Absorption, Rents Up for Rental Market

BOSTON-Driven by strong demand and a booming condo market, apartment absorption rates skyrocketed 453% in Boston metropolis last year. Those rates pushed rents up slightly by 3.6% and increased occupancy by 1% to 96.1%, a report on the area's multifamily housing market shows.

"There is a tremendous pool of latent demand in metropolitan Boston because we've under produced housing of all types, particularly rental housing, for decades," Tom Meagher, who prepared the report for the Acton, MA-based Apartment Rental Advisors, tells GlobeSt.com. That pent-up demand along with a surge in condo conversions helped fuel absorption rates and prompted a burn-off in landlord concessions, Meagher notes.

Moderate job growth combined with a cooling condo market should mean even further improvement in the apartment market with rents expected to grow 4% during the next 12 months, the report predicts. Apartment supply will also increase in 2006, with more than 6,300 units expected to be completed by the end of the year, that's about 245% above the 2,570-unit annual increase projected for apartment demand. In total, about 30,000 new apartment units are expected to be constructed in the Boston region within the next 10 years as developers move in to feed the demand.

Returning this year to 2002 levels, apartments rent for an average $1,415 per month. Rents are still not on par with inflation, but are expected to remain strong, Meagher says. Landlords did get some benefit from the region's strong rental market, averaging nearly $37 more for the same space than they received last year. The highest rent jump came in Boston's Back Bay and near west suburban markets which saw rents grow by $113 and $322. Rents dropped in six metropolitan communities, decreasing by a high of $50 in Brookline to a low of $2 in the Fitchburg area, the report found.