Developers: Demand For New Rental Stock High In MetroWest
Emily Micucci
Matt Senie, a partner with Riverbridge Development, gestures to an empty field in Berlin where his family's company hopes to build 205 apartments and a hotel.
When it comes to demand for rental housing, as Boston goes, so goes MetroWest, and developers are planning new apartment complexes throughout the region to take advantage of a rental boom.
Reis Inc., a research firm that publishes data on the commercial real estate market, has reported record-high rents and low vacancy rates in Boston over the last two years, and the situation appears similar west of the city.
Vacancies Down West Of Boston, Too
According to data provided by Reis, the rental housing vacancy rate has declined steadily in three submarkets west of Boston, which include Middlesex, Norfolk and Worcester counties, over the last three years. It dropped most dramatically in the southeast suburban submarket, which includes towns near Interstate 495 like Franklin and Millis, from 7.5 percent in the first quarter of 2008 to 3.6 percent in the first quarter of 2013. In turn, rents have reacted to those changes, with asking rents increasing in all three submarkets, as well.
But apartment developers say it's not just that demand for rental housing has increased in MetroWest. They say would-be tenants want newer, better rental options to choose from.
Special Permits Often Required
In many towns, it has been decades since new apartment buildings have been constructed as communities have passed laws to prevent further rental housing development to prevent a strain on town services.
This is true in Framingham, which recently granted a special permit to developer AvalonBay Communities Inc., a Washington D.C.-based company with regional offices in Boston, to build 180 rental units near the Framingham-Wayland boarder. Scott Dale, senior vice president of development for AvalonBay, said it's the first new rental project in town in about 30 years.
With the new Framingham complex, and another the company is planning for a mixed-use village at the former Hewlett-Packard campus in Marlborough, Dale said AvalonBay hopes to attract a population of renters that has historically been underwhelmed by the region's rental options. Dale said many area complexes were built in the 1960s and 1970s.
"I think they certainly fill a portion of the marketplace but what we'll be providing, I think, will be something with a higher-level finish, new amenities," Dale said. "And it will do very well in the marketplace."
AvalonBay decided to pursue the Framingham project because its nearby complex, Avalon Natick, off Speen Street, is filling up quickly. That's evidence that professionals want to live in MetroWest, often to be closer to their employers, if they can find homes that meet their standards, according to Dale.
"We think we'll capture a fair number of people who need to live in that area…because of their employment situation or (they're) moving out of another apartment or unit and want to stay in that area," Dale said.
As for the mixed-use project in Marlborough, which will include 350 luxury apartments adjacent to office space, restaurants and retail stores, Dale said that, too, presents an opportunity to capitalize on the growing interest people have in living close to their jobs with easy access to amenities.
Matt Senie, a Berlin-based developer, has applied a similar concept to his plans for a mixed-use village just off Interstate 290 in Berlin. The project, known as Riverbridge, has already attracted a gas station and convenience store and day-care center as tenants. That center is under construction, while the gas station and store are open for business.
Senie is now working on a deal to develop a hotel and 205 apartments in rolling pastures he purchased from a local farmer. He said there's been a palpable shift in the rental market over the last year, and he's feeling it. More potential buyers are inquiring about purchasing his apartment project, as Senie plans to sell a stake in it before construction begins.
With interest warming up, Senie said he'd be "very disappointed" if the apartments aren't built in 2014.
New Generation Cautious About Home-Buying?
So, who wants to rent an apartment in Berlin? Senie said his target market is a mix of retirees who no longer want to own a home, and young professionals who have been "underemployed" in the down economy and are
"afraid to pull the plug on that first home," Senie said.
Senie believes young professionals are more conservative about spending on housing than their parents were. They've seen the toll a recession can take, Senie said, and after losing a job, or knowing someone who has lost one, they're more apt to rent rather than buy.
"I think that's just made apartment living a whole lot more attractive," Senie said.
MetroWest is also something of a haven for people who aren't ready to buy a house yet, but shun the hustle and bustle of Boston.
"Amazingly, some people just don't want to live in the city," said Roy MacDowell, owner of Baystone Development, which planned AvalonBay's project in Framingham and recently finished building Legacy Farms, a 240-unit rental development in Hopkinton.
It's the town's only "first class" rental complex, MacDowell said, meaning it has coveted amenities like storage and walking trails. The beauty of being among the first wave of developers to create new rental housing stock in MetroWest, according to MacDowell, is that competition is minimal — for now.
"If someone wants to live in a new apartment, they have no choice," MacDowell said.
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