Boston Apartment Starts at Lowest Point in Over a Decade

As one of the nation's Gateway metro areas, Boston has seen a lot of interest from investors in past cycles. And as a Gateway metro, Boston's share of population growth informed by international immigration is significant. While rent control won't make it on the November ballots after a long-awaited ruling in June, the impacts of rent control even coming up as a potential risk has been enough to spook new construction activity. Among Massachusetts' three largest metro areas (Boston, Worcester and Springfield), just 1,247 new apartment units have started year-to-date (that's 0.2% of existing inventory). Also, these metros make up about 6.5 million people (about 90% of the state's population), so those three metros are a good proxy for statewide development activity. In Boston, the impact of substantially reduced migration inflows into the metro looks to be affecting Class B and especially Class C performance. Class B and Class C rents were about 1% to 2% as of 2nd quarter. Class A rents, however, were growing by about 2%. Considering the huge reduction in starts and the idea that international immigration will have less of an impact on Class A inventory, then I think we'll see Boston's metro starts remain split between its stronger Class A segment and its (likely) weaker Class B and especially Class C segment.  

Note: 2nd quarter starts figures will likely be revised upward in future months, but will certainly remain well-below prior year totals.