The Dramatic Increase in Boston's Land Costs

The big news out of Boston's real estate development wave last week was Related Beal's entry into the red hot South End market with the purchase of 370 Harrison Ave (the now former Ho Kong Bean Sprout Co site at the corner of Traveler St and Harrison Ave).  The purchase price was an astonishing $8 million for the run down corner lot abutting the site of Quinzanni's Bakery.  With an assessed value of $620,000, that amounts to a nearly 13x difference between the sale price and assessed value of the property... Clearly there were other plans at play for the lot...  Later that afternoon a spokeswoman for Related announced that they did indeed have 380 Harrison (Qunzanni's Barkery site) under agreement which would give them control of the Harrison block between Traveler and East Berkeley Streets.

While the sale of 380 Harrison has not officially been recorded with the Suffolk County Registry of Deeds, if we're to see a similar multiple from assessed value to sale price at 380 Harrison as we saw at 370 Harrison that would amount to a sale price of nearly $20.2 Million*, a total assemblage cost of $28.2 Million* for the two parcels before the first jackhammer hits the concrete.  The total parcel assemblage is 44,569sf or $632/sf*. 

What a difference 3 years make...

In 2012, Gerding Edlen purchased a 55,000sf parcel on the 93 side of the same block between Harrison and Albany for $12.7 Million to develop what is now the Troy.  This parcel was initially purchased for $231/sf or nearly 1/3 the cost that Related may be paying for it's site on the other side of the block.  

*Of course this is a hypothetical factoring in an educated guess as to what the Quinzanni's site may sell for based on a comparison between sale price and assessed value of the neighboring Ho Kong site and in no way reflects the actual investment of Related.  

11/6/15 UPDATE...

Two Deeds were recorded with the Suffolk County Registry of Deeds office for the Quinzani's Bakery property showing Related Company's did in fact purchase the property for the previously estimated $20 Million, a continuation of the $632/sf sale price of neighboring Ho Kong Bean Sprout's building...   

1. 390 Harrison Ave. sold for  $11.3 Mil
   
2. 380 Harrison Ave. sold for $8.7 Mil 

What will these excessive land costs do for the price passed off to the end consumer... time will soon tell as we await Related Beal's plans for the neighborhood.