The Boston multifamily market is booming. With sustained rent growth and high occupancy, investor competition continues to drive down cap rates and drive up sales prices. Further, rents are so high inside the 128, that well-funded investors can often justify building new assets over investing in existing properties.
The largest city in New England, Boston is home to the second largest technology workforce in the United States. Ranked 55th on Forbes Best Places for Business and Careers 2015 (Cambridge is ranked 47th) the city falls far ahead of neighboring metropolitan markets. As of February 2016, its unemployment rates are below the national average, according to the U.S. Bureau of Labor Statistics.
Curbed reports Boston was the third most expensive U.S. market in which to rent an apartment at the end of 2015, falling only behind New York City and San Francisco. And, with GE recently announcing the move of its corporate headquarters from Fairfield, Conn. to Boston, Mass., the demand for Class A and Class B multifamily units shows no signs of weakening.
The strength of Boston’s multifamily market presents interesting opportunities for investors:
- Identifying and redeveloping obsolete properties inside the 128 to convert it into a Class A and Class B multifamily and mixed-use assets.
- Explore properties outside the 128 in MetroWest, along the 495 corridor, and even into Western MA submarkets where there is an opportunity to purchase properties at more generous multiples while still benefiting from high occupancy and rising rents.
As the market remains strong, our Framingham, MA-based team is increasingly sourcing multifamily and mixed-use investment opportunities in secondary markets throughout Massachusetts. For example:
- 63-unit multifamily in Holyoke, MA priced at 10.5% cap ($45,000/unit)
- 18-unit multifamily in North Attleboro, MA priced at 9.0% cap ($78,000/unit)
- 12-unit multifamily in Medway, MA priced at 8.25% cap ($104,000/unit)
While the strength of Boston’s multifamily market makes it challenging for investors to purchase properties inside the 128, there is significant opportunity in other communities across Mass. to make cash-flowing real estate investments.
If you’re in the market for an investment property in Massachusetts, we would welcome the opportunity to talk strategy with you. Contact us today.