The Boston multifamily market continues to demonstrate resilience and steady growth, proving itself as a relatively robust segment of the real estate sector in this East Coast MSA. Over the past five years, Boston has seen a modest population growth of 0.8%. While this growth rate may seem conservative, it highlights a relatively stable influx of residents, potentially helping support a healthy demand for multifamily housing.
Boston's current vacancy rate stands at 5.4%, significantly lower than the national index of 7.8%.1 This low vacancy rate indicates strong demand for rental units in the city, potentially contributing to properties being leased quickly. In 2021, the MBTA Communities Act was adopted by the state, requiring eligible cities and towns to create zoning districts permitting family-friendly multifamily housing near transit stations, thus promoting higher housing density and improved access to public transportation as a way to help address a statewide housing crisis.
The current average asking rent in Boston is $2,886 per month, reflecting a 3.09% growth over the past year.1 This increase in rent underscores the sustained desirability of living in Boston, generally driven by its vibrant economy, educational institutions, and cultural amenities.
Furthermore, net absorption, commonly considered a critical indicator of demand, shows that 7,018 units were absorbed over the past 12 months.1 This positive absorption rate generally signifies that new supply entering the market is likely being met with strong demand. Boston's construction pipeline is also robust, with 17,080 units currently under development.1 This pipeline suggests that many developers are confident in the market's future, anticipating continued demand for multifamily housing.
In terms of investment, the Boston multifamily market has seen a substantial $2.5 billion in sales over the past 12 months.1 The transaction volume highlights the confidence of buyers and the relative attractiveness of Boston's multifamily assets.
Woburn Submarket: A Closer Look
Woburn, MA, is a historic city with a rich heritage dating back to its establishment in 1642. It offers a blend of historic charm and modern amenities, boasting a mix of residential neighborhoods, commercial areas, and industrial zones, which contribute to its diverse economic landscape. The city is commonly known for its vibrant community and a variety of recreational opportunities, including parks, sports facilities, and conservation areas.
Located just 20 minutes northwest of downtown Boston and several major employers, Woburn is a convenient suburban location with easy access to the city via major highways like I-93 and I-95. The city is home to companies such as Oracle, P&G, Pfizer, and Intel, along with numerous life science, technology, and clean energy firms, creating a dynamic employment landscape and generally attracting a highly educated workforce. The median age in Woburn is 39, and the average household income is $104,780, reflecting a community that is both young and relatively affluent. This can make Woburn an appealing location for multifamily developments, supported by a relatively strong renter base.
The Woburn submarket presents a unique set of characteristics, challenges, and potential opportunities for the multifamily sector. Over the past five years, the Woburn submarket has experienced stagnant population growth, remaining at 0%. Despite this lack of population increase, the submarket's multifamily sector continues to evolve.
The current vacancy rate in Woburn is 7.7%, higher than the Boston average but still competitive when compared to the national index.5 This higher vacancy rate may suggest more availability, which could be appealing to prospective tenants looking for options outside the more saturated city center.
Rental rates in the Woburn submarket show a mixed but generally positive trend. The average asking rent for a studio apartment is $2,291 per month, marking a significant 7.73% year-over-year increase.5 One-bedroom apartments command an average rent of $2,616 per month, with a modest 2.16% increase.5 Two-bedroom units are renting for $3,169 per month, reflecting a healthy 5.39% growth.5 Overall, rents in the Woburn submarket have increased 4.3% in the past twelve months and 17.0% over the last three years, outpacing the 14.3% trailing three-year average of the Boston market as a whole.5 These figures indicate a rising demand and a general willingness among tenants to pay higher rents for desirable units.
Net absorption in the Woburn submarket over the past 12 months as of July 2024 was 355 units,5 a figure that, while modest, generally indicates steady demand. However, it's important to note that there is currently a limited construction pipeline in Woburn.5 This construction pipeline highlights a potential opportunity for developers, as the submarket's relatively favorable fundamentals could suggest strong demand for new multifamily developments.
The demographics within a five-mile radius of Woburn reveal a population of 191,468,6 with a median household income of $118,834 and a median home value of $729,568, which has increased by 8.9% over the last year. This high home value, combined with a 10% down payment on a 30-year fixed interest rate mortgage at the national average of approximately 6.5%, equates to a $5,000+ monthly payment, including taxes and insurance.7 This high cost of homeownership may further support the demand for rental housing in the area.
Interestingly, the Woburn submarket has seen no multifamily sales in the past 12 months.5 This could be indicative of several factors, including, but not limited to, limited inventory, high property values discouraging transactions, or a market that is simply holding steady with existing properties. Additionally, Northeast multifamily markets, including Boston, have experienced only moderate supply additions over the past two years,1 potentially contributing to a more balanced multifamily sector in the region and resulting in favorable rent growth.
Conclusion
In summary, while the Boston multifamily market shows robust growth, the Woburn submarket presents a more nuanced picture. Woburn's higher vacancy rate indicates potential challenges, but the positive rent growth, solid demographic profile, and lack of new construction may offer opportunities for additional supply to be added. Together, these markets illustrate the diverse and evolving nature of multifamily real estate within the Greater Boston area, each presenting unique opportunities and challenges for real estate sponsors and tenants.
- CoStar Multifamily Market Report - Boston, MA - 7.16.2024
- https://www.mass.gov/info-details/multi-family-zoning-requirement-for-mbta-communities
- https://woburnma.gov/about-woburn/
- https://censusreporter.org/profiles/16000US2581035-woburn-ma/
- CoStar Multifamily Submarket Report - Burlington/Woburn - 7.16.2024
- CoStar Property Demographics - 315 New Boston Street, Woburn, MA 01801
- https://www.zillow.com/home-values/21355/woburn-ma/
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