Boston Braces for More Luxury Apartments
A historic number of new apartments will be hitting the regional market this year delivering swankier finishes and more amenities as developers vie for the pool of eager renters. Find out what's hot at Bisnow's Boston Multifamily event at the Sheraton Boston, Jan. 15, starting 7:30am.
Erland Construction expects 2015 to be its best year ever thanks to the booming multifamily market. Panelist and Erland residential group VP Jeff Ellowitz tells us he expects to have 1,000 suburban Massachusetts apartments under construction this year, double the previous high in '08. Developers, many of whom shelved projects during the recession, are taking just six months rather than 18 to get into the ground. They’re also moving farther from Boston to I-495 and beyond.
Erland is working on Northland Investment’s 269-unit Merc at Moody & Main in Waltham (it's completed the wooden frame on the first of three buildings and is setting the steel for the underground garage). Jeff expects to break ground soon in Burlington on Nordblom’s 180-apartment project at Northwest Park and 287 units in Malden for Roseland Property Co, after completing 371 units for them at Overlook Ridge last year. Construction costs are rising moderately, not excessively; Erland’s labor and material costs on wood frame product outside of Boston have been fairly steady since rising from recession lows.
Cabot Cabot & Forbes CEO Jay Doherty is mining the Red Line for new development sites. He prefers to approach property owners who aren’t on the market but may not need all the land they have, or be able to relocate or use just part of the site for their business. He likes the towns from Cambridge to Quincy as long as sites have access to public transit. How long will this multifamily boom last? It’s very tough to predict. Before the worst crash in his career—’89—the overall real estate market in Boston was great in April and fell apart by year-end.
In September, CC&F and Boston Andes broke ground on 180 units in Quincy (above) near the Quincy Adams T-stop; the first major development to break ground on the South Shore since the recovery started, he tells us. Also last fall, CC&F delivered for O'Connor Capital Partners the 428-apartment Atmark in the Alewife neighborhood of Cambridge, also near a T-stop. It’s already 60% leased. CC&F is also developing 334 apartments in Newton.
So many of the 7,700 apartments being developed in the region are luxury that developers are differentiating themselves by featuring higher-quality finishes: rooftop pools, outdoor fireplaces and lots of original art, says panelist and Bozzuto Management Co president Julie Smith. They’ve permanently raised the bar for Boston apartment amenities to condo level, she tells us. With more new product coming to market than the city has seen for decades, it’s likely that the strong rent rises of recent years will start moderating but remain solid.
Check out the swanky lobby of the 381-unit Kensington downtown, says Julie, whose company handles leasing along with 14 other area projects; six in lease-up. Despite rents averaging nearly $5/SF/month, renters are snapping up apartments. The Kensington took 14 months to stabilize at 95% occupied, Julie tells us. Waterside Place in the Seaport District is 80% occupied since opening last spring. The Mews in Watertown has leased 90% of its apartments since the summer, she tells us.
In a cycle delivering mostly luxury residences, The Hamilton Co, the region’s largest independent multifamily landlord, is developing four new projects with a total of 234 moderately priced apartments in downtown, Allston and Brighton, panelist and CEO Harold Brown tells us. The monthly rent for a two-bedroom will average $2,725, compared to at least $4,500 for luxury product. At Massachusetts Avenue and Boylston Street, Hamilton has a 50-unit building with one- and two-bedroom apartments slated for spring occupancy. It’s the only property being built by one of the Hamilton Co charitable foundations. Profits will flow to the local community.
To further Mayor Walsh’s plan to develop 53,000 more units of workforce housing by 2030, the city Department of Neighborhood Development recently started to offer city-owned sites to developers, director of operations Devin Quirk tells us. Most of the land is in Roxbury, Mattapan, Hyde Park and Dorchester. In the past two weeks, it has issued RFPs for two sites where 200 units could be built, and developers are responding with proposals. Along with low cost land, the city wants to create some innovative tax incentives to spur activity, Devin says. To get the details and ask questions, register for the Boston Multifamily event at the Sheraton Boston, Jan. 15, 7:30am.