First it was going to be a 502-room hotel catering to businesspeople and extended-stay travelers.
Plan B was a 22-story luxury apartment complex for on-the-go urban professionals, with a sprinkling of microapartments and ground-floor innovation space.
Now, the latest vision for 399 Congress St., one of the last vacant development parcels in Boston’s Seaport District: high-end condos with half the units priced over $1 million.
“We were at the tail end of the apartment boom down here, so the capital markets are a little bit skittish about more apartments right away,” developer Denis Dowdle said at a neighborhood meeting last week. “At the same time, the condo markets are coming back.”
The vacant 1.3-acre parcel has been a laboratory of changing real estate strategies since Dowdle’s Madison Properties acquired it in 2006.
Dowdle said if he had his way, he’d build the entire $220-million complex as condos and increase the size of the units. But lenders may require a mix of rentals and ownership units to balance the long-term market risk.
“Buildings of that size sometimes take a couple of cycles to absorb that many units in Boston,” he said.
Meanwhile, developers have moved forward with plans for close to 2,000 luxury high-rise units in the surrounding neighborhood, prompting persistent talk of a looming market glut.
Dowdle is seeking Boston Redevelopment Authority approval to build either apartments, condos or a combination of the two. He hopes to break ground in late 2015, with units ready for occupancy in late 2017.
By then, the downtown multifamily market may look significantly than it does now, with developers asking $3,000 to $8,000 per month in rents at new luxury high-rises such as the 100 Pier 4 Apartments, which will open March 15 at 142 Northern Ave.

Waterside Place Now
80 Percent Leased
For the past several years, luxury rentals have been the predominant development option in downtown as the condo market recovered slowly from the housing downturn and lenders placed stricter criteria on mortgage qualifications.
Waterside Place, a 20-story tower containing 236 apartments that opened in February at 505 Congress St., is now 82 percent leased, said developer John E. Drew of Boston-based Drew Cos. Average rents are $450 per square foot, which translates to $2,700 for a 600-square-foot, one-bedroom unit. Incentives include one month’s free rent.
Drew Cos. is now preparing to move forward with designs of the second phase, a similarly-sized building on an adjacent lot that is currently used for parking. Consistent with the original strategy, the second phase will also be rentals, Drew said.
100 Pier 4, a 21-story tower named after the landmark restaurant that previously occupied the Northern Avenue site, is keeping the rent bar high as it prepares to open March 15. Studios will start at $2,500 per month, with one-bedrooms renting for $3,341 and the largest three-bedroom units leasing for $8,600. So far 24 of the units are pre-leased, according to marketing associate Alexandria Cornelio.
But developers are trying to gauge the appetite for high-end condos in coming years. They’re encouraged by such recent projects as the Sepia At Ink Block in South End, where National Development was fetching $1,000 per square foot for units pre-sold last summer. In the Seaport, they are focusing on Boston-based Fallon Cos.’ Twenty-Two Liberty condo complex on Fan Pier, where developer Joseph Fallon has said he expects to sell the 118 units for approximately $1,500 per square foot.
“As Joe Fallon has proved, the condo market down here is undersupplied and strong. I do think you’re going to see more projects move back to the condo market again,” Drew said.

‘Sausage Parcel’ Slow To Heat Up
Dowdle’s development site, an oblong-shaped property known as the “sausage parcel” on the outskirts of the Seaport District, would appear to have severe restrictions on development. Sitting next to the angular spires of a ventilation structure for the Ted Williams Tunnel, the property is hemmed in on all sides by surface roads and highway ramps built during the Big Dig.
Dowdle acquired the property from NStar in 2006 and obtained BRA approval for a 502-room hotel, a project designed to feed off its proximity to the Boston Convention & Exhibition Center and its millions of annual visitors. But Dowdle was unable to obtain financing in the wake of the recession and its downturn in business travel.
In 2011, he proposed The Residences at Congress Street, a 22-story apartment complex with 414 units. During its review, the BRA asked Dowdle to set aside 20 percent of the units as affordable – compared with the city’s typical standard of 15 percent. Another 60 “innovation units” were classified as “micro-housing,” ranging from 330 to 400 square feet, with rents capped at $1,700 for seven years. And the BRA sought control over choosing tenants for 3,000 square feet of “innovation retail space” on the ground floor.
The current proposal calls for the standard 15 percent affordable units. Dowdle said he has not decided whether to locate them on-site or submit a payment to support affordable housing elsewhere, which is an option under BRA policy.
Even under the most optimistic timeline, the development will hit the market during a different market cycle once the Seaport has absorbed such competitors as 100 Pier 4, Skanska USA’s Watermark Seaport and around the same time as Berkshire Group’s VIA and The Benjamin at Seaport Square.
“Lenders are saying, ‘Let’s just see how these get absorbed. We like apartments, we like Boston, but is it the right time?’” Dowdle said.