Gentrifying rather than declining central cities, Boston and Cambridge have the most prestigious rental addresses in the metropolitan area. The most expensive suburbs are located inland, west of the cities, while communities along the coast to the north and south are less expensive. New apartment construction is now widely distributed throughout the metro area, in cities and suburbs alike.
- The 22,433-unit Central City/Back Bay/Beacon Hill submarket has a second quarter 2012 vacancy rate of 3.1% and an average asking rent of $2,798 per month, the highest among nine submarkets according to Reis.
- The vacancy rate fell 10 basis points during the quarter and is down 50 from a year earlier. The average asking rent increased 0.7% during the quarter as the average effective rent rose 0.9% to $2,675 per month. The year-over-year gains were 4.2% and 4.7%, respectively, the most among the submarkets.
- Reis predicts just 48 units will complete construction in 2012 as the vacancy rate falls to 2.7%, but 2,852 are expected to complete during the 2012 to 2016 period as a whole. The vacancy rate is expected to rise toward 5.0% as new supply completes.
- “Roughly, 5,000 apartments are proposed for the Central City/Back Bay/Beacon Hill submarket, with projects totaling 1,500 units expected to break ground over the next few years,” according to Marcus & Millichap.
- “In South Boston and Somerville rents rose 20.0% to $2,665 and $2,371, respectively,” according to the Boston Business Journal. “In the Back Bay and the North End rents increased 15.0% to $3,063 and $2,685.”
- “Joshua Golden, owner of Luxury Residential Group LLC, said huge demand from high-income workers is driving rents in full-service buildings downtown,” according to this source. “He said a three-bedroom unit at the Ritz Carlton on Boston Common that rented for $6,700 a month last year rose to a whopping $8,200 this year, a 22.0% increase.”
- In the 13,914-unit Boston City submarket Reis reports a vacancy rate of 3.0%, second lowest among the submarkets, and an average asking rent of $1,595 per month.
- The vacancy rate fell 10 basis points in the second quarter and is down 120 basis points year-over-year. The average asking rent increased 1.0% during the quarter with the average effective rent up 1.2% to $1,526 per month. The year-over-year increases are 2.2% and 2.9%, respectively.
- The 48-unit Ridgecrest Village Expansion completed construction in July, leaving 351 units under construction. The 95-unit The Hodge Boiler Works is expected to start construction in September.
- “Multiple apartment projects have been planned for the South Boston Waterfront, including the most recent Watermark Seaport Tower,” according to Marcus & Millichap. “The 300-unit Class A complex is part of the Seaport Square development and could beak ground by the end of the year. Once complete, Boston City’s inventory will expand by 2.9%.”
- “Another groundbreaking in Boston’ Seaport District will take on place on Thursday as Gerding Edlen starts construction on the $150 million Boston Wharf Tower,” according to the Boston Business Journal. “In 2010, the Boston Redevelopment Authority approved plans for the 21-story apartment building, the tallest in the Fort Point neighborhood, with 184 units at 319 A St. Rear. Originally, the project was to be completed by the Archon Group and Goldman Properties. Gerding Edlen, a Portland, Ore.-based real estate company, signed an agreement to buy the permitted project last year.”
- For-sale housing is booming in central locations according to WBUR. “Crowded open houses. Multiple offers. Selling above the asking price. It may sound like 2004, but we’re talking 2012. Home sales in Jamaica Plain are coming back to life, and it could be a bellwether for the housing market in the rest of the state.”
- “Boston’s condominium market soared in the first five months of the year, rising 22.0% compared to a year ago, fueled by a frenzy of sales in Jamaica Plain, South Boston, and the downtown neighborhoods,” according to the Business Journal citing The Warren Group.
- For the 17,854-unit Brookline/Brighton/Newton submarket, Reis reports a second quarter vacancy rate of 2.7%, still the lowest among the submarkets, and an average asking rent of $1,964 per month.
- The vacancy rate rose 40 basis points during the second quarter but remains down 30 from a year earlier. The average asking rent increased 1.1% during the quarter, and the average effective rent rose 1.2% to $1,879 per month. The year-over-year gains are 3.1% and 3.7%, respectively.
- The 100-unit Element completed construction in Alston in July, but new supply is rare in this affluent mostly suburban submarket. Just 157 more units are expected to be added through 2016.
- The 28,851-unit Cambridge/Watertown/Waltham submarket has a vacancy rate of 3.6%, and an average asking rent of $2,268 per month, second highest metrowide according to Reis.
- The vacancy rate was unchanged during second quarter but is down 70 basis points from a year earlier. The average asking rent rose 1.0% during the quarter, while the average effective rent was up 1.2% to $2,200 per month. The year-over-year gains are 3.6% and 4.2%, respectively.
North Shore/Mystic River North-Route 128
- The 32,275-unit North Shore/Merrimack River Valley submarket has a second quarter vacancy rate of 4.3%, the highest metrowide, and an average asking rent of $1,484 per month, the second lowest according to Reis.
- The vacancy rate fell 30 basis points in the second quarter and is down 80 from a year earlier. The average asking rent increased 1.0% during the quarter, and the average effective rent rose 1.3% to $1,416 per month. Rents are up 1.4% asking and 1.3% effective from a year earlier.
- Reis predicts 3,250 new apartments will complete construction in this submarket from 2012 to 2016, the highest submarket total, though little of this is currently under construction. The 38-unit Burnham Apartments completed construction in Beverly in June.
- For the 26,398-unit Mystic River North/Route 128 submarket, Reis records a vacancy rate of 3.7%, and an average asking rent of $1,507 per month.
- Rents reversed course after two quarters of decrease, as the average asking rent rose 0.7% and the average effective rent increased 0.9% to $1,441 per month. The year-over-year gains are small at 0.1% and 0.7%, respectively. The vacancy rate is down 30 basis points for second quarter and 60 year-over-year.
- This submarket is expected to see over 2,050 units of new supply through 2016 according to Reis, but just 99 this year.
South Shore/Southeast Suburban
- The 23,152-unit South Shore/Route 128 South submarket has a vacancy rate of 4.1%, and an average asking rent of $1,531 per month, Reis reports.
- The 220-unit Avalon Cohasset completed construction in Cohasset in June, but the vacancy rate was unchanged as net absorption matched the new supply. The average asking rent increased 1.5% and the average effective rent rose 1.7% during the quarter, the latter to $1,453 per month. The year-over-year gains are small at 0.9% and 1.5%, respectively.
- In the 14,557-unit South/Southeastern Suburban Boston submarket, the vacancy rate is 3.9%, and the average asking rent is $1,275 per month—still the lowest metrowide.
- The vacancy rate fell 40 basis points from the prior quarter, while the average asking rent rose 1.5% and the average effective rent increased 1.8% to $1,207 per month. The vacancy rate is down 100 basis points from a year earlier, with the asking and effective averages up 2.7% and 3.3%, respectively.
- “Developers are transforming areas near major transit stations into densely packed, master-planned communities,” according to Marcus & Millichap. “The redevelopment of the South Weymouth Naval Air Station, known as Southfield, is one example of this trend. The first phase of the mixed-use project in Norfolk County was recently completed and added 225 apartments, townhomes and top-notch amenities to the area.”
- For the 19,045-unit West/Northwest Suburbs submarket, Reis reports a second quarter vacancy rate of 3.9%, and an average asking rent of $1,542 per month.
- The vacancy rate was unchanged during the quarter, but is down 130 basis points from a year earlier. The average asking rent increased 1.4% during the quarter, with the average effective rent rising 1.5% to $1,448 per month. Prior weakness limits the year-over-year gains to 2.3% and 3.0%, respectively.
- The 129-unit (110 market rate) Abbot Mill is under construction in Westford is now expected to complete in October 2012. Fewer than 1,000 units are expected to be added here from 2012 to 2016.
- “Discount retailer TJX recently received tax incentives to expand operations in Boston to fulfill its global growth strategy,” according to Marcus & Millichap. “The company bought the former Fidelity Investment’s building in Marlborough, and will relocate its headquarters to the complex by 2013, while also adding 225 workers at their site in Framingham. As a result, demand for Class A rentals will pick up in both the areas.”
- MetroWest “experienced encouraging year-over-year growth in home sales in March,” according to the Metrowest Daily News. “A closer look at the data for Ashland, Framingham, Holliston, Hopkinton, Natick, Sherborn, Southborough, Sudbury, Wayland, and Westborough shows these communities experienced an 11.5% increase in home sales in March 2012 when compared to March 2011. The average median price also remained relatively flat, down just 3.68%. Although this area did not outpace the 0.5% median price increase experienced on the state level, there were several communities which fared much better.”