An aerial view of developer Greystar’s 450-unit Anthem Everett apartment complex at 35 Garvey St., which is scheduled for completion in mid-2024. Photo courtesy of Greystar
The current pace of apartment construction in Greater Boston trails all major U.S. markets except for New York City and Los Angeles, while rents rose 3.1 percent in the past year.
The construction pipeline in Greater Boston equates to 1.5 percent of the overall apartment inventory, the lowest share of new supply outside of New York and Los Angeles, CBRE reported.
Busy development activity nationwide has contributed to rent decreases in West Coast and Sunbelt markets, but rents continue to increase in the Northeast and Midwest, according to CBRE’s third-quarter multifamily report.
The more than 376,000 units completed nationwide in the 12 months ending Sept. 30 were the highest since at least 1996, according to CBRE data. But many of the projects were financed prior to the series of Federal Reserve interest rate hikes that have pressured the profitability of new projects.
“Fewer construction starts in recent quarters will lower deliveries in 2025 and beyond,” CBRE predicted.
The Boston area also ranked 17th of the top 20 markets for new supply, with 7,900 units completed in the 12 months ending Sept. 30.
Average rents in Greater Boston rose 3.1 percent compared with the previous year. Average rents continued to rise in the Midwest and Northeast at 3 and 2.9 percent respectively, while declining in the rest of the country, CBRE said.
A recent report by brokerage Colliers said apartment construction in Greater Boston declined 20 percent in the past year, with fewer than 15,000 units currently under way.
The Boston Planning & Development Agency last month began accepting applications for Mayor Michelle Wu’s office to residential conversion program, which gives qualifying projects 75 percent property tax abatements for up to 29 years.
Gov. Maura Healey last month announced a multi-pronged strategy to create 40,000 housing units statewide via a package of dollars and policy changes, including legalization of accessory dwelling units and incentives for conversions of commercial properties into housing. The state legislature has not yet indicated a schedule for taking up Healey’s bill.
