Rent growth is slowing down for multifamily in the Greater Boston area. On a year-over-year basis, the rate was up by 1.1 percent in the third quarter, which is 100 basis points below the previous total, according to a market report from Colliers. Rents per square foot clocked in at $3.21 at the end of September.
Colliers explained that "intensifying competition" and a "rise in concessions are leading to a slower pace in rent growth. Plus, the vacancy rate rose by 70 basis points from the 12 months prior to 6.4 percent, as deliveries surged to 2,767 units, from 1,888.
"Despite these pressures, demand remains resilient due to macroeconomic challenges that constrain homebuying and the current housing crunch."
To add to the point, the CRE firm noted that Greater Boston job additions have experienced the best pace in the last 18 months, although the expansion rate of 0.4 percent lags behind the national average of 0.9 percent. In Boston, 21.7 percent of the population rents, representing a larger share than other major gateways, including New York City, Chicago, Houston and Los Angeles. The only one to outpace Boston is Seattle, with its 22.9 percent share.
Another good sign — construction is falling, which was down by 5.5 percent in the third quarter to 9,920 units. A big reason for this was the Inner Suburbs, which saw activity plummet by more than half. Not too long ago, the area was a leader in product that was underway in Greater Boston.
In terms of transactions, AEW Capital made the largest buy thanks to its $156 million acquisition of Hanover Crossing Apartments in Hanover.
Jones Street Investment Partners and WinnCompanies were the next closest, with $122 million and $38 million acquisitions, respectively.
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