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. Check out his ebook, Context: Nine Key Condo Markets, 2.0.
Bisnow recently held its third annual "State of the Seaport," an event where many of the most active Seaport players discuss what's going on in Boston's hottest locale for new development. Below are some of the interesting insights regarding the Seaport's residential component.
· Boston Global Investors is developing Seaport Square, a mixed-use development that will include 850 apartments. John Hynes, CEO of Boston Global Investors, said that one of the things that will separate the Seaport District from other Boston neighborhoods is that it will be 30 percent commercial and 70 percent residential. He estimated that the Financial District is 95 percent commercial and Back Bay is probably 50/50.
· Matt Edlen of Gerding Edlen said the developer leased all 38 apartments at their new Factory 63 "in about a week" and that about 50 percent of the 202 units being developed at their building 315 on the A are already leased. There was a lot of talk about the diverse demographics of the tenant base, too. "Almost every single person who lives in those buildings works within about a five- to 10-block radius," Edlen said. "The demographics in this market are not specific to age, but an aspirational lifestyle," he added. Other panelists agreed that the aspirational lifestyle was the draw of Seaport apartments.
· Hynes estimated that there are 6,000 to 7,000 apartments in the development pipeline for the Seaport. He says the unit distribution is probably 60 percent studio or 1-BR; 25 to 30 percent 2-BR; and 5 to 10 percent other. "One of our personal corporate goals is to increase the other," Hynes said.
· ADD Inc. was involved in creating the master plan for the Seaport and is active in the design of a number of buildings there. James Gray, a principal at ADD, said that the "other" is going to have some diversity: "I don't think it's just for older folks coming back to the city who want to entertain their grandchildren. I think that it's going to be folks of divorce that have children. I think it's going to be the innovation folks, people who want to live together. I think that's an underserved market that you can only get in Allston-Brighton in bad housing." He also said that people shouldn't worry about the micro-apartment component of the Seaport as micro-apartments will only make up about 500 of the approximately 7,000 units.
· One of the panelists indicated that they were all concerned about affordability issues in the Seaport. Referencing fears that all the high-end apartment development was contributing to fears of a glut in the luxury housing market, ADD's Gray noted that a lot of the most recent luxury development was "delivered in inopportune rental seasons like November and December." As a result, he didn't think there was enough evidence to suggest whether a glut was looming or not.
· Hynes, on the other hand, was the most outspoken panelist about Boston's need for high-end apartment development: "I think there is a pent-up demand for rental housing in the city and there has been a pent-up demand for rental housing for well over a decade." Building a case for Boston's need for new apartments, he pointed out that only a very small percentage of the 150,000 apartments that make up Boston's apartment inventory had been built since 1970.
· "We are not used to seeing this much residential high-rise construction in the city of Boston," Hynes added. "We're just not used to it. If the rental market increases by 1 percent a year on a 150,000 base, that means this city needs 1,500 units a year. That's nothing, 1,500 units a year." He added that Boston's vacancy rate was already very low and he thought Boston's need for apartments would grow even more than 1 percent a year.
· Our Bates By the Numbers archive [Curbed Boston]