Despite Economic Downturn, Multifamily Market Stays Hot

GREATER BOSTON-Despite the softening office market here, the multifamily market in this area is stronger than ever, with a number of recent deals testifying to the current strength of the market and a number of contributing factors that suggest that the market will continue to remain solid.

“Institutional investors are going after multifamily properties,” Jonathan Close, senior vice president at Nordblom Co., tells GlobeSt.com. “For REITs, pensions and others it’s the most stable investment in real estate today.”

The sale of Yorkshire Court in Shrewsbury could be evidence of that. The property was sold to FSR Realty Advisors for $14.35 million, which, Close acknowledges, is “an aggressive price,” especially when the property requires capital improvements. But, notes Close, “they will go in and raise the rents. Getting a multifamily property in Massachusetts is difficult.”

The firm also recently sold a 50-unit complex in Haverhill for $2.68 million, an 18-unit complex in Downtown Boston for $2.4 million, a 180-unit complex in Attleboro for $5.18 million and has a 104-unit complex in Malden under agreement. Close would not disclose the purchase price for the Malden property but points out that 20 offers were made for the complex. “That is a lot,” he says. “No one wants office anymore, now they want multifamily. Massachusetts is one of the top multifamily markets in the country.”

And, according to Close, there are good reasons for that. First, the demand outstrips the supply in this state. Developing new multifamily units here is time-consuming and costly, which makes it difficult to increase the supply.

Also, there is a strong, educated population interested in renting apartments. Housing costs in this state are expensive, making renting an attractive option and keeping these properties full. The low cap rates also make the deals worthwhile, even with value-added properties.

Yet to be confirmed is the sale of a 367-unit property in the Charlestown Navy Yard in Boston. The property, which is in need of improvements, is rumored to be under agreement for a whopping $95 million.

“Multifamily housing is the market to be in right now,” notes Close.