Boston’s Most Important Condo Sale in 2016
David Bates / February 28, 2017-12:05 pm
(This is #1 of my three part series: The Most Important Condo Sales of 2016)
At 60 stories and 625 feet above street level, it was going to be the highest condo in Boston.
At a list price of $37.5 million it was also going to be the city’s most expensive.
But was it priced to sell or was the price intended to do the exact opposite: sell other condos in the luxury development?
In Boston, it was an unheard of ask. Every media outlet would do stories about the price. Every agent would mention it in awe to peers, prospects, and clients.
It was a price that didn’t just one-up the price of the most impressive condos in the city’s best luxury developments; it beat their prices by multiples.
It was nearly three times the highest condo sale in the city’s history – the $13.2 million paid for a penthouse at the Mandarin Oriental.
And it easily quintupled the price of many of Boston’s best condos, which possessed the city’s most enviable locations, most admired views, most luxurious services, and highest end finishes.
The Grand Penthouse at the Millennium Tower would be a unique residence.
It would have 360 degree views and rest ten stories higher than Boston’s most famous overlook, The Skywalk Observatory at The Prudential. But unlike the observatory, the GP would have outdoor space – a 2,000-square-foot terrace.
Yet height wasn’t the only feature that set it apart.
Its 12,323 square feet of living space made it perhaps the largest condo ever offered in a luxury residential building in the Hub.
Furthermore, at 442 residences it topped a building that had scale, a size which was unlike the typical boutique-ish sized luxury developments so commonly found in Boston, such as the 118 residences that at the time were being offered at 22 Liberty, the Seaport’s first luxury development.
But for a moment, forget about The Millennium Tower’s concierges, valets, its 20,000-plus square feet of common space and everything within it, including the pool and the celebrity chef’s restaurant that is exclusive for residents. The Grand Penthouse’s price alone distinguished the building from the competition.
For the out of this world ask, it was impossible to ignore social proof that this development was expected to leave every other Boston luxury building in its shadow.
But was the developer truly intent on getting it?
A variety of anecdotes in the book Priceless: The Myth of Fair Value (and How to Take Advantage of It) by William Poundstone validate that a key benefit of boldly displaying ultra-expensive products, known as “anchors,” is that the ultra-expensive offerings can extraordinarily improve the sales of almost any product priced less than the anchor.
For instance, when a luxury retailer prominently displays a $7,000 alligator handbag, it makes other store buyers feel good about buying the store’s $2,000 ostrich handbag and $2,000 handbags start moving off the shelf. And in high-end stores a conspicuous $1200 pair of shoes can convince customers the $800 shoes next to them are a bargain, and $800 shoes start selling.
So, did the $37.5 million Grand Penthouse price tag provoke buyers like billionaire Michael Dell to without flinching buy another $10.9 million penthouse in Millennium Tower?
Did it help the Tower’s sales team secure more than 400 luxury buyers before the building was ready for occupancy?
Was it a factor in the building achieving an incredible median sales price of $2.254 million and a median price per square foot price of $1,441? (Median Price and Median $PSF Source: LINK)
Anchors can be so effective in selling a vendor’s other product offerings that some pricing experts feel it’s not important if the anchor ever sells.
Yet, in August 2016, the Millennium Tower’s Grand Penthouse did sell. John Grayken, a Cohasset raised billionaire who collects personal residences the way other billionaires collect fine art, closed on Boston’s biggest and highest new condominium for $35 million.
Richard Baumert, a Partner at Millennium Partners, wrote me, “The sale of the Grand Penthouse was an important milestone that underscored the depth of the Boston luxury market and signaled that the city has arrived on the international stage.”
Put another way, the incredible sale price changed expectations about what Boston condos could sell for. In a sense, it became the anchor for Boston’s entire condominium market.
And because the price ultimately impacts the value of so many Hub condominiums, the sale of the Millennium Tower Grand Penthouse is not only the city’s most expensive sale in 2016, but also the most important Hub condominium sale of 2016.