'We Dodged A Bullet': Mass. Multifamily Market Starts To Thaw After Rent Control Ruling

In the week since Massachusetts' highest court blocked a restrictive rent control policy from appearing on voters' ballots, the commercial real estate sector is already back to work.

The Supreme Judicial Court's ruling that the ballot measure was unconstitutional was a win for landlords, who had been fighting tooth and nail to shoot down the measure.

The possibility of the rent control ballot measure passing had essentially paused investment and development across the state, industry experts said. Now that the initiative has been blocked, multifamily brokers say their phones are busier and investor confidence is rising, with the caveat that the fight is on hold, not over.

"It's a positive outcome for the investment community," Berkadia Managing Director Adam Dunn said. "However, everyone's proceeding with cautious optimism, given the ruling."

Though it's early days, Dunn said he has definitely noticed an increase in conversations around potential deals, as well as an uptick in contracts being inked and processes that would lead to more closings, including confidentiality agreements signed.

"It is picking up," Dunn said. "It's been a slow start to the summer, but I expect deal flow will pick up, and we'll see more transaction activity and deals start to close in the second half of the year."

The rent control measure would have capped rent increases across the state to 5% or the consumer price index, whichever was lower. It included exemptions for owner-occupied properties, buildings with four or fewer units and those less than 10 years old. The proposal got enough signatures last November to qualify for a statewide ballot initiative before being tossed.

That led to an immediate chilling effect in the multifamily sales market.

Before the initiative, the sector recorded $4.6B in sales in a 12-month period ending in June 2025, according to the Matthews Q2 2025 report.

Multifamily sales volume in Massachusetts dropped by 40% in Q1 2026 compared to the same quarter in 2025, according to multiple data sources that Colliers analyzed for this story. Preliminary data for the second quarter indicated "further deceleration in sales activity," Colliers Research Director Jeff Myers said in an email.

Conversely, individual multifamily sales increased 3% nationwide to $27.6B in Q1 2026, according to MSCI.

Before the ruling, many real estate professionals argued that development and investment activity under such a restrictive rent control cap would make it nearly impossible for investors to underwrite deals.

Industry leaders, including NAIOP and the Greater Boston Real Estate Board, put up hundreds of thousands of dollars to fight against the measure, arguing that it could halt the development of housing and actually make the state less affordable for renters. The group also commissioned a Tufts University Center for State Policy Analysis study, which projected that the proposal could eliminate $300B in state property values.

"People just straight up redlined Massachusetts," Boston Multifamily principal Kendin Carr said about multifamily investors' reactions to the rent control proposal. "'We're not going to invest in this state until this is resolved, or if we do, we have to get a deep discount.'"

Carr said some investors who had taken Boston completely out of their investment plans following the initiative are slowly coming back into the market.

At this stage, they still have a lot of questions. Many are concerned that rent control will come back with a vengeance.

Walker & Dunlop Director of Investment Sales Maggie McFarland said the activity she has seen so far has been mainly from short-term sellers and owners who want to act now before any further rent control plans come down the pipeline.

"For those clients, the conversation is less about what could happen in two years or at the next election cycle and more about where the market is today and the strategy around a near-term sale, because that's sort of where their focus was," McFarland said.

The SJC tossed the rent control measure because it exempted religious properties, which was ruled unconstitutional because of a state law barring religious issues from going before voters. Rent control advocates said the exemption is "easily fixable and doesn't affect the substance of our proposal."

The group has hinted at bringing forth a new proposal as soon as 2028.

"We dodged a bullet," McFarland said. "But this could absolutely come back and likely will."

Weeks before the SJC ruling, the rent control group, developers and housing advocates were trying to find a middle ground.

Large developers and real estate groups, including WinnCos., The HYM Investment Group, The Builders Coalition and Lupoli Cos. agreed to an own compromise with Homes for All Massachusetts. Developer lobbying group NAIOP was also willing to come to the table.

The compromise would have given cities and towns the option to enact rent caps instead of imposing them statewide. The proposal would have also capped rent increases at the CPI plus 5%, with a cap of 10%.

The Builder Coalition Executive Director Dave Madan, who represents minority developers and investors across the state, said the ballot measure had been a wake-up call for the industry, with leaders now looking for permanent solutions to address housing affordability.

"Don't be surprised if there's some momentum into the next legislative session to try to actually tackle this question and all of the others around how Massachusetts can be really smart about solving housing affordability and getting to production," Madan said.

For investors and developers, the compromise proposal was viewed as a tolerable option if rent control were to move forward, as it provides more certainty in the underwriting process compared to the original proposal.

"You can't underwrite what was proposed initially, but the compromises that were thrown out there are defensible and underwriteable," Dunn said.