The developer behind a 63-unit housing project in Portland has changed course, deciding to sell the units as condominiums rather than rent them as apartments.

Vincent Veroneau, president and chief executive officer of J.B. Brown & Sons, said the decision to redirect the project at High and York streets was made mostly because other apartment projects have absorbed some of the pent-up demand.

“We sort of felt the market-rate housing has been somewhat satisfied with other projects,” Veroneau said.

It’s the latest example of aborted plans to add rental housing units in Portland, and suggests the city’s rental construction boom may be slowing after an infusion of apartments aimed mostly at the high end of the market.

Portland leaders have been eager to add rental housing after a shortage of units led to rapid rises in rents and historically low vacancies that forced some people to leave the city. The average rent for a two-bedroom apartment in Portland shot up 40 percent between 2010 and 2015 to $1,560 a month, while renter incomes were declining at the same time, according to an analysis by the Portland Press Herald.

Rent prices have stabilized more recently, according to landlords, and recent construction in Portland and surrounding communities has made upscale apartments easier to find. However, rental housing remains in critically short supply for lower-income renters, according to affordable-housing advocates.

The new rental housing cited as competition by Veroneau include 132 units in Hiawatha at Longfellow Square, 53 units at 70 Anderson St. and 55 units at 117 Lofts on Preble Street. In some cases, the owners of those projects are offering incentives to persuade people to move in.

Those who had been added to a waiting list for apartments at the J.B. Brown & Sons building were informed of the change to condos in April. Veroneau said 35 people had contacted the company, with about half seeking rentals. Since then, nine of the condos had been reserved as of Friday.

The change from apartments to condos would not have affected the Planning Board’s review of the project at High and York streets, said Jeff Levine, the city’s planning and development director. The project was not subject to a relatively new city requirement that 10 percent of units be made affordable to middle-income people, so it did not have to comply with standards that are different for condos and apartments, he said.

The project, now called 25 High Street, was approved in December 2015 before the inclusionary ordinance, enacted in 2015, went into effect.

According to the project’s website, sale prices start at $269,000 for a 756-square-foot, one-bedroom unit with a city view, and top out at $579,900 for a 1,511-square-foot, three bedroom unit with a city view. A 1,286-square-foot, two-bedroom unit with a water view was priced at $549,000, and a 772-square-foot, one-bedroom unit was priced at $320,000.

Typically, condominium projects are more controversial than apartment buildings because existing residents are increasingly concerned that wealthy people from out of state are more inclined to purchase condominiums as second homes. The city also has been eager to add rental housing to the market because of rising rents and shortage of units.

Although planning records drafted by city staff and J.B. Brown consistently described the project as apartments, Veroneau said he always planned to convert them to condos at some point.

However, if the conversion was made after the units had been occupied, a city ordinance would have required Veroneau to pay $150 a unit, offer tenants the first right of refusal to purchase the units, and help pay relocation expenses for any low- to moderate-income residents who may have been living there.

And J.B. Brown isn’t the only developer rethinking an apartment project.

A&M Partners has decided not to move forward with the Westerlea View Lofts, a 54-unit apartment building at 75 Chestnut St. that was approved in December by the Planning Board. Instead, the entire project – one-third acre of land, planning approvals and engineering work – is being marketed for sale for $1.2 million, or $22,222 per unit, by CBRE|The Boulos Co.

The real estate flier states: “Approvals valuable in Portland market based on high barriers to entry posed by challenging Planning Board approval environment.”

It’s the second housing project in the Bayside neighborhood, which has long sought the addition of more housing, that has failed to move forward after receiving Planning Board approvals.

The so-called Midtown project by the Florida-based Federated Cos., which promised 445 apartments, has not broken ground, despite being approved on March 2, 2015. That approval, which is good for one year, has already received two extensions, the maximum allowed by city code, and is set to expire next March. Meanwhile, taxpayers continue to pay interest on federal loans committed to the project to build a parking garage.

A&M Partners President Lou Wood said he decided to try to sell the Westerlea View Lofts project because the market is strong in Portland and the timing was not good for him personally to move forward with the project. “It’s a good time to sell things,” he said.

Wood said he would have been able to build apartments that were more affordable than other market-rate or luxury apartments because he already owns the land. If someone else buys the project that might not be the case, because that person would have to purchase the land, he said.

“I’d still like to build it,” Wood said. “There is always going to be a market for (affordable apartments) in Portland, Maine.”

The moves come as a group of residents, called Fair Rent Portland, is collecting signatures to put a rent stabilization ordinance on the November ballot. Among other things, the proposed ordinance would limit rent increases for existing tenants in larger apartment buildings to no more than the rate of inflation, as measured by the Consumer Price Index for the Greater Portland region.

Veroneau said that effort was “not a significant” factor in his decision. But he and Wood said that, if adopted, the measure could make building rental housing less attractive to developers.

However, advocates have argued that similar ordinances on the books in West Hollywood, California, and Takoma Park, Maryland, have successfully controlled rents without stifling development.

Levine, the planning and development director, said he doesn’t read too much into the decisions of the developers. He believes the market is still strong for all types of housing projects in Portland, especially less expensive rentals.

“I’m not sensing the market is all set,” he said. “There’s still a demand for rental housing in Portland.”

Randy Billings can be contacted at 791-6346 or at:

rbillings@pressherald.com

Twitter: randybillings

Related Stories