As the first quarter of 2017 draws to a close, multifamily assets continue to trade at record high rates in both Boston and New York City. As many investors explore opportunities in neighboring communities where undervalued Class-B and Class-C assets offer the opportunity to make modest capital improvements, raise asking rents and generate returns, markets such as Framingham and Worcester are thriving. In 2016, Worcester and Framingham ranked first and second among I-495 corridor submarkets for transaction volume in the $1 million to $10 million range. In November 2016, MetroWest Daily News reported commercial property values in Framingham had risen close to 12-percent per a review by the town’s assessing department.
Along the MetroWest Corridor, a number of development projects are not only bringing new jobs to the region, but efforts by economic development and other community groups are focused on making the Corridor and nearby communities attractive places to both live and work.
- On Route 20 in Marlboro, the Apex Center of New England, which is slated to open in fall 2017, is under construction. The 11-building, 475,000-square-foot complex will house office and retail space, lodging and a dedicated “entertainment complex.” While early in its development, Apex Center is expected to drive further demand for Class-B and Class-C workforce level multifamily housing in MetroWest.
- The Boston Globe reports the town of Natick and Natick Center Associates are currently looking to attract more restaurants to Natick Center, which houses shopping, businesses and a performing arts center in a pedestrian-friendly area in close proximity to both routes 27 and 135, as well as the train station. The effort is part of the Natick 2030+ Plan, which focuses on two decades of planning and economic development for the community. As a result, demand for workforce level multifamily with easy access to Boston remains strong.
- In Worcester, Mercantile Center, a mixed use property housing offices and retail, continues to attract new tenants. Also in Worcester, the historic Quinsigamond Village Firehouse, built in 1891, is poised for renovation aiming to attract both residential and retail tenants. Other redevelopment projects in Worcester include The Grid District, which boasts a mix of apartments and retail, including several restaurants, all of which are designed to lure young professionals to live and work in the area.
- In early 2018, Jet Blue will launch daily flights to John F. Kennedy International Airport in New York City from Worcester Regional Airport, improving business travel for the region.
“With the New York City market holding strong, we’re seeing an increasing number of New York investors exploring opportunities in Western, Massachusetts and MetroWest,” Taylor Perun, Senior Associate with Northeast PCG, noted. “By exploring these markets, investors gain access to multifamily assets with the opportunity to generate returns.”
Beyond exploring opportunities in Western, Mass. and nearby MetroWest, investors can also find opportunity in communities just north of Boston, such as Everett.
“Everett offers investors a better price per unit than nearby Boston but has strong potential to maintain high occupancy rates,” Francis Saenz, a licensed associate in Northeast PCG’s Boston office, noted. “We continue to see that communities that offer easy access to train stations for business commuters remain viable options for those who can’t afford the luxury Class-A assets subject to bidding wars in Downtown Boston.”
In Everett, a community under consideration for future casino development, Northeast PCG is currently offering a 26-unit multifamily property for $5.6 million.
While the recent rise of interest rates is putting downward pressure on asking prices, opportunity remains for both buyers and sellers of Class-B and Class-C multifamily.
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