IRR-Boston Mid-Year Viewpoint 2015 Local Market Report - Multifamily
At midyear 2015, the greater Boston area continues to be one of the country’s top rental markets. The multi-family sector, which led the recovery, continues to perform well and has been the hottest sector for the past several years. There is a tremendous amount of new product in the market and still many projects in the pipeline. To date occupancy levels remain strong and rental rates continue to increase. However, a slowing of rent increases and slight upward tick in vacancy is projected over the next several years as thousands of new units come to market.
Our research of actual rent levels and absorption figures for recently constructed multifamily properties reveals that most projects are leasing units at rental rates meeting or exceeding developer proformas and with absorption in line or faster than developer’s and property manager’s initial expectations.
The overall metro area vacancy rate is estimated to be just over 4.5% as of the current time, having ticked up slightly from the year-end 2014 vacancy rate of 4.3%. The Central City/Back Bay, Beacon Hill and West/Northwest suburban areas are slated for the most new units over the next 3 years.
It is noted that the addition of new units to the market has continued to be primarily in the Class A segment while there is a shortage of affordable housing. This is evidenced by a vacancy rate for Class A units in excess of 5.5% while the Class B/C vacancy rate is below 3%. It is important to note that many newly constructed properties are generally offering 1+ month of free rent during the initial lease up period. It should also be noted that the residential condominium market is now coming on strong. Upon completion of construction of Sepia and Twenty Two Liberty will be 100% pre-sold of their 83 and 118 condominiums units, respectively. Initial momentum at Millennium Tower indicates this project is also likely to be fully sold upon completion of construction
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.