Experts: Boston Multifamily Fundamentals Are For Real
Hot apartment markets boil down to one thing: strong fundamentals. And metro Boston's got 'em in '16. The projects that will spur growth are why we're excited to present our Boston Multifamily event at the Westin Boston Waterfront tomorrow. Click for your last chance to get a seat. Still need some enticing? Meet some of our speakers below.
Hamilton Co CEO Harold Brown, who will be featured in the keynote interview, is optimistic for now: "I anticipate strong fundamentals for the time being...But there are increasing signs of headwinds." Harold will receive a Bizzy award tomorrow, our recognition of real estate visionaries. (Not winning one yet puts Harold in the same category as Leonardo DiCaprio.)
Mount Vernon Co founder Bruce Percelay will be interviewing Harold. Bruce is a bit cautious about the fundamentals, telling us the "dynamics of the market are changing" as an increase in supply hurts landlord pricing power. Until the new product is absorbed, it's no longer a given that rents will automatically increase from year to year, he notes.
Gerding Edlen director Matt Edlen tells us job growth in biomedical, technology and financial services—including GE’s announcement at the start of 2016—will help lease up new product hitting the market.
New restaurant and retail corridors have provided lifestyle amenities to areas like the South End, Southie, Fort Point/Seaport, and Fenway, Matt adds, and that supports long-term growth in the multifamily sector. He does think rent growth will temper "as construction and land costs continue to increase and rents relative to wage earnings put stress on the consumer." Also, global factors will stress the debt and equity markets.
Prellwitz Chilinski Associates president David Chilinski points out that job growth in Massachusetts set records in 2015, so demand for middle-income housing will remain strong. Rent growth will leave young professionals with a choice: roommates or move further from Downtown. He feels smaller units on transit lines will still be in high demand. "Softness in the market will be in the luxury sector, as numerous projects open."
Peregrine Urban Initiative principal Bev Gallo agrees "the high-end markets appear to be taking a pause," but she doesn't see any real downward trends coming to the greater Boston housing market any time soon. Rents and occupancies keep going up, though the cost of production continues to skyrocket inside Route 128, especially Downtown Boston. She feels the biggest challenge facing middle-income housing is an inability to meet the significant demand.
Hunt Mortgage Group VP Hayley Suminski tells us limited available housing and a maxxed out in-place infrastructure system are two critical factors that need to be addressed. "Rents will continue growing at about 4% during 2016, which is a slight slowdown from the solid 5%-plus we saw in 2015. Vacancies will remain tight—below 3% in certain submarkets, like Brookline and Brighton, while others may tick up to just over 7%."