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Reprinted from The Salem News, May 24, 2005

New Development Captivates Market

By Tom Dalton
Staff writer
SALEM The Residences at Museum Place, the city's newest downtown condominium development, held an open house last night to celebrate the conversion of the former police station on Central Street into high-end housing.

There's only one catch the work isn't done.

But the construction delay of a few weeks appears to be the only bad news for a project that, by all accounts, has been a success. Interested buyers were knocking on the old door of the 1913 police station, cellblock and courthouse long before the new door ever opened.

"We sold out during construction," said Bill Luster, a former Salem city planner who is one of the developers.

Luster said this project "just took off." It went so fast, he said, they didn't have to build a model unit to push sales. Purchase and sale agreements have been signed for all 14 condos at prices ranging from $350,000 to $500,000, he said. Tenants will start moving in next month.

That's a hopeful sign in a city where 2005 is the year downtown condo developers will find out if their multimillion-dollar gambles have paid off. Are there people out there willing to spend $500,000 to live in a former laundry building in downtown Salem? Four new projects with nearly 100 condos hope to sell out this year.

The answer: So far, so good.

The news is also encouraging just down the road at The Distillery, which, in a former life, was the Bleachers nightclub. Four new condo owners are already living in the historic brick building at the corner of Washington and Front streets. The developers, the Pabich family, say they have accepted offers on four other condos, which means eight of 10 units are gone. The prices here range from the low $300,000s for a one-bedroom condo to $580,000 for two bedrooms, a study and three bathrooms.

Derby Lofts the old Salem Laundry on Derby and Lafayette streets has moved slowly, largely due to construction delays. The developer, RCG of Somerville, is adding three stories to an existing structure. But several buyers have signed agreements in the past few weeks, according to Julia Anna Tache, a local real estate agent. Mostly local buyers The buyers for this project 20 so far tell another part of the condo story in Salem. Most of them are from the North Shore. "We're getting more people from out of town in general, who live north of Salem," said Alex Steinbergh, a principal at RCG. That demographic contrasts with two projects the company is doing in Lynn, which are drawing from Boston and Cambridge and other Greater Boston communities near the commuter rail line.

The Salem Waterfront Hotel & Suites, the new hotel on Pickering Wharf, is breaking new ground in the city. It has 16 condos on top of a hotel something that's been done in Boston and other big cities, but not here. Condo buyers will get hotel amenities a swimming pool and exercise room and some extras for a price, such as preferred docking at Pickering Wharf, room service and full-service housekeeping. With the hotel rushing to open by last Halloween, condo construction took a back seat. But marketing is going full steam now, according to a real estate agent representing the developers, the Rockett family of Marblehead. "The activity level has picked up considerably, and part of it can be attributed to the number of people coming back from Florida or southern parts who probably split time between the two climates," said Bill Willis of Coldwell Banker in Marblehead. This project, with condo prices soaring to a jaw-dropping $839,000, started by casting a wide net, advertising in Boston and beyond. The owners have come to realize, however, that the best business is closer to home. "Our market really lies within a 15-mile radius," Willis said. Because they have docking space, they also are targeting boaters. They recently did a mailing to boat owners on waiting lists for mooring space at local harbors. "It has generated several showings," Willis said.

At every project, the big story is parking. Derby Lofts, which has no parking on site, has come up with an interesting alternative. Condo owners will be able to drive through an old laundry truck entrance into the interior of the building, park their car, drop off packages with the concierge and then either drive to South Harbor Garage two blocks away or have a valet take the car over. The developer also is selling parking spaces behind a Lafayette Street building it bought just down the street.

There is an interesting point of comparison between The Residences at Museum Place and The Distillery, which are about a football field apart. One has parking and the other doesn't, and both are selling. The police station conversion (Museum Place), which provides two spaces per condo, sold out quickly and almost entirely to empty nesters from the suburbs. Asked to explain his project's success and owner demographic, Luster said: "I think there are three reasons parking, parking and parking." He was, of course, jesting but only half-jesting. Luster also credits the character of the building and its location in the heart of the downtown near the Peabody Essex Museum.

The Distillery, by contrast, has no parking. Condo owners will either buy passes to a city garage or make other arrangements. This project, maybe as a result, moved a little more slowly, and prices were lowered on a few condos in order to sell. But with the spring market at full swing, "things have really picked up," Diane Pabich said. The Pabiches said they never worried about the lack of parking because of the success of their first project, Town House Square, right next to City Hall. That sold out and reputedly helped trigger the condo boom in the downtown.

With all these projects done or near completion, there are others waiting in the wings. One of the most intriguing is the proposed conversion of the Crombie Street homeless shelter into moderately priced housing $200,000 to $300,000 for working artists. The buzz it has created appears to signal that the boom is not yet bust. "The people are already coming," said Mark Meche, one of the principals. "We have a list of about 10 people who want a unit, and most are artists." He hopes to start construction this summer.

See related article: Luxury Condo Buyers in Salem, MA

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