The Demand For Condo Market Is Outpaced By Rental Units As Boston Economy Rises
With more than 50 colleges and educational institutions of all kinds, combined with strong job overall growth, investing in Boston is now becoming a hot spot for investors and lenders. However, the investment growth does not favor the condo market but rather the rental unit market. In the early part of 2011, the officials of Boston have allowed developers to build 1,000 units to decrease condominium and increase rentals like the luxury apartments Boston will serve to its market. According to Boston Redevelopment Authority director John Palmieri, Boston is expecting to have a total of 1,855 apartment rental units to be built in 2011 and 830 of those were supposed to be condominiums.
Rental rates in Boston were up by up to $4 per square foot while the construction cost was down to $500 per square foot. With these prices, developers believe that they can build high quality apartments for rent Boston can be proud of and have it rented at a price of more or less $5,000 a month and this will definitely give investors a good yield of income on their long term investments. Investors believe that rental in Boston will have an increase of 3.5 percent in 2011, which made many investors and developers decided to move on to Boston.
Another reason why many developers are invited to build apartment rentals in Boston is the strong real estate fundamentals and economy growth due to the industries of the 21st century including biotechnology as well as the stable large number of medical and educational institutions found in the area. Many companies are having their workers assigned to their Boston location, either on a permanent or medium term basis, which also helps fuel the demand for housing in the Boston area.
Job growth in Boston is outpacing other cities of the country like San Francisco. This year, Boston has expected new positions of 49,000, which is a huge increase from 37,500 last year. Sectors to offer new jobs include business consulting, technology, life sciences, higher education and health care.
Targets of renters in Boston include students, health care institution staff, families with foreclosed property, those who lost their jobs, those who accepted a lower paying job, and those who believe that residential values will continue to fall, making purchasing a home a bad idea for the moment due to uncertainty in residential single family homes.
Developers consider the Back Bay as the best place to invest in Boston. In fact, a developer will build a 188-unit apartment building this year in that area. There are also many other neighborhoods in Boston where apartment buildings are either being built from completely new development projects, or old and dilapidated buildings are being restored. We can also see some commercial properties being renovated and re-purposed as residential housing units in some areas.
by: Bruce Garland