A Look at Greater Boston’s Emerging Markets

Gentrification is breathing new life into neighborhoods across Greater Boston. A recent report by Governing Magazine shows that since 2000, more than 20 percent of the Census tracts in Boston that were eligible for gentrification have done so, resulting in a 50 percent increase in home prices in some neighborhoods. Most recently, East Boston, South Boston and Dorchester have begun to reap the benefits of gentrification, spawning new development which is, in turn, driving up asking rents. As these neighborhoods come into their own, offering improved access to transportation and jobs, investors can benefit from buying undervalued Class-B and Class-C assets and making capital improvements that will lay the foundation for increased occupancy, sustained rent growth and higher returns.

What’s happening in Dorchester, Mass.

In early 2018, Curbed Boston flagged South Bay as one of the area’s top development projects to watch this year. The project brings 475 apartments, 113,000 square feet of retail, a hotel, a theatre and space for outdoor community events to Dorchester.

The South Bay area also boasts properties prime for redevelopment. Northeast Private Client Group is currently marketing 1176 Massachusetts Avenue which is located at the entrance to South Bay Center and listed for $3.2 million.

What’s happening in East Boston

Currently under consideration for Amazon’s second U.S. headquarters, East Boston could soon house up to 8 million square feet of office space, which could create as many as 50,000 jobs. In a city where demand for housing is already high, units often transact at record rates, and average rents in the inner core exceed $2,600 per month (according to WBUR), some residents face being priced out of some of Boston’s more affordable neighborhoods. The upside, however, is that the subway line that runs under Boston Harbor, coupled with new job creation, will allow multifamily investors to maintain high occupancy rates for their assets.

For investors who seek to reap the rewards of buying before prices rise, Northeast PCG has a mixed-use property for sale on Bennington Street offering four one bedroom units and storefront retail space for $1.65 million.

While a final decision from Amazon is still pending, other area development projects are already underway. In East Boston’s Jeffries Point, construction will soon begin on a 37-unit condo building with ground floor retail.

In nearby Revere, another community that will benefit from East Boston’s gentrification, Northeast PCG currently has three listings available:

What’s happening in Brighton-Allston

The development of Boston Landing has already breathed new life into Brighton, expanding the business, entertainment and transit footprint for the neighborhood. Building upon this strong foundation, the number of people seeking multifamily housing in Brighton-Allston stands to rise further in coming years with Harvard slated to complete construction of the new headquarters for its engineering and applied sciences school by fall 2020. In early June, The Boston Planning and Development Agency announced it will also begin planning for transportation improvements in Allston-Brighton this year.

Among Northeast PCG’s current listings is a two parcel property in Brighton which includes a three family home as well as a plot of residential land for $2 million.

Looking ahead

As part of the Imagine Boston 2030 initiative (known as Boston 2030), the city is evaluating how it can best accommodate growth with a limited amount of land. Part of this process will include reevaluating zoning, which may pave the way for mixed-use development, and strengthening neighborhoods by improving access to jobs and transportation. Among the latest communities identified for revitalization planning as part of Boston 2030 are Mattapan and Newmarket. Industrial areas of South Boston, Jamaica Plain and Roxbury are already slated for rezoning with the goal of increasing transit-oriented housing and office space, according to the Boston Globe. As seen in other nearby communities, close proximity to transportation helps drive strong occupancy rates and often creates the conditions to raise asking rents.

With the continued growth of Boston’s pharmaceutical and biotech sectors, fueled in part by the Life Sciences Tax Incentive Program, relocation of GE’s world headquarters to Boston’s Seaport, and an aggressive growth and improvement plan for Boston 2030, investors seizing opportunities in nearby neighborhoods stand to maintain strong occupancy rates and maximize returns in the years to come.