Boston Multifamily Report – Spring 2019
Considering the 8,250 units slated to come online in 2019, which would mark a new development cycle high, rent growth is expected to moderate slightly, to 2.7 percent for the year.
Boston rent evolution, click to enlarge
Boston’s multifamily market remains healthy, thanks to a strong concentration of high-paying jobs supported by a knowledge-based economy, household formation and a high barrier to homeownership.
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Professional and business services led employment growth in 2018, with the addition of 26,100 jobs, followed by education and health services (13,100) and construction (9,300). The metro’s highly skilled workforce, business-friendly environment and thriving tech scene are prompting companies to expand here. Wayfair, the online retailer of home goods based in the Back Bay, announced a third location in the city, with plans to create 3,300 jobs statewide while retaining 3,809 existing positions. In January, Facebook opened a 130,000-square-foot office in Kendall Square, where it plans to grow from some 200 to more than 600 employees. In February, Google signed a 15-year lease to occupy 362,000 square feet at Kendall Center in Cambridge, bringing its total footprint in Boston to 800,000 square feet.
Boston sales volume and number of properties sold, click to enlarge
More than $1.4 billion in assets traded in 2018, at an average per-unit price of $315,324, a cycle peak due to tight supply of multifamily investments, steering buyers toward older and smaller properties. Considering the 8,250 units slated to come online in 2019, which would mark a new development cycle high, we expect rent growth to moderate slightly, to 2.7 percent for the year.
