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Boston's waterfront redevelopment is generating thousands of jobs and facilitating growth across several employment sectors. The construction industry, in particular, has benefited as workers build thousands of residential units along the waterfront.
Pier 4, a mixed-use project located in the Seaport District, is underway and will consist of three buildings to contain apartments, ground-level retail, condos, and a hotel or office space. Additionally, developers are moving forward with plans to build two 22-story towers in the Seaport Square mixed-use development, adding 800 apartments and 300,000 square feet of retail and entertainment space. This would be the first major project at the 23-acre site, considered the key to connecting the surrounding Fort Point, Fan Pier, Pier 4 and Waterside Place developments into a 24/7 urban environment.
The developments are successfully transforming the area from sizable parking lots to a center that will draw employers and young professionals seeking a live-work-play lifestyle.
In addition, many builders are acquiring older assets in prime areas of Boston and deploying capital in order to increase rents or convert to condos as empty-nesters and young adults seek more affordable ownership opportunities in affluent neighborhoods. Developers in search of conversion opportunities are targeting larger units with nice finishes, and upgrading kitchen and bathrooms before selling.
Boston employers will add 31,000 jobs in 2013, an annual growth rate of 1.3 percent. Effective rents among apartment properties built within the last decade rose to a new high with steady rent growth since 2010. As a result, many households may choose to buy in instances where homeownership is more affordable. However, others will remain renters, choosing the amenities, low maintenance, and access to business and entertainment districts that many apartments offer.
This year, completions will total 4,600 units, up 29 percent from 2012. Of these, nearly 3,900 units will be market-rate rentals, with affordable and seniors housing making up the rest. As new supply outweighs demand through the year, vacancy will rise 40 basis points year over year and reach 3.8 percent in the fourth quarter, still 100 basis points below the 10-year average.
With vacancy remaining at historically low levels, average effective rents will reach $1,690 per month by year’s end, an annual growth rate of 2.9 percent. In 2012, vacancy increased just 10 basis points and rents rose 1.6 percent.
— Tim Thompson, senior associate with Marcus & Millichap Real Estate Investment Services