Senior Vice President, Capital Markets
Boston’s apartment pipeline has been a hot topic in the media lately.
Newly delivered Class A properties are offering one to two months of concessions to maintain their lease-up velocity. Deliveries will peak in 2015 and then inevitably reduce due to rising construction costs and improving condominium economics.
Despite the pipeline, investment sales have set records across all classes and geographies. For example, we just closed Gatehouse 75, a new-construction, stick-built deal in Charlestown, MA for approximately $546,000 per unit. This sale represents the second highest price per unit ever paid for a for-rent multifamily deal in Boston…for now.
Although the apartment pipeline has been in full swing since the end of the recession, condominiums have just recently begun to deliver in volume. Due to this lack of development, Boston is experiencing its lowest condominium inventory since 2003, with only 1.2 months of supply on the market. New pricing records are being set, and the market is deepening for ultra-luxury product north of $2,000 psf
Boston remains one of the most fundamentally healthy residential markets in the country. Our demographics have never been this strong, with the split of Baby Boomers and Millennials driving household formation over 1.2% for the foreseeable future. The lack of available land, a difficult permitting environment. Rising construction costs will keep housing production in check and will help Boston avoid a dangerous stage of cyclical overbuilding.