At Wednesday’s “Multifamily Growth & Expansion” event, Bisnow convened expert panelists to discuss the factors shaping Boston’s multifamily landscape and what the industry needs to know in order to succeed in an increasingly challenging marketplace.
Laura Gollinger, Vice President of The Collaborative Companies, opened the day with an overview of key market data, including a review of rental rates in Boston’s “Urban Core,” or the cluster of neighborhoods in downtown Boston and its immediately adjacent towns. The findings –people are paying more for less space, renters expect more amenities and perks from their residences, and demand is not close to diminishing – underscored the need to adopt a strategic approach to developing in Boston.
The day’s first panel, “Mixed Use Update,” took an in-depth look at mixed-use living, the demographics of buyers and renters interested in luxury units, and the amenities these residents require, such as a pool, lounge, and common space. The theme of convenience and community resonated throughout the discussion, with Thomas O’Brien, Managing Director of HYM Investments Group, LLC noting that “people want to feel like they’re living at a hotel.”
Bryan Lee, Principal of Transom, acknowledge the demands of today’s residential consumer while emphasizing the strain this places on the development process. At a cost of $750 per square foot, developers face a significant challenge when occupying space with amenities that, while practically required, generate no revenue.
The next panel, moderated by Lisa Nickerson, segued to “New Development Frontiers” and was particularly topical as much of the discussion centered around the continuing surge in unit demand, development costs, and wood frame construction as an affordable – and safe – option to mitigate costs.
Gemma Geldmacher, Senior Director at Berkadia, shared that “the market peak was predicted five years ago…and so far, we haven’t seen the end.” Adelaide Grady, Senior Vice President of the Pritzker Group, added “We (Boston) need to generate 8,200 units a year through 2030 to meet demand, and we’re already behind.” The panel emphasized that with prices, demand, and development costs continuing to rise, affordability will be a key factor shaping Boston in the decades ahead.
Panel moderator, Nickerson Founder and Principal Lisa Nickerson, introduced the topic of wood-frame construction as a popular, cost-effective, and safe approach to development, noting that 84% of the new construction buildings across the country in 2016 were wood-framed. “We’re helping clients highlight the benefits of wood-frame construction,” Nickerson explained. Fred Kramer, Vice President at Stantec, also noted that “as a community, we need to continue to deliver multifamily housing and understand the facts on wood-frame (construction).”
The common theme running through the morning event was the fact that there continues to be a growing unmet demand for housing in and around Boston. With maturing millennials continuing to generate new households and empty-nesters increasingly seeking to downsize from the suburbs into multifamily properties, there will be a continued pressure for new, well-designed product, as well as for well-kept and strategically renovated older properties. It will be up to the region’s developers, architects and designers to find innovative ways to maximize housing opportunities, while still providing a diverse suite of services and amenities that consumers demand today.