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Boston Area Multi-Family Market Report for Q2 2020

 

 

 

Overview

The Boston Multifamily Market has struggled during the coronavirus pandemic, but vacancies have compressed so far in 2021, following a roughly 300 basis point expansion last year. Signs of pent-up demand emerged, as net absorption topped 2,000 units and roughly doubled supply additions. Vacancies are still near a record high, however, and exceed 10% in 4 & 5 Star inventory.


Boston still faces significant supply-side pressure, and the roughly 14,000 units under construction will continue to strain fundamentals. The supply pipeline equates to about 5.9% of the existing inventory, and Boston faces the most supply-side pressure out of any market in the country outside of the Sun Belt. Infill areas like Somerville/Charlestown, East Boston/Chelsea, Quincy/Milton/Randolph, Route 1 North, and Allston/Brighton have joined the Seaport, Cambridge, and Downtown as construction hot spots. Relatively few projects are underway in the outer suburbs, where demand has soared during the pandemic.


Asking rents declined by about 5% in 2020, ranking among the worst performances of major markets nationally. Rents have increased so far in 2021, thanks to improved occupancies, but the heavy pipeline may continue to slow rent growth in the coming quarters. Expensive urban submarkets have posted the worst rent losses during the pandemic, as renters seek affordability and space in the suburbs. Sales volume was limited in the middle of last year, as investors moved cautiously for the first few months of the pandemic, but bounced back in 20Q4. Sales volume in 2020 fell just below its average over the previous five years, with most of the largest deals involving suburban product. Several high-volume deals continued to flow in 21Q1.

 

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Information provided by CoStar.com

 

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