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Boston's new luxury towers seem to accommodate few Bostonians – The Boston Globe

Boston's new luxury towers seem to accommodate few Bostonians – The Boston Globe





Many buyers of apartment buildings in the new luxury towers that spring around Boston are either part-time residents or investors – sometimes without clear connections with Boston – according to a survey published Monday that claims that the high-end building boom of the city does little to help the local population . Residents.

Researchers at the Institute for Policy Studies, the Washington, DC, think tank that produced the report, combed property records for about 1,800 apartments in 12 newer luxury buildings in Boston, from the Millennium Tower at Downtown Crossing to the petite Le Jardin, overlooking the Public garden.

They discovered that more than a third of the units are owned by limited liability companies, trusts and other business entities that allow buyers to hide their identity. Only 36 percent of the owners have applied for the real estate tax exemption that the city offers to homeowners – a sign that the owners can live elsewhere for most of the time.

The report is the latest example of the growing concern among proponents of housing that the development boom in Boston yields little that most residents can afford. In this case, study author Chuck Collins said, it seems entire buildings are being built for global elites who are looking for some money to park.

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"I would not even call these buildings a housing market, it's just another asset class for some of the investors looking for an alternative to the stock market," Collins said. "It's not a home, it's a power storage unit."

But developers and brokers in the luxury market refute that accusation and say that they have little interest in selling apartments that are empty most of the time. Worldwide demand for housing in Boston is a sign of the vibrant culture and economy of the city, and many new buildings limit the number of units they sell to investors, they say.

"You do not want a building with lots of dark windows," says Sue Hawkes, managing director of Collaborative Cos., Who brings luxury objects to the market. "That does not benefit anyone."

The 22 Liberty condos from Fallon Co. in the Seaport suburban areas, says the developer.

Jim Davis / Globe Staff

The 22 Liberty condos from Fallon Co. in the Seaport suburban areas, says the developer.

The study found that more than half of the 51 apartments in the Mandarin Oriental on Boylston Street are owned by trusts – a mechanism sometimes used by investors but sometimes also used by residents of an accommodation for legal or liability reasons.

In the meantime, barely one in five residents of the Millennium Tower claims the residential exemption – suggesting that these units may be either second homes or rental homes.

Many units in these buildings were bought with cash, showing ownership records, and the institute said that the average sales price for all twelve developments was $ 3 million per unit.

Thousands more apartments in the seven figures are under construction or are being planned in and around the city center – extreme examples, say proponents, of so many houses that have appeared in urban areas, houses that are beyond the reach of most middle class residents.

"We have these striking prosperity gaps in our city and we are adding thousands of units for wealthier people," Collins said. "The question is, for whom is Boston?"

That demand is also echoes in other expensive cities, from New York to San Francisco to Vancouver, which last year levied a new tax on thousands of so-called empty homes of 1 percent of the taxable estimated value. The city said the tax has so far raised $ 30 million for affordable housing programs.

The institute, a left-wing organization that advocates economic and social issues, advised Boston to consider Vancouver with its own empty house tax, as well as a surcharge on home sales of more than $ 2.5 million.

Boston City Councilor Lydia Edwards held a hearing in April to consider tax on speculative or empty high-end homes and is planning more discussions on the topic this fall. She said it is clear that the flood of high-end homes does not help the many residents who can not pay rent, which easily costs $ 2,000 for a one-bedroom unit.

"This is not your father's housing market, so if we approach the housing policy for average Bostonians, we can not just treat it as if what we have done continues to work," Edwards said. "We are currently building portfolios for the super-rich, rather than places where Bostonians can live."

Developers see it differently.

Fallon Co., whose 22 Liberty condo building in the Seaport was quoted in the study, said that its primary market is empty suburban nesters trading in a family home in, say, Wellesley, for a perch on the water's edge.

Builders with more general goals, such as Richard Friedman, developer of the One Dalton Tower in the Back Bay, said that they need potential buyers to disclose their identities and limit the number of units they sell to investors, give preference to buyers who live there.

Millennium Partners seems to have sold a substantial part of the Millennium Tower to investors – many of them from abroad. The company refused to share the occupancy rate figures, but noted that the units owned by the investors are usually leased, bringing new residents to Downtown Crossing. and providing housing in a tight market.

"These buildings are being marketed as vibrant, vertical communities that have been carefully designed to serve as primary homes," Millennium spokeswoman Lauren Jennings said in a statement. "We are proud that these residential communities have played an important role in the dramatic evolution of the center of Boston."

Many high-end developers here cap investor sales at 20 or 25 percent of a building, Hawkes said, in part to mortgage lenders who want to meet a large proportion of the owner-occupiers.

And there are many reasons why buyers could use shell companies to make their purchases: privacy, for one, or to keep the property in confidence for tax or liability reasons. Really anonymous buyers, represented only by brokers or lawyers, come by now and then, Hawkes said, but not often.

"I can probably count on one hand the number of times we have not yet met the buyer at any given time in the transaction," Hawkes said. "I can not say never, but it is very, very rare."

However, according to Collins, the number of cash transactions and anonymous deals increases the specter of shady foreign buyers who use American real estate to illegally hide money or launder. Two years ago, the Treasury Department started an investigation into money laundering by foreign buyers in half a dozen American cities, examining all cash purchases from shell companies. Government supervision has cooled parts of the foreign market with money from Miami and American Senator Marco Rubio, a Republican from Florida, has filed legislation to expand national research into treasury practices.

Earlier this year, Mayor Martin J. Walsh asked the Ministry of Finance to add transactions in Boston to his investigation. That process is underway, said a Walsh spokeswoman. A spokesperson for the Treasury did not respond to a report on Monday.

In 2015, the Walsh administration
forced developers of high-end condos to contribute more to city programs that finance affordable housing. And Boston approved a regulation to sharply restrict short-term rentals, in the hope that more apartments will be rented annually to residents, instead of nightly to tourists at much higher rates.

The city's landlord, Sheila Dillon, refused to comment on the Institute's report because she had not seen it. But she said that Walsh's housing plan "was created to meet the living needs of the city's growing population for a range of incomes and demographic data."

"However, it must be self-evident that every unit of housing that is built must be occupied to help alleviate Boston's housing shortage," Dillon said.

Tim Logan can be reached at tim.logan@globe.com. Follow him on Twitter @bytimlogan.

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