Transit-oriented projects help multifamily sales reach record highs

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D'Amato_Travis_Color_Casual_HiResFrom Travis D’Amato
Managing Director, Capital Markets

2015 was a record year for multifamily sales volume, both locally and nationally. Across the US, investors poured nearly $139 billion into residential product, a 31% increase from 2014. In fact, the last quarter of 2015 was the strongest ever recorded, with year-over-year transaction volumes up more than 38% to $46 billion.

In the Metro Boston area alone, multifamily sales volume topped $3 billion, shattering the previous high of just over $1.5 billion reached in 2007. That record was driven by a total of 32 sales, 56% of which were Class A properties. Whereas in 2007 the average price per unit was just over $200,000, last year the average price doubled to $400,000.

The recovery of our nation’s CBDs has been exciting to witness, but it has also created a game-changing rise in multifamily demand, values and rents—a trend that is starting to price owners and renters out of the urban core and into more affordable, transit-oriented outer urban areas like Everett, Malden, Chelsea and Revere.

In fact, transit-oriented residential development in these areas is skyrocketing, with projects like One North, Vanguard at Waterfront Square, and Residences at Rivers Edge spurring the revolution. Convenient access to the MBTA is the key, allowing residents to conveniently work and play downtown, just as they would if they lived there. However, these are still discerning renters that require high-end units. As a result, developers are building high-quality rental product in these locations at a quasi-suburban cost structure and achieving quasi-urban rents. In fact, rent growth along the Orange Line North has been the highest of any MBTA line, growing 5.9% since 2011.

It’s not surprising then to see where Boston falls in JLL’s recently released 2016 US Multifamily Perspective. The report examines the urban-to-suburban migration trends, identifying three primary drivers including affordability, jobs and transit, and ranking the U.S. markets best positioned in each category to benefit from these shifts. As the chart below shows, Boston ranks 2nd in the US in cities where transit is the primary driver of this shift.

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Download the complete 2016 US Multifamily Perspective for more details, or contact me with any questions. And, be sure to stayed tuned as next week we will take a deeper look at the impact of transit on Boston area development as we recap our recent Tracks to Growth Capital Markets Perspective Event.

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