AvalonBay Communities’ 350,000-square-foot Avalon Residences at the Hingham Shipyard currently lists one-bedroom units starting at $2,814. Photo courtesy of TAT
Two major apartment landlords reported big rent hikes in their Boston-area portfolios and predicted more increases to come because of the region’s declining supply of new multifamily housing.
Equity Residential, owner of 7,077 apartments in Greater Boston, reported average June rents of $3,583. In the past year, average rents have risen 4.3 percent in the company’s local portfolio.
Executives said Boston has outperformed their outlook from January, including stronger-than-expected summer leasing trends.
“Occupancy is holding strong amidst the highly seasonal summer leasing months as compared to past years, when we often saw a declining occupancy as residents churned in and out more frequently,” Chief Operating Officer Michael Manelis told analysts in the company’s second-quarter earnings call.
AvalonBay Communities reported average rents of $3,363 in its 42-property New England portfolio, up 4.7 percent in the past 12 months.
Chief Operating Officer Sean Breslin said a continuing downturn in the local development pipeline likely will drive rents even higher in the short term.
Multifamily construction activity has declined in Massachusetts following interest rate hikes and higher project costs. The Affordable Homes Act signed Tuesday by Gov. Maura Healey includes a new $50 million fund that will be made available to housing developers whose projects are approved but have been unable to complete financing.
During a conference call with analysts last week, AvalonBay’s Breslin pointed to declining housing starts in Greater Boston as the main factor driving higher rents. New construction represents 1.5 percent of total inventory, down from 2 percent a year ago, and is projected to decline to just over 1 percent next year in the urban market, Breslin said.
Kanso Milford, a 162-unit complex with development costs of $63 million, recently opened with average projected monthly rents of $2,730. The complex was 69 percent leased as of July 17, according to an SEC filing.
The company has one new development under construction in Greater Boston, the Avalon Quincy Adams complex at 269 Centre St. AvalonBay acquired the former Monti Granite property across from the MBTA station in April 2023 for $6.6 million.
