Indicative of landlords’ increased attention to leasing incentives, Constitution Quarters in Chelsea recently offered to pay a fee equal to two months’ worth of rent to brokers who showed apartments and secured leases through Aug. 31.
Two months’ free rent for a Boston apartment? Sound too good to be true?
Not really.
According to local real estate brokers, apartment vacancies in Boston are up and landlords and property owners are offering a variety of incentives this fall, including paying brokerage and moving fees and offering rent-free months, to fill their units.
The tables have slowly turned. Not too long ago, tenants asked landlords what they needed to do to secure an apartment. Nowadays landlords are asking prospective tenants what they can to do get them to sign a lease.
“I’ve been speaking with other brokerage office owners to find out what their handle on the situation was and, for the most part, everyone’s agreed there’s a tremendous amount of vacancies out there,” said Lawrence H. Fisch, president of Boston’s Preferred Properties. Last week, Fisch’s agency had 676 listings of vacant units, more than double the amount he had at the beginning of last September when his office was dealing with about 300 vacant apartments.
Local real estate brokers point to various reasons for the rise in vacancies, including the economy, job layoffs, new college dorms and fewer international students searching for off-campus apartments.
“There are still lots of nice properties left over,” said Patricia Mazza, owner of Patricia Mazza Real Estate in Harvard Square. Mazza said her office still has about 75 units that are available. In typical years, there would be only about 35 vacant apartments leftover in September. Harvard University’s housing office has about 1,200 apartment listings from local brokers and landlords, she said. “It’s very unusual for this time of year to have this many available apartments left,” said Mazza. Mazza estimated that rents are down by as much 20 percent.
All segments of the rental market appear to have been affected one way or another. High-end properties like Museum Towers in Cambridge, where one-bedroom apartments with balconies run around $2,000, is offering two rent-free months to any tenant moving in before Oct. 1. Tenants moving into Dexter Park, a luxury apartment development in Brookline, with a signed yearlong lease by last Friday were also entitled to two rent-free months and didn’t have to pay the brokerage fee.
At one point, Avalon at Prudential Center in Boston was offering to reimburse residents up to $2,000 for moving expenses if they moved in by Aug. 1, in addition to offering the first month’s rent free for anyone with a one-year lease. If that wasn’t enough, Avalon was also offering to pay a full month’s broker’s fee.
In Charlestown, Constitution Quarters was offering to pay a fee equivalent to two month’s rent to brokers who showed apartments and secured leases through Aug. 31.
Those sort of incentives were virtually unheard of about two or three years ago, according to Fisch. But today landlords are competing for a shrinking market of prospective tenants, both students and professionals, according to local brokers.
Young professionals who lost jobs may have fled to other cities in search of new ones, while others are choosing to stay put or live with multiple roommates to weather the economic downturn.
The corporate rental market has been especially hit hard by the economic woes. Fisch said as the economy worsened and companies slashed budgets, including spending on consultants and travel, demand for furnished rentals started dropping. The Sept. 11 terrorist attacks also struck the corporate rental market, as business travel fell.
“There’s nowhere near the amount of demand that we’ve been getting in the past,” he said.
‘More Choices’
Some brokers theorize that the Sept. 11 terrorist attacks also affected another key population that helped keep apartments filled in the past – international students.
“It appears that the student occupancy demand and corporate rental demand fell off significantly after Sept. 11,” said Tom Meagher, a consultant with Northeast Apartment Advisors in Acton.
“No one is saying that all these markets have disappeared,” said Fisch. “I’m just saying they’ve condensed. They’re downsized but the properties are still there.”
“Typically, in the month of August and the first couple of weeks of September, we get a tremendous amount of students that come from abroad that are looking for high-end apartments to live in,” said Fisch. “The amount of people that are looking right now from that market, I think, is negligible compared to what it’s always been in the past.”
A Boston University spokesman said last week that it’s “a stretch” to attribute apartment vacancies to a drop in foreign student enrollment in the city. While enrollment figures won’t be finalized until later this month, Boston University is not expecting a major drop in international student enrollment. The majority of undergraduate students coming from other countries – an estimated 75 percent of them – live on campus, said Colin Riley, a spokesman for the university.
In typical years, the university draws about 4,440 to 4,600 non-American students from about 140 different countries. This year’s incoming freshman class is very large – 4,500 students have enrolled – with students from up to 70 countries, Riley said.
The fact that colleges and universities, including Northeastern University and Boston University, have added thousands of dormitory beds during the last two years has helped ease the demand for off-campus apartments. Universities have responded to calls from city officials and neighborhood residents for more on-campus housing as a way of easing the housing crunch and high rents in the city.
This week, Northeastern University students will move into the new West Village E apartments, which can accommodate almost 300 students. The apartments are part of the West Village Campus that Northeastern University has been developing during the last three years. Since 1999, Northeastern has added nearly 2,000 student beds in its West Village complexes alone, and is planning more residence halls along Huntington Avenue and Ruggles Street in Boston.
Two years ago, Boston University finished the Student Residence at 10 Buick St., an apartment-style residence hall for more than 800 students.
Fisch believes that parents who were anxious after Sept. 11 are probably more likely to encourage students to take advantage of the increased on-campus housing choices.
Even property owners that don’t cater to college students are affected. Fisch explained that college students are a critical segment of the rental market in Boston. With fewer college students searching for off-campus housing, non-student renters will have less competition when looking for an apartment.
“You can be a landlord that doesn’t take any college students. But without the college students there, all the professionals have a lot more choices,” said Fisch. “Let’s say there’s 5,000 more dormitory beds available today for college students to live in that were not available two years ago. How can you expect that not to affect the market?”
