Lt. Gov. Karyn Polito, (fifth from left), Rep. Ayanna Pressley (third from left), Boston Mayor Michelle Wu (sixth from right), Boston City Councilors and other dignitaries celebrate groundbreaking at The Pryde, New England's first LGBTQ-focused senior housing development, in June 2022. Photo courtesy of LGBTQ+ Senior Housing Inc.
Greater Boston apartment rents are rising at an annual rate of 3 percent, and further increases are likely waiting in the wings, according to a new report on the multifamily market.
The number of apartments under construction has declined 20 percent since mid-2022, brokerage Colliers reported, and currently comprises fewer than 15,000 units.
“Any construction slowdown could benefit existing landlords with operational assets, creating both increased occupancies and the opportunity to raise rents,” Colliers’ third-quarter multifamily report noted.
Year-over-year rent increases ended the third quarter at 3 percent.
The rent growth exceeds historical averages and reflects the barriers to home ownership in Greater Boston, Colliers said. Approximately 15,000 apartments in Greater Boston were absorbed during the past eight quarters.
Currently, the construction pipeline equals approximately 6 percent of the overall inventory, representing a 10-year low. Construction starts and new development have declined in both urban and suburban markets, as developers have delayed groundbreakings amid a challenging financing climate.
Boston continues to contribute the largest share of new inventory in eastern Massachusetts, with nearly 5,300 units under construction, representing more than a third of the region’s imminent deliveries.
Downturns in office and lab leasing could lay the groundwork for an uptick in multifamily development activity, however.
Boston Mayor Michelle Wu’s office-to-housing conversion program that launched last week is designed to encourage fast-track approvals and financial incentives for developers. The program offers 75 percent property tax abatements for up to 29 years.
The sharp downturn in demand from the life science industry has prompted some developers to pivot back to housing as a preferred use.
And the Healey administration is looking to direct billions of dollars towards multifamily development via a housing funding and policy bill launched Wednesday morning.
As of the third quarter, Boston’s Seaport remains the highest-rent district in the region at $5.71 per square foot, equating to average monthly rents of $4,280, and a vacancy rate of 3.9 percent.
