Vertex @ Fan Pier & Growth in Biotechnology Industry Pushes Boston Apartment Market Demand

Boston Apartment Market Among Nation’s Strongest

Article Courtesy of:  Citybizlist

Fan Pier Boston Apartments

Boston Apartment Market Fueled by Growth in Biotech

Fueled by growth in the biotechnology industry, Boston will be one of the top-performing apartment markets in the nation this year, according to the Marcus & Millichap 2012 Market Forecast.

Pharmaceutical companies are rapidly expanding in the area. The redevelopment of the South Boston Waterfront, for example, is attracting Vertex Pharmaceuticals. The company announced plans to relocate their world headquarters to Fan Pier by 2013, a move that will spur economic growth and support demand for Class A apartments in surrounding areas.

Additionally, thousands of construction jobs will be created, sparking demand for Class B/C rentals.

Elsewhere, in the Cambridge/ Watertown/Waltham and Brookline/Brighton/Newton submarkets, expansions by several biotech companies, including Novartis, Merck and Amgen will expand the renter pool for high-end units. With home prices still out of reach for many residents, apartment vacancy in these areas will compress to the sub-2-percent range this year. Overall, vacancy will dip below 4 percent this year, facilitating healthy rent growth for apartment operators.

In an attempt to acquire best-in-class apartments, institutional investors will reposition their portfolios to core markets, including Boston, pushing smaller syndicates to suburban areas. REITs will dispose of assets in secondary markets to deploy capital in trophy assets located inside of state Route 128. As bidding activity remains elevated and interest rates hover near historic lows, cap rates for these properties will compress to the mid-4 percent range this year.

In the suburbs, meanwhile, buyers looking for outsized returns and lower price points will target value-add properties near transportation corridors in Norfolk and Essex counties. Well-occupied assets below the $5 million threshold will trade at initial yields around 8 percent.

Depending on location, owners may be able to reposition the property to attract more affluent renters and elevate rents.

Article Courtesy of:  Citybizlist

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