Multifamily development may be slowing nationwide, but construction activity is alive and well in Boston. More than 7,100 units were delivered last year, only slightly less than the cycle high of 7,480 apartments added in 2018. As of mid-January, the market had some 18,000 units under development, with most—nearly 80 percent—set to deliver by the close of 2021.
The vast majority of communities underway were aimed at Lifestyle renters in or near the city center, which could spell trouble for Boston’s upscale rent growth in the near term. Ever-present affordability concerns—rents in the metro were some 50 percent higher than the December national average of $1,462—also bring challenges, as renters shift toward suburban zones.
Despite headwinds, developers recognize the long-term potential for new, investment-grade multifamily assets in gateway markets. The table below utilizes Yardi Matrix data to highlight Boston’s top submarkets for development activity in terms of units under construction.
Brighton has been a hotbed of multifamily development activity for some time. Since 2012, developers have completed more than 1,500 units, upward of 26 percent of its inventory. In addition to new apartments, the area has also had its share of other projects, including the mixed-use revitalization of a former 15-acre industrial area at Boston Landing.
The largest project underway in Brighton is the 555-unit Overlook at St. Gabriel’s at 175 Washington St. The development, a joint venture between Blue Vista Capital Group, Peak Campus Cos. and Cabot, Cabot & Forbes, broke ground in late 2018, with delivery slated for spring 2021. Starwood Capital Group is providing $150.2 million in financing for the five-building community.
4. South Boston
Spanning Fort Point to Telegraph Hill, South Boston has a mix of the old and the new. The Seaport District has led the submarket’s growth, with nearly 1,800 units and 3 million square feet of office space added in the last decade alone. Rents were among the highest in the metro in December, averaging $3,442 per unit.
Crescent Heights’ 414-unit NEMA Boston in the Seaport District was the largest development underway. The project kicked off in mid-2017, backed by $157 million in construction debt from Ullico. In addition to the 22-story building’s residential component, the property will include hospitality and retail space upon delivery in the first quarter of 2021.
Although many signs point to a renter exodus from the urban core, work on five major projects in Boston’s downtown continues. These 1,358 units underway add up to more than one-quarter of completed inventory. Even as rents fell 8.4 percent to $3,259 year-over-year through December, developers seem confident that, even amid wider economic woes, central Boston’s importance will not diminish in the long run.
The Davis Cos.’ project at 112 Shawmut Ave. is downtown Boston’s largest multifamily development, set to add 536 apartments upon completion in early 2022. Construction began in mid-2019 and M&T Bank is financing the 13-story project with a $105 million loan. The property will include an affordable component of at least 139 units and the developer is targeting LEED Silver certification.
2. North End–Charlestown
The North End–Charlestown submarket faces many of the same challenges as downtown, with high—but falling—rents amid a spate of development activity. Rents dropped by 10.6 percent in the year ending in December, one of the highest declines in the market. At the same time, more than 1,400 units were underway in January, with one-third slated to deliver in the first half of 2021, likely to deflate rent growth even more.
Equity Residential’s replacement of a dated parking structure at 35 Lomasney Way with a 469-unit luxury community marks the submarket’s largest project under construction. The 44-story, $410 million tower began its ascent in late 2018 after the demolition of the 650-space Garden Garage, with delivery slated for the end of this year. The developer is targeting LEED Gold standards with the high-rise, which will include a 2,000-square-foot retail component in addition to an 870-stall underground parking garage.
1. East Boston–Chelsea
Covering a wide area from Jeffries Point to the city of Revere, the East Boston-Chelsea submarket was the most active in the market, with just shy of 1,500 units underway. Though only one property delivered in 2020, the area has long been a target for developers, with more than 4,000 apartments added over the past decade.
Fairfield Residential’s VERO, a 694-unit project in Chelsea, was the largest development in the submarket and in the metro as of December. Construction began in early 2019 and preleasing is set to begin in the first quarter, with completion anticipated later this year. The property, at 255 Vale St., will have two six-story buildings with ground-floor retail. Community amenities will include a fitness center, swimming pool and business center.