After the burst of the housing bubble in 2008, the commercial real estate market took a hit on all fronts. While the office, industrial, and retail markets continue to work towards recovery, multifamily has outperformed the rest and continues to do so. As a result, multifamily construction has become highly attractive and the pipeline for development is exploding, especially downtown.
There are currently 7,500 luxury units in downtown Boston’s pipeline. At an average of $2,900/month for individual rents, prices are steep. According to typical landlord qualification standards, tenants must be able to allocate at least 33 percent of income towards their rent. This requires each individual tenant to make at least $106,000/year. While off the bat, one might not think there is an adequate supply of tenants within this salary range, Greater Boston is home to many well-educated, and thus well-paid individuals. Additionally, pent up rental demand makes the outlook promising for multifamily developers.