Boston 2Q23
Multifamily Market Report
$2,886
average rent
95.8%
average occupancy rate
$1.4B
ytd sales volume
4.1%
YoY rent change
-1.3 POINTS
yoy occupancy change
38
ytd individual transactions
Supply & Demand
2Q23
847 Units
QUARTERLY DEMAND
YTD: 1,820
1,315 Units
QUARTERLY COMPLETIONS
YTD: 3,115
Annual Demand vs Completions
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Completions
-
Demand
Demand Trends
During the second quarter of 2023, Boston’s apartment market demonstrated notable vitality, with over 840 net units positively absorbed, underlining the robust demand for apartment housing.
Of the Boston’s 19 submarkets, a significant majority, twelve to be precise, registered positive net absorption. The Chelsea / Revere / Charlestown submarket led with an impressive absorption of 392 units, the highest among all submarkets.
Completion Trends
Boston’s apartment inventory experienced a substantial growth during the second quarter of 2023, adding 1,315 new units. The period’s development activity was fairly distributed across the market, with new completions recorded in 15 out of the 19 submarkets.
In line with the quarterly trajectory, the past year has seen new completions spread quite uniformly across the metro. However, the Cambridge / Somerville and Plymouth County submarkets have proven to be key contributors, accounting for approximately 36% of the 6,650 units brought to the market over this period.
Demand Outlook
The demand outlook for the Boston multifamily market remains optimistic for the next four quarters. RealPage projects an absorption of 13,040 units, a volume that is set to outpace the incoming supply of new inventory.
Among the Boston neighborhoods, Fenway / Brookline / Brighton is projected to be a significant demand hotspot. It’s expected to contribute to 14.0% of the overall absorption in the coming year.
New Supply Outlook
The Boston apartment market is gearing up for a substantial expansion in multifamily inventory over the next four quarters. This expansion is expected to come in the form of 10,910 new units.
The Chelsea / Revere / Charlestown submarket is anticipated to play a pivotal role in this expansion, leading the way in new supply with 1,640 units.
Occupancy & Rent Trends
RENT VS OWN
MONTHLY PAYMENT
$3,971
Average Monthly Mortgage Payment
$2,886
Average Monthly Rent
Occupancy trends
Despite a dip in demand compared to the first half of 2022, the Boston-Cambridge-Newton, MA-NH market managed to maintain a tight overall occupancy rate of 95.8%, marking a moderate year-over-year decline of 130 basis points. Remarkably, all product classes maintained strong occupancy rates, all above the 95% mark. The Class C product category led the way with an impressive 96.9% occupancy, while Class A and Class B properties posted strong rates of 95.2% and 95.4% respectively. Nearly all of Boston’s submarkets demonstrated robust occupancy rates, surpassing 95%. Rockingham/Strafford Counties and North Essex County stood out with top-tier occupancy rates exceeding 97.0%. The Fenway / Brookline / Brighton submarket, while slightly lower, still posted a strong occupancy rate of 94.4%. Looking ahead, we anticipate the occupancy rate to incrementally increase as demand begins to outstrip the elevated level of new supply. This demand-supply dynamic is expected to push the occupancy rate up to an estimated 96.4% by Q2 2024.
RENTAL TRENDS
During the 2nd quarter of 2023, average multifamily rents in the Boston-Cambridge-Newton, MA-NH market experienced a healthy increase of 4.1% year-over-year, reaching $2,886 per month. This outperformed the market’s five-year average of 3.6%. Regarding performance disparities among product classes, the second quarter presented minor variations. Class A properties registered an average rent increase of 4.5%, while Class B and C assets both experienced a 3.9% annual change. Zooming in on specific submarkets, Southwest Boston and North Essex County emerged as strong performers in Q2, recording increases of 7.2% and 6.8% respectively. Contrastingly, Plymouth County experienced a slight downturn, marking a -0.1% annual rent change, making it the only submarket to see a decline. As we move forward, rent growth in the Boston market is projected to continue to normalize. This trend is anticipated as the market adjusts to the influx of new units coming online.
Submarket Rent & Occupancy
| Submarket | Average Occupancy | Annual Occupancy Change | Average Monthly Rent | Annual Rent Change |
|---|---|---|---|---|
| Cambridge/Somerville | 95.2% | -1.1% | $3,597 | 4.7% |
| Chelsea/Revere/Charlestown | 95.1% | -1.3% | $2,877 | 4.9% |
| East Middlesex County | 95.3% | -1.7% | $2,750 | 5.8% |
| Fenway/Brookline/Brighton | 94.4% | -1.6% | $3,576 | 4.5% |
| Intown Boston | 96.3% | -0.7% | $4,017 | 4.3% |
| Lowell | 95.9% | -1.8% | $2,365 | 2.7% |
| Marlborough/Framingham | 96.1% | -1.4% | $2,428 | 3.0% |
| North Essex County | 97.0% | -1.0% | $2,270 | 6.8% |
| Plymouth County | 96.1% | -1.6% | $2,291 | -0.6% |
| Quincy | 95.7% | -1.2% | $2,588 | 3.0% |
| Rockingham/Strafford Counties | 97.5% | -0.6% | $1,992 | 3.0% |
| South Essex County | 96.5% | -0.4% | $2,615 | 2.5% |
| Southwest Boston | 95.1% | -1.0% | $2,746 | 7.2% |
| Waltham/Newton/Lexington | 96.1% | -1.0% | $3,175 | 2.6% |
| West Norfolk County | 95.3% | -2.5% | $2,662 | 4.0% |
| Boston-Cambridge-Newton, MA-NH | 95.8% | -1.3% | $2,886 | 4.1% |
Units by Submarket Delivering in 2023
17,026
Units Under Construction
10,910
Units UC Delivering In the Next 4 Quarters
Percentage of Units Under Construction
Percentage of Units Delivering Next 4Q
Sales Activity
Despite tightening financial conditions, investor interest in the Boston apartment market has demonstrated remarkable resilience. Over the past year, the volume of apartment transactions has remained steady, totaling $1.4 billion in the first half of 2023. This figure represents a marginal year-over-year decline of only 1.7%. In this period, a noteworthy 38 properties changed ownership – a rate that aligns with typical market activity for this timeframe. The standout factor, however, is the substantial 7.9% increase in the average price per unit compared to the same period last year. This upswing has propelled the average price per unit in the Boston-Cambridge-Newton market to an impressive $410,100.
- Brookfield AM
- Eaton Vance RE
- DSF Group
- Abacus Capital Group
- Lincoln Property Co
- Boston Residential
- AvalonBay
- Pantzer Properties
- National Development
- Brookfield AM
TRANSACTION VOLUME
YTD Transaction Volume
Y-O-Y Change
Individual Transaction Count
Price Per Unit
Annual Price Change
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual conventional transaction $2.5M +
Economy
In May 2023, the Boston metro witnessed remarkable job growth, adding 42,500 jobs compared to the same month in 2022, reflecting a substantial 2.7% increase in employment. Consequently, the unemployment rate decreased by a significant 1.2 percentage point compared to the previous year, reaching 2.1%, which is well below the national average of 3.4%. Among the sectors, the education and health services industry experienced the most significant job gains, with an impressive addition of 21,800 positions, representing a substantial 3.7% expansion. The professional and business services sector also saw comparable growth, with a 3.7% expansion and the addition of 19,800 jobs. These positive indicators underscore the region’s strong economic momentum and promising employment prospects. Notably, the average hourly wage in Boston stands at $38.85, surpassing the US average of $29.76.
76.0K
May Annual Jobs Created
2.7%
May 23 Employment growth
2.1%
May 23 Unemployment rate
3.4% us may rate
Top 5 Employment Sector Annual Change
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| Sector | Change from May 2022 to May 2023 | Percent Change |
|---|---|---|
| Education and health services | 21,800 | 3.70% |
| Professional and business services | 19,800 | 3.70% |
| Leisure and hospitality | 8,500 | 3.30% |
| Trade, transportation, and utilities | 7,600 | 1.90% |
| Financial activities | 5,200 | 2.80% |
| Mining, logging, and construction | 5,100 | 4.00% |
| Government | 4,900 | 1.60% |
| Other services | 1,700 | 1.70% |
| Information | 1,600 | 1.90% |
| Manufacturing | -200 | -0.10% |
Major Economic Developments
State-Of-The-Art
Research Campus Under Construction
Read The Article Here
3000+ Permanent Jobs Job Creation
$750M Investment Cost
Capacity 900k sqft., 345-unit Residential Building, a Hotel, and Harvard University-Operated Conference Center
Allston, Boston Location
2025-2026 Expected Completion
Boston Logan International Airport Expansion
Read The Article Here
1,000
Full-Time Jobs Job Creation
$640M Investment Cost
320,000 sqft. Expansion Site
Fall 2023 Expected Completion
Bio-Tech Firm Plans
$170m Expansion
Read The Article Here
200 High-Paying Jobs Job Creation
$170M Investment Cost
400,000 sqft. Campus Site
Maple Grove Location
Three Years Expected Completion
Market Outlook
Boston has proven resilient amid the pandemic, outperforming many coastal gateway markets. As of Q2 2023, 17,026 housing units are under construction, with 10,910 more expected by mid-2024. Apartment absorption has returned to normal levels, aligning with historical trends. Major demand hotspots for the coming year include Fenway / Brookline / Brighton, Cambridge / Somerville, and Chelsea / Revere / Charlestown, accounting for 39.2% of overall absorption. Despite new inventory concentration in those areas, strong demand, and economic growth will maintain high occupancy rates and stabilize rent performance, ensuring solid fundamentals for Boston’s apartment market.
Sources: RealPage; BLS; MSCI; Boston Business Journal; Boston Economic Development Center
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