Multifamily in Greater Boston isn't coming off the greatest ending to a year — but a cool down in construction is leading to optimism, according to the latest market report posted by Colliers.
In summing up the fourth quarter, Colliers said that multifamily was performing "below peak levels." Most notably, vacancy jumped by 80 basis points year-over-year to seven percent. The level is now over a percentage point higher than the 5.9 percent historical average.
"Vacancy has continued to increase even though the post pandemic cycle of new deliveries peaked at the end of 2024," Colliers said.
Another concern that Colliers cited was jobs in Boston's metro area contracted by 0.3 percent or roughly 9,000 positions.
However, there were some encouraging signs in the fourth quarter. Rents per unit grew modestly to $2,850, a $16 increase year-over-year. On a per-square-foot basis, the change was only two cents, going from $3.17 to $3.19. This is strong enough to rank Greater Boston in the top five for year-over-year rent growth per unit.
New supply is coming down, with deliveries only at 1,894 units, down from the 2,775 that came online in the fourth quarter of 2024. Moreover, construction was down by about 1,000 units to 10,339.
Overall, the trends bode well for multifamily fundamentals in Greater Boston, according to Colliers.
"While Sun Belt markets such as Phoenix and Dallas–Fort Worth have more units under construction than in the region, supply and demand fundamentals are expected to rebalance more quickly in Greater Boston than in markets that face more significant imbalances," the CRE firm predicted.
Also, Colliers forecasts there will be an opportunity for investors, particularly on middle-quality assets, as Massachusetts faces a major housing shortage. The vacancy rate among mid-tier apartments is only 4.9 percent compared with 5.6 percent on higher quality assets.
Lupoli Co. made the largest acquisition in the fourth quarter, with its $254 million buy of Royal Crest - North Andover in North Andover.
Pembroke (Fidelity) and TruAmerica Multifamily came in second and third place with their $172 million and $63 million buys, respectively.
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