Boston's Multifamily Investment Sector Finds Stable Footing, But Policy Risk Looms

Greater Boston remains one of the most attractive markets for multifamily investment despite growing supply and slowing rent growth, but investors say they are prepared to put the brakes on new investment should a rent control ballot measure be enacted in November.

Marcus & Millichap anticipates a stable 2026 for multifamily investment, despite a sizable supply of multifamily housing set to deliver in the near term. Those deliveries will be offset by continued red-hot demand for housing and an anticipated falloff of new construction projects, Managing Director Thomas Shihadeh said.

That is, if market conditions persist.

New rent control measures could reset the multifamily picture in Boston for many investors, he said. Analysts and investors are treating it as a very real possibility.

"When you look at comparable cities, it's the only one with rents this high that is not subject to any rent control," Shihadeh said.

Rent is expected to rise 2.2% this year in Boston, despite a slower pace of leasing than during previous years. Rents in Greater Boston are some of the highest nationwide, at $3,170 per month.

Shihadeh said he anticipates rent growth slowing in 2026 after some 8,000 new units were delivered in 2025.

Newly delivered supply “has led vacancy rates to grow, and we're not seeing the same kind of rent growth that we have been seeing over recent history," Shihadeh said.

Between 12,000 and 14,000 more units are expected to be delivered throughout metro Boston this year, Shihadeh said. Vacancy is expected to rise to 4.2%, the first time vacancies have risen since 2022 but still below the region's 20-year average.

Supply is set to fall off sharply in 2026 due to economic uncertainty and high interest rates. Construction starts for new units are down 36% from the previous year, Shihadeh said.

More residents are remaining renters as high home prices and mortgage rates deter many would-be homebuyers. This is creating a large number of longtime or permanent renters.

"The spread between the cost to own and the cost to rent within Boston is one of the widest within the country," he said.

Although the state lost more than 30,000 net residents to other states last year — a trend that has some officials concerned about the state's competitiveness — Shihadeh said the region is still desirable due to its quality of life compared to other regions.

Boston is expected to see a modest uptick in job growth of more than 6,000 positions in 2026, which would be the most annual jobs gained since 2023, according to the report. Big employers, including Hasbro and Lego, have planted flags in the city and are expected to create more demand as workers move into the area.

"It's still one of the most desired cities to live in nationwide," Shihadeh said.

While all of these factors point to a favorable market for investment, talk of rent control is prompting caution.

In November, housing advocate groups secured enough signatures to put a rent control initiative on the ballot. It would limit annual rent increases across the state to no more than 5% or in line with the consumer price index, whichever is lower.

The initiative has an exemption for owner-occupied buildings with four or fewer units and an exemption for new multifamily housing in the first 10 years after construction.

The ballot initiative has garnered massive pushback from the commercial real estate sector and even from state officials, including Gov. Maura Healey. Real estate professionals say the initiative will impact investment in the commonwealth, with some investors already threatening to exit the market.

Rent control opponents also say the initiative could disincentivize new construction. Taurus Investment Holdings CEO Peter Merrigan said at a Bisnow event last month that major multifamily developers in Greater Boston planned to pause development and exit the market if the measure passed.

The threat of the ballot measure passing is already clouding the investment picture, Shihadeh said.

"That's impacting investors' decisions to buy the properties and how to really value whether it makes sense to invest in improving them," he said.