Simon Property Group, best known for its retail developments, has put construction of a 52-story Boston luxury tower on hold citing an oversupply of such units and high construction costs, the Boston Herald reported.
The Copley Place tower was to be built next to the Copley Place mall, which Simon is currently renovating. The high-rise, part of a $500 million mall expansion project, would have increased the area's retail and dining space by approximately 45,000 square feet and added 542 residential units — 121 for sale and 421 for rent.
- Boston Planning and Development Agency Director Brian Golden said the city added 50,000 residents in the past six years, and, of those, the number of wealthy residents should be enough to support the project.
Onlookers have said this could be the beginning of the end for Boston's luxury residential market, which has several high-rises in various stages of completion.
A similar trend is occurring in Miami, where developers have put luxury developments on hold as high inventory drives sales prices down. Condo developer Related Group stalled a 298-unit development when only 15% of the units drew buyers during the pre-sales period. Construction on the Auberge Residences & Spa Miami was set to begin in 2017, but Related executive Carlos Rosso told The Miami Herald that taking a break "might be good for all of us."
The focus on luxury construction has led to a dearth of lower-priced units around the country, driving up rents for those who can least afford it. The current environment of low homeownership rates has created a boon for the rental market, but developers are looking to luxury rental properties for higher margins. In California, for example, overall rents have increased 7% while rates for the bottom one-third of the rental market have risen 33%.