $104 P.S.F. Reduction
Total
Cost:
----
Cost P.S.F.
For Net
5
of Total
Cost:
Sellable S.F.:
-----------------------------------------------------
Hard Costs:
85% of Total Costs
Acquisition Cost:
Construction Cost
Construction
Interest:
Marketing
Interest:
$1,100,000
$5,416,965
$18
$90
$412,560
$7
5%
$233,507
$5
4%
-----------
13%
63%
--------------------------------
Soft Costs:
15% of Total Costs
Marketing
Commissions:
All Other:
$308,064
$1,009,442
$5
$17
4%
12%
Total
$8,210,538
$142
100%
Cost:
Note:
-See Note on Page
1 of this
Table.
125
Table 7
Page
3
Summary of Hard And Soft Costs For "Unfinished" Space
At A $140 P.S.F. Reduction
Cost P.S.F.
% of Total
For Net
Cost
Sellable S.F.
---------------------------------------------------Total
Cost:
----
Hard Costs:
85% of Total Costs
Acquisition Cost:
Construction Cost:
Construction
Interest:
Marketing
Interest:
$1,100,000
$5,146,965
$18
$90
13%
63%
$440,867
$7
5%
$319,732
$5
4%
$5
$17
4%
12%
$142
100%
--------------------------------------------
Soft Cost:
15% of Total Costs
Marketing
Commissions:
All Other:
$268,377
$1,039,272
--------------------------------------------
Total:
Note:
-See note on Page
1 of this
Table.
126
APPENDIX
127
LINCOLN UARF
PROFORMA
Last Revised:
6.16.65
Developomnt Costs
Soft
Costs
FINISHED UNI S
PAGE I
MMMMMMMMN,0MMMMM
? Stories
Spent Prior
to Conet.$
Total
MMNNNNNM0MNNNNNNNNNNN55MMMWNOMWN,5
28.25
ovelopment Period:
2 of
Cost
To be Spent 602-Lincoln 322 - North Cost per
Unit
Ferrys
begin'gw/ConsUharfs
... .------ -----------..- ---- -.. ---- -.. ---- ---- --- ---- --- "-"- --"- -- " """" """
....---.... --w
102
027,500
"1,100,000 9350,20@
6749,792
61,100,000
32
69,344
693,441
9260,323
12
62,500
010,000
690,000
02
$625
925,000
$25,000
12
63,750
6112,500
637,500
6150,000
02
61,250
932,500
650,000
650,000
42
610,000
9400,000
6400,000
32
W9,344
6242,947
6149,506
6373,764
32
69,344
9373,764
6373,764
nequisitions
Arch4Eng .52):
Months
Total
0373,764
9100,000
Survey & Testings
Insurances
LegalSAccountings
Peritst
Marketings
Develop. Man.C52)s
Contingencies(52):
02
-1,250
$50,000
950,000
R.E.Tawee/Conmt.1
02
6500
920,000
620,000
R.E.Tames/marketings
12
62,234
669,354
69,354
Financing(x>1
- - - - - - ------------------------------------------------------------------------63,623,622
Total Sort Cost:
C(1,100,000),sinus Aquisition
9607,329
92,460,152
61,360,152
..............-.
Marketing
==-------e
...---..----
Coast per Unit
Hard Costes
------------------------------------------------------------Construction Costs
Conat. Interests
Marketing Interests
RquisitionsCLincoln)
67 475,208
;744,367
6356,661
6749,792
9166,802
618,609
91,360,152
934,004
422,713
610,566
66
73
3m
7X
0,917
616,745
2.502
Costs:
Condowi niun:
Marina 4 P.:
Orrices
-------------------------
As 2 of Total
6345,240
636,737
640,737
9422,713
Set Costs$
All Others
Merketings
Public Benefites
Totals
122
43
2X
65,057
5234,270
611 343,244
1350,206
North Ferrys
-Public Beneites
+322
(234,270)
011,459,162
()
Total Cost for Phase One
PROJECTED SALES PRICES FOR FININISHED UNITS
Tgpa
...". *
-- - -- -. - -- - .-. . ---- *..
--..........--...-.........---..........-.-.-......-.--..-Total
roteas.F.m/Balc Price P.S.F Aver.Unit Value
e
Second Floors
One Bedroon
Tuo Bedroo
Third Floors
One
Too Bedroon
Bedroeo
Fourth Fleers
One Bedroon
two Sedroow
9220
0194,260
0347,325
01,554,000.00
6694,650.00
1,500
2
6300
6
---------------------------------------------
9240
0199,600
6401,700
379,200.00
62,410,200.00
1,560
9,090
9270
0213,300
6492,375
92,954,250.00
1,500
9,090
6300
7,064
2,526
S
2
0,034
2
6
Fifth Floors
2
One Dadroo
6
Two
-------------------------------------------Sioth Floors
2
Two Sedroow
2
Botto
of DupleW
Sedre*
Seventh Floors
Top of Duple"
--------------------
2
40
size
1,309.10 W.f.
or Unit
Average
-------------------------------
-
e
111
11
6275
Min
mi
-
6325
9340
9365
4,040
3,740
6365
4,040
---------52,364
$390
Average P.S.F
6237,000
6515,100
46600
0426,600.00
6474,000.00
$3,090,600.00
---------
91,474,600.00
0737,300
662,550
6787,000
-------------
-
6313
-----------
$1,365,100.00
-
-
-
$1,575,600.00
-
- - - 616,396,080
-
-
-
-
-
-
LINCOLN UNARF PROFRMAPAGE 2
Const.
14
Per.:
Market Per.:
14.25 Months
Area Calculations:
Financing Empenses
X of Total
S.F.
Construction Period
------------
07,475,288
Const.Cost:
+Soft Cost: $1,360,152
+Aquisistion $1,100,000
-Equity
($1,000,000)
Loan Amount: $8,935,440
Interest Rat
12.00X
Points:
1.002
14
Ter"Cwonths)
Gross S.F.
Net Sellable
Total Res. S.F.
M/o ealconey
Total Res. S.F.
M/Balconey:
Total Balcon
Total Office
Total Park.:
Total Circ.:
Marketing Period
100x
69,323
61,655
892
47,580
692
53,915
6,335
4,140
3,600
7,668
78%
92
6z
52
112
Loan Arountt$10,235,001
12.002
Interest Rat
Points:
0.002
Terw(nonths)
12
Non-CondoiniuN Revenues
--------- m-------m---Type:
OfficeC20w43
Parking:
Indoor
Outdoor
Assigned
Floating
Marina Slips
Pricing
.--.-.-..--------
..-.--- .--.---
0 of
Avoer.
860
$250
9
P.S.F.
$35,000.00
1S
$630,000
$30,000.00
11
11
$330,000
0275,000
$25,000.00
$30,000.00
Unit Value
$215,000 Per Unit
17
$510,000
57
$1,745,000
$30,614
Square Foot Cost and Return Analysis
-----------------------------------------------------------Building:
Gross
2 of Total Net Sellable 2 of Total
Total Cost
Const. Cost
Soft Cost
Interest
$164
$100
$30
$16
$184
662
192
10
Building # Land, Pier and Maters
Gross
a of Total
Total Cost
Const. Cost
Soft Cost
Interest
$106
$70
$20
$10
662
192
102
$121
$34
$16
107,123
66X
192
102
Per Unit
LINCOLN UNARF PROFORMAPAGE 3
MWMUMMMMMMMMMMMMMMMMMMMMMMNWMMMMMINNMMNMMMMMMWMMMMMMMMMMMMMMMMMMM
Total Developnent
.-...-. =.-.. -.......
Building
Area
...........--............-.-....---------------------.
.........
Land/Pier
Area
Parking
Marina
Lincoln
Uharf Net:
9,lI
6,000
4,3; -0
6,000
x of
Totals
Totals
76,835
North Ferry
22,658
22M
69,323
37,800
18,61[10
125,723
683
14,972
37,150
6,6C 0
58,722
32X
74,950
25,2(10
12,336
Net:
Lincoln
Uharf Gross:
North Ferry
Gross
Total Dev.
Net:
Total 0ev.
Gross:
84,295
553 of total developed area is sellable
101,493
14,000
13,5C 10
?3,993
184,445
Public benefits:
........... a. ...... a........ ~t.......--...-..--.---......-.-.-..--.----.----N.P.V.
X Share NeatS Share
Pavyent
Costs
Lincoln U.
Due
-
I-J
L0
Contribution
Fireboat:
$4?5,000
Total:
$545,000
70$,000
==---=..----e----7
2
Lincoln U.
6103
-----
$323,774
$47,714
fEU
feas
"
$169,334
$44,936
$234,270
Equity Sourcess
3 of Equity 2 of Owner -slip
==
...-m....
.
.. .. ..-------.....
.--..-a.0...
.-.*ia
192
$303,665
KOC:t
dim
192
$303,665
NarbourC.wmM
1.01
62
$1,000,000
102 Liwited:
Totalt
$1,607,329
m503 of PreConst. Bev. Costs
""Paid at Closing of Loan and emchange of Title,
Note: Developwent to be 1003 financied
Return to Lincoln harf Associates
-----------------------------.------------------.-----.
X of Total
Total s
---------------------...----------.----....--...-------....----------.
Revenues:
642
Condosi ni us $16,398,860
73
$1,452,737
Marina OP.:
$1,536,737
82
Office
Sub-Totall
Costs:
Sub-Totals
Limited:
Generals:
Total:
$19,420,354
($11,459,182)
$7,961,171
($1,000,000)
C607,329)
$6,353,642
Entity
"....*
ROI
Man. Total
""*""""""""""""
---*"."-$3,102,176
$242,947
1022Z
942%
$2,859,229
64%
$635,384
Gross Return +Dev.
$2,659,229
KDC645X
HarborC.3452 $2,859,229
$635,384
Li PitedGl0
LINCOLN UHARF PROFORMAPAGE 4
EXHIBIT
1
1
COST PROJECTIONS
2
3
4
5
6
7
s885
S885
5885
$885
5885
$885
58,600
$8,600
52,478
58,600
$2,478
$8,600
52,478
56,600
X8,600
52,478
02,478
52,478
0656,883
0656,883
$656,883
$656,883
5656,883
5656,883
15
.--------------...--.--...-......--..--.------.----.----......---------...----------.---------------------.----------------------$638,246
$638,246
5638,246
$638,246
$638,246
$638,246
5638,246
58,935,440
Cin Loan)
56,674
06,674
96,674
56,674
56,674
$6,674
56,674
$93,441
Construction Loan
Acquisition
Arch&Eng.(52):
Survey
Testing:
Insurance:
LegalAccounting:
Permits:
Marketing:
Developsent han.:
Contingencies(Sf):
R.E.Tawes/ConstaM.:
Financing(13)
&
510,000
525,000
5112,500
$32,500
5400,000
5242,947
9373,764
570,000
589,354
910,000
5885
912,500
932,500
$8,600
$2,478
589,354
$801,237
Total Empandituress
--....-----...----........-................--..--..---.........------..-------.---.------------.---.-.-.-------.------.-.----.-----
EXHIBIT
1
Construction Loan
Acquisition
Arch5Eng.C52):
Survey & Testing$
Insurance:
LegalAccountings
Permits:
Marketings
Develop"ent Man.:
Contingencies(SX)t
R.E.Ta.es/ConstOn.:
FinancingC1X>
8
9638,246
$6,674
9
10
11
12
13
14
5638,246
5630,246
$638,246
$638,246
S638,246
56,674
56,674
56,674
56,674
56,674
9638,246
$6,674
5885
S885
5885
S885
$885
5885
s885
08,600
$8,600
50,600
$8,600
V8,600
575,000
08,600
575,000
88,600
52,470
52,478
02,478
52,478
52,478
52,478
$2,478
-----------------------------------------------------------------------------------------------------------------5731,883
5656,883
5656,883
0656,083
0656,083
5656,883
Empanituress
Total
E------------EXHIBIT 1
(-J
........-..-......
-----
-...
19
$8,333
5885
S885
58,333
58,333
$17,544
98,600
517,544
58,600
$2,478
537,840
5885
58,333
Marketings
Development Man.:
ContingenciesC53):
R.E.Tames/ConstAn.:
Financing(13)
Total Empandituresl
--------.....--...........
1
20
21
5885
s885
58,333
517,544
58,600
517,544
08,600
$2,4789
52,478
52,470
537,840
......--....
537,840
Marketingt
Development
.-..-----------------.----
-
Man.t:
28
26
27
S885
58,333
s885
58,333
$17,544
517,544
$8,600
$6,333
$17,544
$8,600
Contingencies(5)
R.E.Taues/Constn.:
Financing(13)
52,478
$2,478
52,478
$8,600
------------------------------------------------------------------------
58,600
$2,478
*-----"--------"537,840
S885
22
23
24
."""--""*-""..---------- .------------- " .".--
5885
s885
5885
58,333
58,333
58,333
$17,544
017,544
58,600
517,544
58,600
$17,544
58,600
$2,478
$2,478
52,478
02,478
$37,840
$37,840
$37,840
58,600
537,840
537,840
.-.--.--.-.--.----------------------------------------28.25
---- ..--.---- .-..---------------...-.-----.-.---------.
Construction Loan
Acquisition
ArchkEng.523):
Survey 6 Testing$
Insurances
LegalSAccountings
Perits:
5731,883
$17,544
2...
..-.---------.....-.---------.-.--.-----------------------------
is
17
Construction Loan
Acquisition
Arch*Eng.(5)
Survey & Testing:
Insurances
Legal&Accountings
Per-its:
EXMIBIT
.
.-----------.-.--------------.---.--...---------
--
5885
0,333
5885
$8,333
517,544
9,600
$2,478
LINCOLN MHARF
EXHIBIT
PROFORMRA
FINISHEo UNITS
PRGE 4
)
FINANCING REOUIREMIEN CONSTRUCTION PERIOD
Tuo
INTEREST RAT
12.00!
=----------------------------------------------------------------------- -----------**------------------e-------------==**e-----
Mlonth
Beginning Balance
Pressle eene
Empenditures
Outstanding Balance
1
2
3
4
5
6
7
a
s0
$809,250
$1,480,794
5656,883
82,159,053
12,844,096
54,234,800
$4,940,599
1656,883
5656,883
$3,535,988
5656,883
5656,883
0656,883
52,137,677
521,377
52,815,936
J8,500,978
54,192,871
541,929
54,891,682
$5,597,482
$801,237
5656,883
5801,237
08,012
5terest
51,466,132
$14,661
$28,159
$35,010
948,917
555,975
---------==-------==--------------------------------------------------------------------*---------=--------------e----------"---End
- Balances
5809,250
51,480,794
52,159,053 512,844,096 03,535,988
54,234,8900
54,940,599
55,653,457
w---=
---.----------------
-------------------.----.....----...-----.
EXHIBIT TUO
Month
Beginnini Balance
Pr-sal. euenues
Empenditures
Outstanding
Interest
End
-
Salance
Balances
------------EXHIBIT
THREE
9
10
11
12
13
14
55,653,457
56,373,443
57,100,629
57,835,087
98,576,890
59,401,860
$656,883
58,491,970
0731,883
584,920
59,308,773
593,088
$731,883
$10,133,743
$101,337
58,576,890
V9,401,860
510,235,081
5656,883
0656,883
0656,883
06,310,340
$63,103
96,373,443
97,030,326
570,303
57,757,512
577,575
97,100,629
57,835,087
==-------------- -----------
SALES SCHE.:
* of Units:
Sell Out Periods
1
----------.......
e....--*..
------------..-""..e**--**.....
2
3
0 0 of Parking/Marina Units:
12
Parkin/Marina
Unite Sold
Offices
4.00
2.81
0.63
0
4
4.00
2.01
0.63
4.00
2.81
0.63
5
6
7
4.00
2.81
0.63
4.00
2.81
0.63
4.00
2.81
0.63
Price per unit
4.00
2.81
0.63
----------------------------------------------------------------------------------------------------------------------..
H
LAJ
EXHIBIT
THREE
8
9
10
11
12
13
14
4.00
2.81
0.63
4.00
2.61
0.63
4.00
2.81
0.63
4.00
2.01
0.63
4.00
2.81
0.63
4.00
2.81
0.63
4.00
2.81
0.63
14.25
4 of Units:
Sell Out Period:
Parking/Marina
Units Sold
Offices
1.00
0.70
0.16
w---------e--------e------------------------------------------------.---=-----------------------------------
-
EMHIBIT FOUR
SALECIn 7rketing
REVENUES/CON"O
Month:
Rverage
period onjg
Sale
w-----w-----we----------------------m-----------------------1
2
3
4
5313.17
8
Cash fro" Sales
Lees Cornission(2.5X
51,150,799
($28,770>
51,150,799
(28,770)
91,150,799 01,150,799 91,150,799
Cash BeforeFinancing
51,122,029
51,122,029
51,122,029
-------------------------------EXHIBIT FOUR
Montht
Cash fro" Sales
Less ConnissionC2.5P
Cash BeforeFinanciog
(028,770)
(28,770)
51,122,029
e-m---------------e---------------------- -
9
10
51,150,799
(528,770)
51,150,799
(528,770)
V1,122,029
51,122,029
11
12
91,150,799 $1,150,799
C28,770)
91,122,029
1,309.10
------*--e---e**-----e----------**-----"**--".7
5
6
(528,770)
51,122,029
=----------*
13
$1,150,799
($28,770>
$1,122,029
51,150,799
(528,770)
51,150,799
($28,770)
51,122,029
51,122,029
-------***-*.....-....---.-.---14
14.25
$1,150,799
(28,770)
51,150,799
(28,770)
(28,770)
5287,700
C7,192)
51,122,029
51,122,029
51,122,029
$280,507
(090 6*)
G61'£1.£
~b~b 6~ 95
£r6'TT'9
6£T
66 KT '9
(ob-I.O'£
8T1 L££'1
frb'z6U'95
.1
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(Ol'9'.££)
01812.12'1S
966'62£b"65
it
es 050505
966'6gb'65
810'l60164
(06,0'1gs)
(O.96zes)
sta0'£i£'1
ste'£1£Its
010,'14'l
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990'964
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05
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(ob.'1.£5)
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S19
(1.696r'es)
(£90 605)
(60060)
(9ZE £15)
(6T1 zzK)
££2
66
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(0.6£ £5)
69L'GEI5
(96£ 9£5)
(900 165)
b069£5(0'T'6)99££)
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(1.06 95)
(026 .5)
(K66'900
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(f6££51
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(66£'£5
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(£6
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(U0 £)
60a.6£15
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651. 6£IS
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691 6916
9
Z.
6£
(66£'£5)
601.'SIKS
6£'E$
661.'6ti
(6£2s £5)
691.'sitK
G
6115
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96
005lan
101
Ga£10I
(r6£r £5)
i91.'Sets
6££5)
601.'Ge5
c~ivO~i"~S*tar,
Oi
483
1
I
6£
96£6111t
6116
66
(1901m5
961'££Ks
(190,16)
"1"££Ts
G06K114
r62£'611$
a1
£t
66IS
6115
(190'£m
966'15ct
61'6116
(K90'£5)
9GIr'£OKS
IT
(K90'£es)
966'££Tls
6619K
69'6116
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(f6915)
1.19600l
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(190 £5)
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(T90'£5)
96r'001
(190'£m
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(190'£5)
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(K90'£5)>
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9 3W4
3fl14 11911493
wUWNoVd414f~ M1031411
LINCOLN WHRRF
PROFORMAFOR UNFINISHED SPACE 6
Last Re.ised:
8.1.85
Unfinished Units
Development Costs
Soft
Costs
Spent Prior
to Const.1
$104
PER SQUARE FOOT BELOM THAT OF FINISHED SPACE
7 Stories
Total Development Period:MO
To be Spent 682-Lincoln 322 - North Cost per
begin'gM/Conslharf:
Ferry:
Unit
"""""--""--e"-"e------*-*--..---.-----------------.------.-..-.---.---.----------.---...--------------------------.
Acquisition:
Arch&Eng.(43):
Suruek
Testing:
Insurance:
Legal8Recounting:
Permits:
Marketing:
Oevelop.
Contingencies(4%):
R.E.Tames/Const.:
R.E.Tames/Marketing:
FinancingC.):
$1,100,000
$205,879
$180,144
$205,879
$40,000
$20,000
$62,564
$72,058
Total Soft Cost:
$2,875,867
$403,966
a
$154,409
$100,000
$20,000
$150,000
$50,000
$400,000
Man.C3.52)
$90,000
$1,100,000
051,470
$10,000
$749,792
$350,208
$27,500
05,14?
$2,500
$500
$20,000
$112,500
$32,500
$400,000
$117,093
$205,879
$40,000
$20,000
$37,500
$50,000
03,750
$1,250
$10,000
$4,504
$5,147
$1,000
$500
$1,564
$62,564
$1,009,442
$128,674
$233,507
-
Marketing Costs:
--....................---...............
Condominium:
$230,590
Marina & P.:
Office:
-----------------------------------------$308,064
$36,737
$40,737
Soft Costs:
$1,009,442
$308,064
Total:
#322 North Ferry:
-Public Benefits:
$8,094,600
$350,208
(234,270)
$25,236
$7,702
12X
42
3X
$5,857
$234,270
$8,210,538
PROJECTED SALES PRICES FOR UNFINISHED
Type
0 of
UNITS @MINUS
TotalS.F.m/Balc
$10
P.S.F.
Price P.S.F
Aver.Unit Value
Total
Second Floors
One Badroon
Two Bedroom
8
2
7,064
2,526
$116
Third Floor:
One Bedroon
Tmo Bedroo
2
6
1,500
8,034
$136
$107,440
Fourth Floor:
One Bedroon
Too Bedroon
2
6
1,580
9,090
$166
$221
$131,140
$334,815
Fifth Floor:
One Bedroon
Tmo Bedroo
2
6
1,580
9,090
$196
$236
$154,840
$309,680.00
$2,145,240.00
Sioth Floor:
Too Bedroon
bottom of OupleN
2
2
4,040
3,740
$261
$261
$527,220
$488,070
$1,054,440.00
Seventh Floor:
Top of DupleM
2
4,040
$286
$577,720
$1,155,440.00
40
52,364
Average sixe of Unit
1,309.10 s.f.
Total
142
32
12
0%
22
12
52
22
32
02
02
12
$2,109,442
C$1,100,000>minus Aquisition
e---------------------...-..-.---.-...--Hard Costs:
Cost per Unit
As X of Total
------------------------------------------------------------Construction Cost:
$5,146,965
642
Const. Interests
$412,560
$10,314
5X
Marketing Interest:
$5,838
32
Aquisition:(Lincoln)
$749,792
$18,745
92
All Other:
Marketing:
Public benefits:
25.25
X of
Cost
$171
$102,428
$819,424.00
$431,946.00
$215,973
$214,880.00
$1,574,664.00
$196 $262,444
$357,540
,
$262,280.00
$2,006,890.00
$976,140.00
$10,953,024
Average
P.S.F
$209
2.502
LINCOLN
MMARF
PROFORMR "UNFINISMED"
Conet. Per.:
PAGE 2
Mlarket Per.:
11
financing Empenses
Area Calculations,
3
or Total
5.f.Tta
Construction Period
-----------Const.Cost:
85,146,965
#Soft Costi
81,009,442
+Rquisistion 81,100,000
-Equity
C01,000,000)
Loan Aount:
Interest Rat
12.00%
Points:
1.00%
TernCoonths)
14
-----------------------------------------Gross S.F.
69,323
Net Sellable
61,655
Total Res. S.F.
M/o 8alconey
47,580
Total Res. 5.F.
"/"alcony:
53,915
Total
6,335
Total Office
4,140
Total Park.:
3,600
Total Cire.:
7,668
$6,256,407
Baleen
Marketing Period
Loan Amount:
Interest Rat
Points:
14.25 Mlonths
s0
12.003
0.00%
12
ferpCmonths)
Non-Condoiniue Revenues
8 of
Pricing
T:pe:
Aver. Unit
860
9
835,000.00
18
0630,000
t
Assigned
floa ing
830,000.00
825,000.00
11
11
0330,000
8275,000
Marina Slips
$30,000.00
OfficeC20m43
Value
0215,000 Per Unit
6250 P.S.F.
Parking:
Indoor
Outdoor
U
17
8510,000
57
81,745,000
030,614 Per Unit
Square Foot Cost and Return Analysis
Building:
Total Cost
Const. Cost
Soft Cost
Interest
Gross
X of Total
o117
874
$25
Net Sellable X of Total
642
222
e
89
Building + Land, Pier and Mter:
Gross
2 of Total
Total Cost
Const. Cost
Soft Cost
Interest
$76
840
816
86
64
22Z
8
8131
863
$29
910
107,123
64X
22X
8
100a
892
693
783
9x
6z
5z
113
PRGE 3
"UNFINISHED"
LINCOLN WMARF PROFORMRA
-------------
----------------------------------.----------------------------.--------.
Doselopoent
Total
Building
Area
Lincoln
Uharf Net:
North Ferry
N.:
Lincoln
Uharf Gross:
North Ferry
Gross
Total Dev.
Net:
Total Dev.
Gross:
Land/Pier
Parking
Marine
Totals
Area
v of
rdals
61,655
9,160
8,000
78,83i
?8n
12,330
4,320
6,000
22,65*1
222
69,323
37,800
18,600
14,972
37,150
6,600
84,295
58,72:!
13,500
73,993
74,950
682
125,721
14,000
25,200
32M
552 of total developed area is sellable
101,49?;
184,44--1
Public Benefits:
Costs
2
Pay"ent
Due
N.P.V.
610X
Share Net 0 Share
Lincoln U.
Lincoln U.
3475,000
7
762
9368,950
3189,33*i
-------------------------------------------------------------------.---370,000
2
763
354,373
344,93E.
Contribution
Fireboat:
Totals
9545,000
Equity Sources:
9234,27C1
X of Equity 3 of Ownership
------------ .------- --. ---. --. -----. ---..------KDC:is
0201,983
143
45%
HarbourC.:ws
$201,983
143
452
H
1~3
103 Limited:
31,000,000
Total:
31,403,966
713
103
s50
of PreConst. Dev. Costs
at Closing of Loan and escchange of Title
Note: Dovelopfoent to be 1002 finencied
,,Paid
Return to Lincoln 1',arf Associates
.
--.. To-..---.3 --.
of-T-ta
a of
Total is
--.-..--..
Reuenues:
Condowiniuw
Marina &P.:
Office
--------.-....
$10,953,024
31,432,737
31,588,737
Sub-Totals
Costs:
Sub-Total:
313,974,498
Liwited:
GeneralS
C31,000,000)
C36,210,538)
35,763,960
Total:
(403,966)
34,359,994
..-----Total
-----.-- --783
10
113
..-.---------Entity
n. . .--.
- - -...-- -. --.I- ---. .-.-.--- ------.-..------------
K0C§452
NarborC.8452
Liwited6103
Gross Retur -n es.
1, 961, 997'
1,961,997'
0435,99%9
Man.
Total
3117,093 32,079,091
$1,961,997
$435,999
ROT
10292
971X
442
LINCOLM UHARF PROFORA
"UWFINISHED"
PAGE 4
w--.........-.=.-----==..=..........===---1
2
----------------------------w--------------.........----.---6
7
3
4
5
ENHISIT .. 1 ....-....
COST RoJECTIONS
Construction, Loan
Acquisition
Arch&Eng.C52):
Survey & testing2
Inusance:
LegaMSAccountings
Perwits:
Marketings
D
aleeoppent
ContingenciewC53>
A.E.tae=/CenstfM.I
FinencingC12)
Man.:
$6,256,407
(in Loan)
$51,470
$10,000
$20,000
$112,500
$32,500
$400,000
$117,093
$205,879
$60,000
$62,564
.................
1===.---------------- ===--=-=----$
ConstBruction Loan
Requisition
Arch3Eng.C52)2
Survey a Testinge
Insurance:
Legal Accounting:
Pe.its:
t
To al Espenditures:
H
Li)
$568,764
1458,764
$568,764
$4,679
$4,679
14,679
$4,679
$568,764
$4,679
$568,764
$4,679
$10,000
$792
$12,500
$32,500
$792
$792
$792
$792
$792
$792
$4,637
$4,637
$4,637
14,637
$4,637
$4,637
04,637
$2,376
$2,376
$2,376
32,376
$2,376
$2,376
$2,376
$581,249
$561,249
$:%1,249
$581,249
9
==
;-
---==...-
10
===-;
$581,249
11
===.....-;---..--
$568,764
$568,764
$568,764
$4,679
$4,679
$4,679
9792
$792
$792
$4,637
$4,637
$2,376
$581,249
---12
;
;-----==-------- 14
=======--. 13
9792
$792
$7,018
37,018
$792
$7,018
$4,637
$75,000
$4,637
017,544
04,637
$17,544
$4,637
$2,376
$2,376
$2,376
$2,376
$2,376
$2,376
$581,249
$656,249
$656,249
$32,367
$32,367
$75,000
952,367
$17,544
$4,637
--21
19
20
16=---------------------------.------.--..--------------.--------.-----17
18
Construction Loan
Acquisition
Arch*Eng.(52):
Marketing
,evelopwent Man.$
Contingencies()I
R.E.Taue=/Cnst$M.2
$7,018
97,018
$792
$792
$7,018
$792
$7,018
$17,544
$4,637
$17,544
$4,637
$17,544
917,544
$2,376
$2,376
$792
$4,637
$2,376
$792
37,018
$792
$7,018
$792
$7,018
$4,637
17,544
$17,544
$4,637
$4,637
$17,544
$4,637
$2,376
$2,376
$2,376
$2,376
Financing(1>
052,367
932,367
$32,367
$32,367
$32,367
$32,367
$32,367
Total Empenditures:
..................
-.................
===...-....www-.......www~.....==-......w-......=-.-...--...====-===-.*=-..--
===.w.=========.....==.......=..==....=..==
22
EMMISIT 1
23
======..=..
24
...... m.....
25
25.25
Construction Loan
Acqui si ti on
ArchEn.
C52S
Survey & Testing:
Insurancex
Lega14Re ountings
Pernits:
$792
$792
$7,018
$792
$7,018
$792
$7,018
$7,018
$198
D1,754
$17,544
94,637
$17,544
$4,637
$17,544
$4,63?
$17,544
$4,637
04,386
$2,376
$2,376
$2,376
$2,376
$594
total Espenditures:
$32,367
$32,367
===..--============..=........==-......==.....-=................-...................
$32,367
$32,367
$8,092
Marketings
0Deveopment Nan.:
ContingenciesC5)1
R.E.Taws/Const4.:
$581,249
I...ww...-...==.......-.....=--........===....w....=...==.......-.---=----=...-ww.---.
......................
==.t r u"w--=' m,L---4"-----w---- -------15 -------EMHIITI1
Survey & testing:
Insurance:
L gaI Accounting
P.er"its:
$4,679
$62,564
$568,764
$4,679
$792
Marketing:
Deuelopnent Man.1
ContingenciewC5m>1
R.E.toaes/CenstM.I
Financing(12>
$568,764
$698,813
Total Empenditures:
EMMIBIT
$568,764
31,159
Financi ng( 13)
LINCOLN WHARF PROFORMA "UNFINISHED"
PAGE
5
------------------------------------..-...-.........-.-.-..--.--. I..... -.-----.. --------. -.-.....
--.
----. -----.. -..
--.
---..
-.--..
--.
EXHIBIT TUO
FINANCING REGUIREMEN
Month
Beginning Balance
INTEREST RAT
CONSTRUCTION PERIOD
12.002
1
2
3
4
5
6
7
s0
$705,801
$1,299,921
01,899,981
$2,506,043
$3,118,165
53,736,408
Presale Revenues
Ependitures
$698,813
$581,249
$581,249
1581,249
$581,249
$581,249
$581,249
Outstanding Balance
Interest
$698,813
$6,988
$1,287,050
$12,871
$1,881,170
$18,812
$:2,481,230
$3,087,292
$30,873
$3,699,414
$36,994
$4,317,657
$43,177
End
$705,801
$1,299,921
$1,899,981
0:2,506,043
$3,118,165
$3,736,408
$4,360,833
4
5
6
7
4.00
2.81
0.63
4.00
2.81
0.63
4.00
2.81
0.63
-
Balance:
EXHIBIT
$24,812
TIO
--..---------------.-------------------------------------------...--------Month
8
9
10
11
Beginning Balance
$4,360,833
$4,991,503 95,628,480 56,347,576
Presale Revenues
Empenditures
$561,249
$581,249
$656,249
$656,249
Outstanding Balance
$4,942,082
95,572,752 $6,284,729 97,003,825
Interest
$49,421
$55,728
$62,847
$70,038
End - Balance:
$4,991,503
$5,628,480 $6,347,576 $7,073,863
--------------------.---------...---------- =ww.-------------------------.
EXHIBIT
c-J
THREE
SALES SCHED.:
* of Unita:
Sell Out Period:
1
2
0 S of Parking/Marina Units:
12
Parking/Marina
Units Sold
Offices
4.00
2.81
0.63
4.00
2.81
0.63
3
0
4.00
2.81
0.63
Price per unit
4.00
2.81
0.63
------------------------.---------------------....-------....-------------------------------......--------------------....----ExHIBIT THREE
8
9
10
11
12
13
14
14.25
$ of Units:
Sell Out Period:
Parking/narine
Units Sold
Offices
4.00
2.81
0.63
4.00
2.81
0.63
4.00
2.81
0.63
4.00
2.81
0.63
4.00
2.81
0.63
4.00
2.01
0.63
4.00
2.81
0.63
1.00
0.70
0.16
-.----------------------------------------------..---------...-----------------------------.----------------------EXHIBIT FOUR REVENUES/CONDO SALE(In
Month:
Cash from Sales
Less Comnission(2.5Y
Cash BeforeFinencing
-------------------.-
1
$768,633
($19,216)
marketing
period only)
2
$768,633
C$19,216>
Average Sale
3
$768,633
($19,216>
4
$768,633
C$19,216>
$209.17
5
$768,633
($19,216>
1,309.10
6
$768,633
(019,216>
7
$768,633
($19,216)
8
$768,633
C$19,216>
$749,417
$749,417
$749,417
$749,417
$749,417
$749,417
$749,417
$749,417
- - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - -
EXHIBIT FOUR
Month:
Cash fro" Sales
Less CovnissionC2.5Z
-Cashefo
inancig
Cash Befc,-eFinancing
9
$768,633
C$19,216)
749,47
$7.49,417
10
$768,633
($19,216>
749,47
$749,.417
11
$768,633
($19,216)
79,4
$749,417
12
$768,633
C19,216)
749,41
$749,417
13
$768,633
($19,216)
749,1
$7,49,417
14
14.25
$768,633
$192,158
($19,216)
($4,804)
749,47,5-------------------------------4
$749,417
$187,354
LINCOLN UHRRF PROFORMR "UNFINISHED"
PAGE 6
--- --------------------- ---Sale--- ---930,614
------------------- --- --------.-------SLIPS
Average
REVENUES FR0MPRRKING S
EXMIBIT FIVE
MiARINA
w...-.-------.--....2 ----...-------..---.....----.-----.......
3
1
Mlonth:
Cash
Sales
-ro,
Lescmnission(2.5X)
9122,456
(93,061)
Cash
$119,395
BeforFinancing
-----------------
122,456
<93,061)
9122,456
(03,061)
$119,395
9119,395
*119,395
--....--.--...-...--------------4
5
9122,456
122,456
(93,061)
($3,061)
$119,395
6
7
9122,456
9122,456
($3,061)
0119,395
.--.----...------- 8
($3,061)
0119,395
122,456
C$3,069
$119,395
~w.-----------------------------------------------------------------------------w--------------
EXHIBIT FIVE
10
11
12
13
14
14.25
9122,456
9122,456
9122,456
9122,456
$122,456
$30,614
9
Monthi
fro.
9122,456
($3,061)
Cash
Sales
L.ssCowisinC2.55>
($3,061)
($3,061)
C$3,03,06C3,061)
9119,395
9119,395
0119,395
Cash BeforeFinancing
-----===--------ee=-wm..w.--.......---------------w..------------------.-----------
w---------------------
1
M.onth.
fro.
Cash
Sales
LessCowmissionC2.52)
$119,395
($765)
$119,395
$29,849
OFFICES
REVENUES:
ENHIBIT SIN
9119,395
C93,061)
9135,799
(93,395)
2
3
9135,789
9135,799
4
9135,799
($3,395)
C$3,395)
(3,395)
5
6
7
8
$135,789
$135,789
$135,799
$135,789
C$3,395)
(03,395)
($3,395)
(X3,395)
$132,395
$132,395
$132,395
S132,395
9132,395
--------------------- - - - - - - - - - - - - - - -- - - - --- - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - -
Cash BeforeFinancing
EXMIBIT
9132,395
S132,395
9132,395
SIN
I-------------------------------------------------------------------.-------------------.----------------.-------.--14
14.25
11
12
13
9
10
Mlonth:
Cash fro" Sales
LessConcission(2.52)
9135,799
($3,395)
Cash BeforeFinancing
9132,395
------------------------------EXHIBIT SEVEN FINANCING REQ.'s:
($3,395>
(93,395)
$132,395
9132,395
0135,789
($3,395)
9135,709
$132,395
$132,395
($3,395)
MARKETING
INTERE~t RAT
PERI00
2
3
4
$132,395
933,099
12.003
7
6
5
($32,367)
C1,489,128)
91,001,207
(932,367)
C9'1,290,366)(93,354,330)C02,419,033)
(924,190)
(033,543>
(942,804)
(91,474,384)
(014,744)
($520,288)
($5,203)
(97,073,063)
91,001,207
(932,367)
C6,166,073)
91,001,207
(932,367)
C$!,249,206)(04,323,170)03,397,873)
Outstanding Balance
Interest
C96,105,023)
C$61,050)
C5,197,234>
(951,972)
01,001,207
(032,367)
91,001,207
(932,367)
$1,001,207
C5,249,206) ($11,323,1703C$3,387,673)(92,443,224)
(6,166,073)
End Balense
= ..-.-...---- I--------. -.-.... ----... ------------------...
.- ....
= .-- .... .------.-.---.-.--.---- ...
Month:
933,947
(9049)
(02,443,224)
91,001,207
(932,367)
Beginning Balance
Net Sales Revenues
Empenditures
EXMIBI T SEVEN
9135,789
(93,395)
==--------------e---------------------------------------------------------------------------
1
Monthl
9135,789
$135,799
($525,491>
(91,499,128)
--... -..-.----------.
FINANCING REO. *s
;=
......----------------------..----.-- ....-.--9
Beginning Balance
Net Sles Revenues
Empenditures
9443,349
91,001,207
C932,367)
Outstanding Balance
Interest
91,412,199
90
91,412,199
End Balance
.-........-........-----..----------------------------.---
.....
; ......
;
==----===-w------------------....;
..... 13
12
;.....
10
11
14
14.25
91,412,199
92,361,029
94,319,709
95,297,549
96,256,388
$250,302
9!,49,068 94,318,709
95,287,549
96,256,38
$1,001,207
(932,367)
92,381,029
90
92,391,029
93,349,969
91,001,20?
91,001,207
91,001,207
($32,367)
C32,367)
C32,367>
90
s0
93,349,869
94,318,709
90
$1,001,207
C032,367)
90
96,256,38
95,287,549 *"-----"""--"---"""""-"""
(0,092)
96,499,599
90
96,499,599
a
($525,491)
91,001,207
(932,367)
$443,349
s0
$443,349
--.... -.--. -=
LINCOLN
HARF
UNFINISED UNITS Soinus 5140 pst FROM FINISHED UNITS PAGE 1
PROFORMA
La0t Revised:
8.13.85
Development Costs
Soft
Costs
7 Stories
Spent Prior
to Const.:
-quisition:51,100,000
ArchSEng.C42)1
5205,879
Survey S TestingS
Insurance:
5150,000
Lega)SAccountings
Perwits:
5400,000
arketing:
S180,144
Man.(3.52)
5205,679
Contingencies(42):
R.E.Tamas/Const.:
540,000
R.E.Teces/MArketing:
562,564
Financing(2):
$100,000
$20,000
$50,000
Develop.
$154,409
590,000
537,500
550,000
572,058
52,875,867
5403,966
Cost p.er Unit
$5,14?
$2,500
$500
$51,470
$10,000
$20,000
5112,500
$32,500
$400,000
53,750
51,250
510,000
54,504
5117,093
5205,879
$5,14?
$500
51,000
$1,564
52,109,442
(1,100,000)oinus
Marketing Costs:
525,236
56,709
$268,37?
$5,857
9234,270
Condominium:
536,737
Marina & P.:
0 fice:
040,73?
-----------------------------------------$268,377
122
3
3X
98,095,013
Totals
*322 North Ferry:
-Public
5350,200
($234,270)
Benefits:
Cy
8,213,95l
PROJECTED SALES PRICES
TYpe
Tota15.F.N/Bale
of
Price P.S.P
Aver.Unit
Yalue
Total
Second Floor:
One Sedrooc
Two bedroom
6
2
7,064
2,526
080
5135
0170,505
$70,640
0565,120.00
5341,010.00
Third Floor:
One Bedroo
Two Bedroow
2
6
1,560
8,034
5100
"160
579,000
5214,240
$158,000.00
$1,285,440.00
Fourth Floors
One Sedroow
To bedroom
2
6
1,560
9,090
5130
5185
0102,700
5280,275
$205,400.00
$1,681,650.00
fifth
Floor:
One Sedroon
Too Bedroow
2
6
1,560
9,090
5160
5200
5126,400
5303,000
$252,800.00
$1,818,000.00
Sioth Floor:
Too Bedroom
bottom of Ouplew
2
2
4,040
3,740
$225
5454,500
$909,000.00
$505,000
$1,010,000.00
Seventh Floors
Top of Duplem
Average size of Unit
2
4,040
40
52,364
1,309.10 s.f.
5225
$250
0420,750
0841,500.00
59,067,920
Average P.S.F
142
32
12
02
22
12
52
22
32
02
02
12
2.50%
$190,904
As 2 of Total
Soft Costs:
1,009,442
Total
Aquisition
------------------------------------------------------------642
0128,674
55,146,969
Contruction Costs
$10,314
52
Const. Interests
5412,560
32
9276,600
$6,915
Marketing Interest:
AquisitionsCLincoln)
5749,792
518,745
92
All Other:
Marketing:
Public Senefits:
25.25
2 of
Cost
5350,208 -749,792 527,500
51,100,000
$1,009,442
Hard Costs:
vOelopent Period:
$40,000
520,000
562,564
$20,000
Total Soft Costs
Total
To be Spent
682-Lincoln 322 - North Cost per
begin'g/ConsUharf:
Ferry:
Unit
5173
PAGE 2
LINCOLN MHARF PROFORMA
Const.
Per.:
14.25 Months
Market Par.:
11
Area Calculations:
Financing Empenses
x of Total
Construction Period
-------------
Const.Cost:
+Sft Costs
*Rquisistion:
-Equity
Loan Aount:
Interest Rate:
Points:
TermCmonths):
S.F.
--------------------------------------- ----1002 69,323
Groe S.F.
692
61,655
Met Sellable
Total Rev. S.F.
69a
47,580
w/o balconey
95,146,965
51,009,442
01,100,000
C1,000,000)
56,256,407
12.002
1.002
14
Total Res. S.F.
N/5Balconeys
Tot1 balcon
Total Office
Tota1 Park.:
Total Circ.:
Marketing Period
Loan Aount:
Interest Rate:
Pointa:
TermConths)3
53,915
6,335
4,140
3,600
7,668
s0
12.003
0.003
12
Non-CondoniniuN Revenues
5 of
Pricing
:
Office(20N43)
Parking:
Indoor
Outdoor
Assigned
Floating
H_
Ht
Aer.
860
5250 P.S.F.
9
535,000.00
lo
5630,000
$30,000.00
11
11
9330,000
5275,000
525,000.00
Unit Value
$215,000 Per Unit
Marina Slips
530,000.00
17
5510,000
---------------------------------------5? 51,745,000
-------P
Ui
530,614 Per Unit
Square Foot Cost and Return Analysis
building:
Total Coat
Const. Cost
Soft Cost
Interest
3 of Total
Gross
5117
574
525
510
64Z
223
92
Building + Land, Pier end Mater:
Gross
of Total
2
Total Cost
Const. Cost
Soft Cost
Interest
976
540
516
56
643
222
92
Net Sellable
5131
583
529
o11
107,123
2
of Total
643
223
9z
78
92
6X
52
112
LINCOLN WIARF PROFORMAPAGE 3
MMNMMMMMMMMMMMMMMMMMMMNNMMMMMMMMMMNMMNNMMMMMMMMMMNMMNMMMMMMNNNNMMMMNMMMMMMMMMMMMMNNMMMM
Total Developoent
Building
Land/Pier
Area
Area
Lincoln
Wharf Nett
North Ferry
Net:
Lincoln
Uharf Gross:
North Ferry
Gross
farina
Parking
Totals
3 of
Totals
61,655
9,180
8,000
78,835
12,338
4,320
6,000
22,658
78
22X
69,323
37,800
18,600
125,723
683
14,972
37,150
6,600
50,722
32M
74,950
25,200
Total Dow.
Net:
Public
13,500
73,993
Total Dev.
Gross:
84,295
553 of total doeeloped area is
101,493
184,445
Benefits:
Costs
Contributions
Fireboat:
X Share Net 8 Shr
Lincoln U. Lincoln U.
Pajont
Due
8475,000
870,000
Total:
2
783
78
6368,958
$54,373
N.P.V.
8103
9189,334
844,936
$234,270
"545,000
Equity Sourcess
X of Equity X of Ownership
KOC:: -201,983
H
kNb
14,000
HarbourC.1
102 Linitedtmw
$1,000,000
Total:
81,403,966
14
142
713
11201,983
45
453
103
of PreConst. Deu. Costs
wmPaid at Closing of Loan and eochange of Title
Note: Developmeent to be 1002 financied
N503
Return to Lincoln
Uharf
Associates
Total *
Revenues a
Condoniniuw
Marina &P.2
Office
Sub-Total:
Costs:
Sub-Totals
Liited:
Generals,
Total:
x of Total
99,067,920
81,432,737
81,568,737
753
123
133
Entity
912,069,394
(18,213,951)Total Costs
83,875,443
(1,000,000)Paid
(0403,966>
$2,471,477
Gross Return +De.
81,112,164
KDCO 453
Herb orC.8452
0247,148
Liwi tedOlOX
back to Limited Partner
$1,112,164
Man.
8117,093
Total
81,229,258
S1,112,164
8247,148
ROl
6093
551%
25X
sellable
LINCOLN
~IU4FPROFORMA
"UNIFINSHED" PAGE 4
-------.--------------ftf------------.------.--------------------------------------.------.-------..-.-----..--------..---------..----COST PROJECTIONS
1'
2
3
4
5
6
?
-..-------..-----------..----.---.----- w.------------------------..---.-............--..........---....------....------.--.-.---.
Construction Loan
96,256,407
9568,764
9568,764
$568,764
9568,764
9568,764
$568,764
568,764
cquisition
(in Loan)
Prch4EnZ. C52):
$51,470
94,679
94,679
$4,679
94,679
94,679
$4,679
94,679
Survey
Testings
910,000
$10,000
Insurance:
$20,000
0792
9792
9792
$792
9792
$792
9792
LegalAccountingi
9112,500
$12,500
Peri9t:
032,500
932,500
Marketingt
9400,000
Developoent Man.:
9117,093
94,637
94,637
$4,637
94,637
94,637
94,637
94,637
ContingenciesC5):
9205,879
R.E.Tamow/Const&n.:
960,000
92,376
92,376
$2,376
92,376
92,376
02,376
92,376
Financing(1)
962,564
962,564
ENHIBIT I
Total
Empanditurept
-----.------------------ExHIBIT 1
-------------.-.
9
10
94,679
94,679
$4,679
$4,679
9792
9792
9792
9792
Developwent Man.1
ContingenciesCS5:
R.E.Taoew/Const&n.:
Financing(12)
$4,637
$2,376
94,637
92,376
92,376
$75,000
$4,637
92,376
Total Espenditures:
$561,249
9581,249
0656,249
9656,249
17
18
19
16
EXHIBIT 1
(J-)
a
9581,249
975,000
94,637
Marketing:
az:
5
9581,249
----------------..----
0581,2-49
9581,249
981,249
14
15
Insurance:
9792
S792
LeglsAccountings
Peri ts:
Marketing:
Developpeent Man.I
Contingencim
sC52>
R.E.Tmsws/ConstSM.:
Financing(1M
Ewpenditures:
..----
-------------.
9792
97,018
07,018
917,544
94,637
917,544
94,637
917,544
$2,376
92,376
917,544
94,637
92,376
932,367
932,367
932,367
932,367
.------..-
...-----
f--.--....-..--.------
.---- ------...----
24
25
25.25
.w.------...--------------------------------
R.E.Tawes/ConstaM.:
Financing(12
97,018
9792
9792
97,018
9190
91,754
917,544
94,637
S17,544
94,637
94,386
91,159
92,376
02,376
9594
932,367
98,092
$32,367
..-. .-.---- . ....-.---.----.-.
Total Ependitur-es:
9792
97,018
$7,018
.--.-.-..-------.
EXHIBIT 1I
===.--.----......
Construction Loan
Acqui si tin
rcheEng. C):
Survey & Testings
Insuranc:
LegalRecounting:
Peroi ts:
Marketing:
Development Men.s
ContingenciesC52)s
9792
9792
-.-------...----- ------....
94,637
92,376
.--..-----------. --...
9792
$792
$7,018
97,018
97,018
$7,018
$17,544
917,544
917,544
92,376
917,544
94,637
92,376
932,367
932,367
932,367
932,367
20
21
22
23
94,637
94,637
92,376
ww--.-------------------.
----------------------------------------------
Construct~ion Len
Acquisi tion
ArchEng. C5):
Survey S Testings
Total
9581,249
11
12
13
--.
--------------------...
--.. ---.-. ---------------------------------------------------------.
9560,764
9568,764
9568,764
9568,764
Construction Loan
Acquisition
ArchSEng.C59)s
survey a Testing:
Insurance:
Lega14Accounting:
Per.its:
H
0698,813
w------------------------------------.----------.-------.------...----------.----------......---------.---
$792
$4,637
$2,376
-----------------------
$792
9792
97,018
$7,018
9792
97,018
97,018
$17,544
$4,637
92,376
917,544
917,544
917,544
932,367
ft
..------.-
94,637
92,376
94,637
92,376
932,367
..------...
---f
932,367
-
--. ----.
-------....
94,637
$2,376
932,367
--------..
(0061fXl)
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(6069X41)
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(606'LT1s)
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LINCOLN
NARF
PROFORMA "UNFINISHED"
PAGE 6
;-;
--------------------------------------------..--------....
;;..-.----..........
ENNIBIT FIVE
REVENUES
PARKING S
SLIPS
Average Sale
530,614
FROM
MRARINR
.------------------------------.---------.---------------------------------.........--.----------....--....--..-----.--.......1
2
3
4
5
6
7
8
Cash fro" Sales
$122,456
$122,456
5122,456
$122,456
$122,456
$122,456
$122,456
$122,456
Mlonth:
LessCoomission(2.52)
Cash BeforeFinancing
($3,061)
$119,395
(53,061)
6119,395
($3,061)
0119,395
(3,061)
5119,395
(53,061)
$119,395
($3,061)
5119,395
(53,061)
C$3,061)
$119,395
S119,395
-------------------------------------------------------------------------------...------------....-------.-...--.-----ENNISIT FIVE
Month:
9
10
Cash ron Sales
LessCoissio.n(2.5t)
5122,456
(53,061)
9122,456
Cash BeforFinancing
5119,395
$119,395
(53,061)
11
12
13
5122,456
C93,061)
5122,456
($3,061)
5122,456
(3,061)
9119,395
5119,395
$119,395
------=--.--===----e-...-..--------.------------=-----......---------------
OFFICES...-..
EMMIBI7 SIN
REVENUES,
----------.---------------
Month:
Cash
LssC
frow
Sales
issionC2.5
Cash beforeFiancing
$119,395
529,849
-----...--..------------
..-----.--. ------...-...............--..-........-----....---..-..
2
3
4
5
6
7
8
5135,789
(53,35
$135,789
5135,789
(3,395)
5135,789
(3,395)
$135,789
$135,789
$135,759
$135,789
5132,395
9132,395
9132,395
5132,395
5132,395
=------------..------------ ---SIN
Months
14.25
530,614
(5765)
1
--
E)4M181T
14
5122,456
(53,061)
9
3,395)
--
(3,395)
(03,395)
5132,395
(3,395)
CX3,395)
5132,395
5132,395
e----------.---.------------------..--------------------------------------10
Cash frow Sales
LessConnission(2.5X)
5135,769
(53,395)
9135,789
Cash _BforeFinancing
5132,395
5132,395
($3,395)
1-j
11
12
13
14
14.25
5135,789
(03,395)
5135,769
(03,395)
5135,789
<3,395)
5135,789
($3,395)
533,947
<5849)
$132,395
5132,395
$132,395
$132,395
533,099
(1
SEVENFINANCING REQ.'s,:
MARKETING PERIOD
==-------------=...=.---...-----------=.1.......3
EIBIIT
INTEREST RAT
12.002
.-...-...--........
................
-----------------------------------..--....------------------...-------------------............-.
1
2
3
4
5
6
Monthz
Seginning Dalance
Net Sales Revenues
Empenditures
C$7,073,863)
5872,226
(532,367)
(56,296,344) ($5,511,050)(4,717,903)(03,916,824>
5872,226
(032,367)
(532,367)
(532,367)
(32,367)
C$3,107,735)
Outstanding Balance
Interest
(06,234,004)
C62,340)
End Balance
C6,296,344)
(01,465,203)
(032,367)
(05,456,485) (94,671,191>C03,876,044>(3,076,965)
(554,565)
C46,712)
($38,780)
(530,770>
(52,267,876)
(522,679)
(51,450,696)
(514,507)
($625,343>
<6,253)
(05,511,050> C4,717,903)(<3,916,824)C3,107,735)
C2,290,555)
C1,465,203)
($631,597)
5672,226
$872,226
$672,226
5872,226
w---=.----....-----------------------------------.-----------.-----------.-----------
------------EMMIBIT
SEVEN FINANCING REQ. 'a:
HonthI
9
Balance
Beginning
Net Sales Revenues
Espenditures
Outstanding
Interest
Balance
(631,597)
5872,226
C32,367)
$208,262
s0
End Dal ance
E208,262
---------------------------------.
----..---7 =-..--......8
(52,290,555>
5872,226
(532,367)
10
5200,262
5872,226
C32,367)
51,046,121
s0
50
11
12
13
51,048,121 51,887,980 52,727,839
5872,226
5872,226
5872,226
(532,367>
(532,367)
(532,367)
51,867,980
52,727,839
0
52,727,839
53,567,698
s0
----........---.-----
14
14.25
$3,567,698
5872,226
(32,367)
$4,407,557
$218,057
54,407,557
50
54,617,522
s0
(58,092)
51,048,121
51,887,980
53,567,698
54,407,557
54,617,522
............................................ ft.ftft ..............................
5872,226
(532,367)