Here's the latest installment of Bates By the Numbers, a weekly feature by Boston real estate agent David Bates that drills down into the Hub's housing market to uncover those trends you would not otherwise see.
Don't tell Demetrios Salpoglou that I'm calling it "rentals." He often refers to it as "leasing," a term which has a more professional ring to it. And giving rentals a more professional image has been his goal for some time.
Demetrios is the CEO of a network of Boston rental companies (Jacob Realty, NextGen Realty and Boardwalk Properties) with 150 rental agents, relationships with 14,000 landlords, and 116,000 apartment listings. His companies have 90 rental websites (including all the Pads sites), 30,000 galleries, and 360,000 apartment pictures. Each year, they find apartments for thousands of Hub residents, making them arguably the largest rental team in Boston and New England. Yet, it's not enough.
Demetrios laments how in this city rentals are an ugly step-cousin. "We do thousands of transactions and we pretend it doesn't exist." He used to write letters to the Board of Realtors requesting that it increase the amount of training and include courses concerning rentals. Perhaps, as a result of the board's lack of action, he developed 17 classes for rental agents in his company. He tells me it's "a professional leasing program that builds professional agents."
Due to the company's extensive resources, his agents can often provide services that are just not possible at other rental companies, like sophisticated rental CMAs or having one agent show apartments in multiple neighborhoods. Having made my bones in rentals an era back, I'm impressed. In those days, being in rentals was like being in a secret society, where all you needed was to know the secret password and the secret handshake.
"What's trending in Boston's rental market?" I asked Demetrios.
He answers that he is worried about the city's vacancy rate. "This year's market is much tighter than last year," he says. Demetrios can tell you how many apartments are available, what he refers to as "real-time vacancy for Sept. 1." When we talked, there were around 3,600 vacancies compared to around 6,000 that were available that same date the year before. "Thus," he says "there were a whopping 2,400 units less than the year before."
The reason for the low vacancy, I wonder? He says that in a rising rent environment, tenants have a "stay-put mentality." They're not going to get a better deal across the street, so they re-up.
As a result of the super-low vacancy rate, his advice to tenants still looking for Sept. 1 is: "Don't be overly picky. You have to ask yourself if you are going to see something better and that's a gamble as you get closer to move-in dates."
Another trend he mentions is that consumers will not hesitate to pay hefty sums to rent out apartments that are decked out to the nines. To get premiums rents, he has seen some landlords go to the extent of including plasma TVs with the apartment.
According to Demetrios, a third trend is that while some Boston demographics will pay $500K for parking, with some other Boston demographics the need for a strong location—one where it's convenient to get around—totally trumps the need for secured parking. In other words, give them an apartment with the right location and they don't worry that it doesn't come with parking.
Demetrios informs me of one trend that may not continue in 2014: He says that rents have gone up 10 percent each year for the last two years and he thinks that trend may end this year. Of course, it's still a little early to tell, but he says he will have a definite feel for it in January. I'll have to check back in with him then about renta... er, leasing.
· Our Bates By the Numbers archive [Curbed Boston]