The Boston-area multifamily market continues to attract strong investment as out-of-state backers pour hundreds of millions into the state.

Multifamily transaction activity in the Boston area for the 12 months ending June 30 was 33% higher than the prior year, according to Marcus & Millichap's second-quarter multifamily report. Sales to in-state investors rose by 50%, while sales to out-of-state investors nearly doubled.

Marcus & Millichap Regional Manager Tom Shihadeh said he thinks out-of-town investors have been drawn to the Boston area in part because it doesn't have the types of rent control policies of other East Coast cities like New York and D.C.

"I think people are viewing Boston as this major market with the same supply constraints as other cities that are subject to rent regulation," he said. "They feel like it's a good opportunity for them to get in before the next rent cycle."

The price per unit of Boston-area apartment sales over the last year averaged $325K, according to Marcus & Millichap. Effective rents in the area reached $3,080, a 2.8% year-over-year increase.

Shihadeh said it is somewhat surprising to see overall multifamily transaction volume rising given the relatively modest rent growth and macroeconomic volatility.

"There's no broader market fundamental that would aid multifamily investing — yet more of it's happening," Shihadeh said.

Last month alone, several Boston-area sales closed for more than $100M, including TA Realty's acquisition of a 230-unit apartment building in Revere for $122M, The Hamilton Co.'s purchase of The Hill Estates in Belmont for $175M, and Greystar's acquisition of a 295-unit apartment building in Malden for $112.5M.

Boston is also a favorable market for investors because there are more high-income-earning renters due to the state's strong education and healthcare economies. Shihadeh said part of the demand is coming from millennials moving out to the suburbs to start families, and instead of buying homes, they continue to rent, but at nicer, larger apartment complexes.

"People will be moving out to the suburbs, and I think that really benefits the bigger residential complexes with big amenities space," Shihadeh said. "They're catering towards the young family because they think a lot of the rental pool just can't make the down payment and monthly mortgage."

Similar investment is happening in more urban areas of the state, like German insurance company Munich Re's January acquisition of a 200-unit apartment building near Fenway Park from Samuels & Associates for $145M.

Shihadeh attributed the interest in Boston proper to its lack of rent control.

In markets like New York City that have rent-stabilized apartments, owners have faced a surge in distress from an environment that has made it difficult to operate and own rent-capped properties.

In 2023, Boston and other large Massachusetts cities pushed to enact rent control, a move that requires state approval. Mayor Michelle Wu pushed a rent control policy that passed the city council in March 2023, but the plan died on Beacon Hill.