Everyone knows a luxury-apartment glut in Boston could happen like that [snaps fingers]. Thousands of units are going up at incredible rents, while the condo market struggles to meet demand. That reality has started to drive rental developers to pivot to for-sale housing; and it's also driven brokers and marketers (and marketers who broker) to amp up tenant incentives to fill new towers.
Might all this hullabaloo be due less to the sheer amount of apartments going up (some estimates peg it at 11,000 in Boston alone when you consider those planned, though not yet under construction) or to the rents being charged for them, but to the types of apartments going up?
Tina Bacci, research director at Resis, lays out some startling statistics in a recent analysis of whether or not a Boston apartment glut is imminent (emphasis ours):
[M]any of the existing luxury apartment buildings were designed with little to no studio apartments. The Devonshire, The Colonnade, The Greenhouse, 1330 Back Bay Fens, Exeter Towers, Mandarin Oriental Apartments, etc. have no studios and there are less than 20 studios combined in Archstone Boston Common, Archstone Avenir, One Back Bay, West End Residences, and the Lofts at Atlantic Wharf. Some newer complexes, such as the Victor (its basketball court is pictured), do have a sizable amount of studios as well as 1-BRs for that matter. For the most part, though, there appears to be a serious dearth of smaller apartments. And the bigger apartments that make up the bulk of these luxury towers understandably charge more rent—the new Avalon Exeter wants $5,300 for its 2-BRs, $10,000-plus for its 3-BRs.
Yes, the smaller apartments, too, charge what seem like astronomical rents (the new Radian Boston wants $3K for its studios and the recently debuted Arlington wants $3,200 for its 1-BRs). But even $3,000 a month is not $10,000 a month. Thus, it would seem that the reason it may soon feel like there are too many empty luxury apartments in the region is that there are too many empty large ones.
· Will Boston Property Market Absorb New Luxury Rental Apartments? [Boston.com]
· Glut, Glut! '14 a Tipping Point for Boston Apt. Development? [Curbed Boston]
· Greater Boston Condo Sales: WTF and Other Measures [Curbed Boston]
· Tip of the Iceberg? Charlestown Rental Project Mulls Condos [Curbed Boston]
· Southie Complex Offering Six Weeks of Rent for $100 [Curbed Boston]
· The Smart Money on Boston's 11,000 New Apartments [Curbed Boston]
· The Market Loves Avalon Exeter and Its $10K Apartments [Curbed Boston]
· The Arlington's Apartments Start Dropping: $3,200 and Up [Curbed Boston]
· Radian Boston's $3,000 Studios Up for Grabs Next Week [Curbed Boston]
· Boston's Victor, Its Court and Its $3K 1-BRs Welcome You [Curbed Boston]