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 and people you would not otherwise notice. Follow him on Twitter and check out his ebook, CONTEXT 2015: 14 Hub Condo Markets
Adam Mundt is the leasing manager of Metro Realty, one of Boston's biggest rental agencies. Adam and his wife just moved into the Radian and we exchanged a few emails concerning his love of heavy metal, his lack of golf skills, and the Hub's 2015 rental market.
Describe this year's rental market?
This year's rental market started later than years past for obvious reasons: the weather. … We had an extremely busy March and April because of the pent-up demand. This doesn't necessarily equate to a super-active rental market. It simply means people got a late start.
Are rents going up or down?
Up. And they're renting. The luxury product is pushing rents in the brownstones up a bit because there's a higher demand for the "affordable" units. One area that's interesting to watch is Allston/Brighton. The quintessential "Comm. Ave. brownstone 1- or 2-BR" apartment have BLOWN UP in demand.
Allston/Brighton are becoming more of a young professional area than strictly an "undergrad student" neighborhood. That, coupled with the affordability of rents and some owners who have quality rentals geared toward the professional crowd rather than the undergrads, those units are now renting very quick at rent levels higher than ever.
This is an unusual rental year in Boston, primarily because of the amount of new buildings coming to market. Can you describe what's happening in that market?
The newer, luxury product being rented in the first half of this year has happened a lot easier than I originally anticipated, partly due to the pent-up demand for that product and the flurry of activity after the brutal winter (excuse the pun).
However, I believe the competitiveness of the condo market helps this along as well. Young city dwellers found out that THEY CAN'T BUY ANYTHING. So, many of these first-time homebuyers are transitioning back to renters and a lot of them are interested in this new luxury product. Sure, they may be splurging a bit from what they're used to but they're not blowing money they don't have. Using the industry standard measure for what a person can afford, these rents aren't as crazy as they sound—Boston just isn't as used to it like folks in N.Y. or other major metropolitan cities. Work in the free rent and savings from the broker's fee into your bottom line and, dare I suggest, you're getting a good deal?
These rents aren't as crazy as they sound—Boston just isn't as used to it like folks in N.Y. or other major metropolitan cities. Can you talk a little bit about what's so appealing about living in these buildings?
These buildings offer a new, luxury lifestyle that Boston really hasn't ever considered available to anyone other than the super-affluent who live in the likes of the Four Seasons or the Pru or the Mandarin or the W. The notion of "luxury apartments in Boston" simply translated into "unaffordable" for a lot of us.
However, once that product is more widely available, some see that it is indeed within reach, and that is really appealing to them, which is why I don't think these buildings will have a huge problem getting filled. And, let's face it, there's something to be said about being the first person to live in a brand-new unit. It's a good feeling and pretty rare in Boston with its collection of century-old brownstones.
Will this happen overnight?
No. BUT, I did watch Pier 4 go from 295 vacancies to 150 or so in the matter of about six weeks, which is pretty damn good in my book. The Radian looks like they're mostly sold out with a few of their penthouse units remaining. We'll have to wait and see how the AVA Theater District and One Greenway go since they're in the same 'hood as each other and the Radian.
Is there anywhere in the city that it looks like there might be too many new apartments?
The Fenway area will be an interesting area to watch this year as the season goes on. Between 1330 Boylston and the Fenway Trilogy and Van Ness and Viridian, they're essentially prospecting the same renter. This is about 1,100-plus units, which is a tremendous amount when you're talking about a very defined area and demographic. That's a lot of vacancy to fill. I'm not sure that area can support THAT MANY luxury units but we'll see.
This is when bigger incentives will drop—multiple months of free rents, free iPads, etc. What advice would you give prospective tenants this year?
I have a feeling that we'll see a decent collection of apartments still be available come late summer/early fall and this is when bigger incentives will drop—multiple months of free rents, free iPads, etc. It will happen—and if you have the luxury of waiting until the season is over to rent, you'll be able to take advantage of some great opportunities.
You already have a month free here and there and brokers fees being paid—watch for that to get more aggressive as the year goes on. So, for renters, if you can wait through the season, you'll be in good shape. This isn't terribly unique from years past—the difference is that this year, you'll have plenty of options. Instead of sifting through the undesirable "left-overs," there will be plenty to go around.
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