Rent Growth Moderates; Demand Persists in Boston

By Bogdan Odagescu

Boston rent evolution, click to enlarge

Above-trend population gains and increasing job growth continue to make Boston one of the most stable multifamily markets in the U.S. Although rent gains have fallen to 2.3% year-over-year through June, demand remains healthy, supported by highly skilled workers, who are increasingly drawn to the metro’s reputation as a regional powerhouse and global innovation hub.

Anchored by education and health services and professional and business services, Boston’s diversified economy is adding both blue- and white-collar jobs. While developers bet on the city’s stable, long-term fundamentals, a handful of large, mixed-use projects move closer to breaking ground. Massachusetts Institute of Technology (MIT) is pushing for the rezoning of Kendall Square, which would deliver 1.7 million square feet of office space and 1,400 residential units in Cambridge. The 775-foot-tall Winthrop Square, the 1.2 million-square-foot, multi-building Tremont Crossing and the 677-foot-tall South Station Tower are also set to change the metro’s skyline.

Some $350 million in multifamily assets traded in the first half of 2017, marking a slowdown after two years of intense market activity, as more investors focus on value-add plans. With 9,400 units expected to come online by year-end and rents contracting in some of the priciest submarkets, Yardi Matrix forecasts 1.1 percent rent growth for Boston in 2017.

Read the full Yardi Matrix report.