Construction Surge Tempers Rent Growth in Boston
Bolstered by population and employment gains, multifamily demand continues to rise across the metro, spurring developer optimism and attracting new investors.
Despite the metro’s traffic and accessibility issues, demand is on the rise, as both residents and companies are swarming to the city. This is putting further pressure on rents, already among the country’s highest. Rental rates rose 2.1 percent to $2,142 in the year ending in March, a growth rate surpassed only by New York, San Jose and San Francisco. And with developers heavily focusing on upscale properties, affordability issues continue to thicken.
Professional and business services led growth with the addition of 15,000 positions, more than double the number of jobs generated by the former top-performing education and health services sector. Intense development activity across the metro has also boosted the construction sector, which registered the highest uptick, at 5.6 percent year-over-year. Notable developments underway include MIT’s Volpe Center project, consisting of 1.7 million square feet of commercial space and about 1,400 housing units, as well as the 4.5-acre Fenway Center project, in the works for nearly 20 years, which upon completion is set to deliver roughly 650 housing units and more than 200,000 square feet of commercial space.
Some $300 million in multifamily assets traded in the first quarter, while the development pipeline remains high, with almost 15,000 units under construction. Yardi Matrix expects Boston rents to rise 2.6 percent in 2018.
Read the full Yardi Matrix report.