According to Marcus & Millichap, the luxury apartment market in Boston experienced a modest increase of 30 basis points in vacancy rates compared to last year. This is significantly lower than the 70-bp increases seen in both Class B and C segments. As a result, Class A vacancy rates are now 20 bps below mid-tier rates for the first time since 2013. Additionally, with an effective annual rent growth of 4.5%, Boston ranks as the second fastest-growing major U.S metro for Class A properties.
Evan Griffith, Senior Vice President of Investments at Marcus & Millichap’s Boston office stated that this performance demonstrates remarkable resilience by the luxury tier segment.
However, their latest report on multifamily investments in Boston during Q2 noted that despite positive rent growth and occupancy metrics overall, there may be short-term challenges due to a high volume of new units being built – particularly in Cambridge-Somerville and Fenway-Brookline-Brighton areas. It is estimated that over 9,000 new rentals will be completed by2024 which will lead to inventory growth reaching up to2 .2%.
In summary,theClassA apartment sector has shown impressive strengthinBoston but may face some obstaclesdue tonew developments enteringthe marketinthe near future.
