Rising construction costs and a slowdown in the luxury rental market may accomplish what neighborhood opposition could not: put the brakes on a 44-story apartment tower in Boston’s West End.
Developer Equity Residential is taking a wait-and-see attitude on development sites in coastal markets, CEO David Neithercut said.
“We’ve got some sites that we currently have in L.A. and in the Bay Area and in Boston that we could do something on but we’re not going to pursue those very aggressively at the current time,” Neithercut told analysts this week during a conference call to discuss the company’s second-quarter quarter earnings. “The teams continue to work on them, but we’ll just sort of see how things play out.”
Neithercut attributed the company’s cautious development outlook to rising construction costs and current yields.
“We continue to underwrite new land sites; the guys continue to look at what’s out there, but there’s nothing that we find attractive,” according to a transcript on SeekingAlpha.
Equity Residential spokesman Marty McKenna confirmed that the Boston comment referred to the Garden Garage site on Lomasney Way but said “nothing has changed with regard to our plans. We’re continuing to work on that project and the current start is (2018).”
Documents filed with the BRA in late 2015 called for a June 2016 project start and June 2019 completion.
The former Boston Redevelopment Authority approved the 470-unit tower in February 2016 which would replace the existing 650-space Garden Garage. The revised plan replaced an earlier version in which Chicago-based Equity Residential planned to build two towers on the 3-acre site. The approval came amid protests from residents of the neighboring Amy Lowell Apartments, who objected to the project’s height and density.
Recent luxury rental projects in the neighborhood include Trinity Financial’s 320-unit One Canal, which opened in spring 2016 and AvalonBay Communities’ 503-unit North Station tower, which opened in December.
Equity Residential owns 23 apartment communities in Greater Boston totaling approximately 6,103 units with average rents of $2,941 and an occupancy rate of 95.7 percent as of June 30. Executives have said they are monitoring potential headwinds in the local multifamily market because of rapid development in Boston and Cambridge, with three-quarters of the new supply competing against their existing properties.
