Communities Open Doors To More Rental Housing
PHOTO/COURTESY
Nelson Zide, of ERA Key Realty Services in Framingham: “Location is still No. 1. The better location you are, the higher rent you can get.”
Adding to the growing list of signs that the state's economy is on the upswing, permits for multifamily housing jumped 84 percent in 2012, from 2,752 to 5,019. That prompted Gov. Deval Patrick in November to announce a state goal of 10,000 units per year this decade.
Central Massachusetts communities were among the 24 in the Bay State that had more than 50 permits pulled last year, with some of those cities and towns seeing significant action compared to 2011.
Most notable was Natick, which, according to the U.S. Census Bureau, approved permits for 524 units. Patrick Reffett, the town's community development director, said most of them are in the 407-unit Avalon Natick on Chrysler Road. Reffett said Avalon is ideal for young professionals and empty nesters alike who work in Boston because of close access to Interstate 495, Route 128 the Massachusetts Turnpike and other major roads.
“That is what has made the Cloverleaf Apartments project work really well,” Reffett said. “That's what Avalon's betting (on).”
Cloverleaf is a 10-story high-rise on Speen Street with more than 180 units built about four years ago. Both are especially significant to Natick because they help the town exceed the state's goal of each community having 10 percent of its housing stock deemed as “affordable,” or geared toward renters who earn up to 80 percent of the area's median household income.
But while the two developments are appealing because of their proximity to major highways, Reffett said Natick would like to see more attention on the downtown area, where there is access to train and bus transportation, and businesses that need patrons.
“Having more people in our downtown we think is smart growth,” he said. But he added, “That's a hard one to push. It really takes the right developer with the right property and the right vision.
“We don't really predicate what happens when. It's more a matter of what the private sector wants to do,” he said.
And an increasing portion of the private sector is turning to rental housing. According to the U.S. Census Bureau, the percentage of Massachusetts residents living in rental housing rose from a pre-recession level of 34.9 percent in 2007 to 37.9 percent in 2011.
Leif Rosseland, manager at Coldwell Banker in Worcester, noticed a rise in home buying over the last year, but believes economic uncertainty is leading the uptick in renting. He said consumers aren't hearing enough positive news about the economy to go out and buy homes. In addition, foreclosures since the onset of the recession in 2007 have helped rental numbers.
“There's probably a portion of the renters that you see that have kind of clogged the marketplace that could have been people who lost their houses,” he said.
Rosseland said people whose homes were foreclosed on often don't have the option to buy another house because of the damage to their credit.
But aside from negative news, there may also be a change in what people want from housing.
A December report by the National Multi Housing Council said that if current trends hold, up to 400,000 apartments will need to be built annually in the U.S. for the rest of this decade to meet demand.
And, according to a statement from Greg Bialecki, the state's secretary of housing and economic development, “The trend in housing is people are looking for homes that are accessible to public transit and the commercial core or town center.”
Accordingly, Massachusetts developers are building more rental units. The Census Bureau reported that the proportion of multifamily housing permits increased from 38 percent of total permits pulled in 2011, to 48 percent in 2012.
In Central Massachusetts, at least 10 communities that didn't report multi-family housing permits in 2011 reported two or more in 2011. In addition to Natick, other communities that reported a spike in permits were Holden, with 84, Lunenburg, with 41 and Hopkinton, with 66. All three can attribute most of the permits to one or two major developments.
In Hopkinton, the major development is the 730-acre Legacy Farms mixed-use development. It includes 50 single-family homes, 650 townhomes, 240 rental units and 450,000 square feet of commercial space.
Legacy Farms recently secured permits for two, 30-unit apartment buildings. Elaine Lazarus, the town's planning director, said that in the 20 years before Legacy Farms, Hopkinton was mostly single-family housing.
“I think the whole Legacy Farms (project) … changed the landscape of what the housing development here is going to be and what the future is going to look like,” she said.
Location Remains Key
Nelson Zide, owner and broker of ERA Key Realty Services in Framingham, said that when it comes to what developers are looking for in multi-family housing, it comes down to location and how much money they have to spend.
“Location is still No. 1. The better location you are, the higher rent you can get,” he said.
In a statement announcing the 2012 permit numbers, Marc Draisen, executive director of the Metropolitan Area Planning Council, said multifamily rental housing is especially needed because rents stayed high during the economic crises of the past five years.
Zide said the fact that rents are high is one thing that appeals to developers today. He said that low interest rates and lower prices are leading to an increase in demand from buyers looking for multi-family housing units.
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