By David Ortiz

A condominium boom is about to explode in Providence, as developers are starting to exploit a profound gap in the local housing market.

Condos make perfect sense right now for many people seeking to buy homes in Providence, say many local real estate experts. The city's renaissance is continuing to attract single homebuyers, empty nesters and first-time buyers in a high-priced market. At the same time, available housing in the city is low. Research conducted last year shows a strong pent-up demand in the Providence market for condos and townhouses.

On the East Side in particular, developers seeking to replenish a dwindling housing inventory are already converting old houses with inefficient floor plans, bad plumbing and no parking into condominiums and townhouses. Many industry insiders predict a condo explosion will occur next in Downtown Providence and the Jewelry District, where abandoned factories are ripe for conversion into loft spaces.

Right now, there are 10 large condominium complexes on Providence's East Side and Downtown. But seven large condominium complexes, containing 780 units, are being planned or proposed for development in the next couple of years.

Developers planning condominiums and townhouses here have conducted extensive market research that shows a pent-up demand in the market for both high-end and entry-level priced condos.

"We found that condos are a very viable product in Providence, especially in the upper end of the price point range," said Craig Seymour, a vice president and principal at RKG, a real estate consulting firm based in Durham, N.H.

In the fall of 2001, RKG conducted market research focused on Downtown Providence and the East Side for Toll Brothers, Inc., a Pennsylvania-based developer that plans to build a $15 million, 94-unit luxury condominium complex in the Wayland Square neighborhood.

RKG analyzed census data and other proprietary sources, and conducted a Web-based survey of potential homebuyers. The firm found that there is a strong demographic of aging professionals on the East Side looking to sell their homes who want to stay in the city, and are willing to pay as much as $400,000 for a luxury condo.

"We found that condos are just right for empty nesters, aging baby boomers looking to sell their 5,000-square-foot house for $800,000 and trade down for a new condo with parking and maintenance," said Paul Commito, director of acquisition and development for Toll Brothers. "We're talking about empty-nesters out by Blackstone and other places on the East Side who would welcome this type of lifestyle and environment."

The Toll Brothers plan to build condominiums that will sell for $300,000 to $400,000. But RKG's research also pinpointed a huge demand for condos in the $100,000 to $200,000 range. Many young professionals drawn to Providence because of the city's increasing employment base would like to buy homes, said Seymour. But right now there is little available for a single person or a couple with a dual income. Instead, these people are going to Woonsocket, or Attleboro, said Seymour.

"These are generally single people or couples that don't have kids. They have the money to pay for a condo and want to build some equity in a very strong real estate market, that probably will perform well in their portfolio," said Seymour.

Condos are a wonderful alternative as a starter home for people looking to buy their first home here, according to T. Todd Brown, a real estate broker in North Kingstown. In an electronic newsletter that he publishes for the industry, Brown wrote recently that condominiums have held their value as an investment despite economic downturns and problems with some associations.

Using appreciation as a measure, condominiums in some areas have been as profitable an investment as single-family homes in the last five years, said Brown. In fact, condos have appreciated more in the last few years than when they first came on the scene in the late 1970s and early 1980s, said Brown.

But there is little land to build on for developers looking to build condos in Providence. As a result, condominium conversions probably will explode next in the jewelry district, where sprawling old manufacturing and industrial brick buildings can be easily converted into lofts.

"In my estimation, the Jewelry District is the next place where there will be residential development, because there are existing buildings which lend themselves to that genre," said Sharon Steele, president of the Rhode Island Association of Realtors and a member of the board of the Jewelry District Association. "There are all of these large brick buildings with high ceilings and beautiful Arkansas Pine floors, which were originally built to withstand heavy jewelry-making machinery."

Steele predicted that when quarterly statistics for the local real estate market are released next week, they will show condominium sales are brisk and rates of condo appreciation high, continuing the trend from the first quarter.

Published 7/22/2002