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On the Hot Seat

Boston’s real estate enjoying a strong recovery

Pat Greenhouse/Globe Staff

Vincent J. Costantini

Founder, Roseview Group

Vincent J. Costantini has seen a lot of real estate cycles. As the founder of The Roseview Group, a real estate advisory and investment business in Boston, he has helped investors survive downturns and recalibrate their strategies in rising economies. He discussed the current state of the market with Globe reporter Casey Ross.

As an adviser, what’s more stressful: When people are facing distress or when they’re getting ready to risk their money on a new building project?

When people are trying to come to grips with major losses, it’s very difficult. We have clients who have done everything right, and the guy across the street went bankrupt, and it ends up hurting the person who’s been thoughtful and conservative. Trying to wrestle through that part of the cycle where people wake up to discover the market is being crushed is pretty stressful.

Where does the real estate market stand now in markets that were hardest hit?

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I was in Florida four weeks ago, and the news in the market was a 25-unit town house development north of West Palm Beach that had people sleeping on the sidewalks to get into the sales office in the morning. It sold in one day. So that’s Florida, where you thought, “Oh my God, it will never come back.”

Is the speed of the current transition from bust to boom surprising to you?

It’s always surprising. The market has materially improved all over the country. Maybe Boston and Washington and New York are still easier. But on a relative basis, it’s much better everywhere than it was 18 months ago.

Is this a unique point in time for Boston in terms of the amount of investment opportunity?

Boston is a focal point. It’s healthy and it’s on peoples’ radar as a good place to do business. There’s biomedical, there’s universities — all the things we know about. We never had the deep decline here. Most investors in the market say there’s much more competition now, it’s much harder to find opportunities in Boston. There’s way more capital flooding into town.

What does that mean for the city’s skyline over the next few years?

I think we’ve gotten to the point on the multifamily side where it’s getting dangerous in my opinion. There’s too much building, too fast. Boston is a very popular place for people to live — both for empty nesters as well as young people. But construction prices are rising. Labor prices are rising. Steel prices are rising. If you take an average apartment, where you have to get $3,000 a month or $3,500 a month to make your number, how many people can afford $3,500 a month?

What about the office market. Rents are rising. Will we see more construction on that front?

For a lot of firms who thought it was cool to be outside the city, there is a trend to move back. I would say supply and demand is at a point where you can probably justify office construction at the right place. But it’s so difficult to get a building permitted in Boston. The real issue in our city is you could acquire a piece of land at a time of high demand, and by the time you get it permitted, you’ve missed the window.

Does city policy need to change to make development easier?

The system could benefit from being more transparent. Developers want the same thing as taxpayers [and] corporations want. They want clarity about the rules. They want to be able to plan for and understand the time it takes to go from Point A to Point B. But I also think Boston is a world-class city, and the growth over the last 10 years is pretty remarkable.

What happens to development if interest rates start to rise along with construction costs?

If interest rates rise — and they’re certainly not going to stay this low forever — you will shut down development in high-cost places, particularly in the multifamily sector. As interest rates rise, it creates more complexity on the financing side. It constrains what can be built.

Casey Ross can be reached at cross@globe.com.
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