"Any REIT with a presence in Boston is doing well," Penobscot Group Inc. principal Frederick Carr tells GlobeSt.com. "The surprising thing is how difficult it is for apartment REITs to break into the market." The problem is one of approach, the locally based principal states. "Typically, when they want to break in, they'll have someone from the home office spend a day or two a week here, and that's not the way to uncover investment opportunities."

Of the apartment REITs that are doing it right, he says, the closest is AvalonBay Communities, which has a long-standing Boston office. But, with the promotion of local office head Bryce Blair to president and COO and his subsequent relocation to Virginia, Carr questions how well the trust will perform locally going forward. The move, he tells GlobeSt.com, "might hurt Boston." Blair did not return phone calls.

"The mayor will do anything to get more housing going," Carr adds. "But if REITs want to develop here, they have to get someone of sufficient capability on the ground here."

REIT problems are both deeper and more widespread than a perceived inability to crack open a new market from the outside, says George J. Fantini Jr. of Fantini & Gorga. It comes down to the long-standing problems REITs have accessing capital--an oddity since Downtown Boston as a place to live is getting a lot of buzz among investors, he says.

"There's a lot more interest on the part of investors in Boston as they discover Downtown as a place to live," he says. "For the first time, multifamily Downtown is being considered as an alternative to office. Its feasibility is good, compared to office--it's easier to finance. Plus, it's currently demanding prices around $4 per sf."

The sector also demands a huge commitment, says Fantini, and, with the exception of REITs such as Archstone or AvalonBay, "which are reasonably well-capitalized, they are simply not endowed with a lot of capital these days," he says. "They're just not equipped to compete."