“Boston’s high home price-to-income ratio, combined with its outsized college and university student pipeline, make it uniquely positioned for long-term growth in the multifamily sector,” Keenan said. “This dynamic workforce has allowed Boston’s economy to diversify and thrive, which supports strong demand for rental housing and positions the city and the multifamily housing sector for sustainable growth.” 

Blending home and office

Investors can consider opportunities to make apartment properties more appealing to people in remote and hybrid work.

“Property owners will want to think about ways to make their units and buildings as user-friendly as possible for renters who are working from their apartments,” Keenan said. 

Providing strong internet connectivity is a clear first step. Other enhancements, such as package delivery facilities and conference or meeting spaces, are becoming increasingly common, he said. 

Higher-for-longer interest rates

Interest rates remain elevated as the Federal Reserve seeks more signs of progress on bringing inflation to its 2% target.

High rates have pushed Boston cap rates up slightly, largely due to increased borrowing costs, Keenan said. But the market has strengths attractive to investors with a long-term view.

“Demand for existing assets remains strong,” Keenan said. “And while Boston multifamily development has increased substantially over the last 10 years, it has had less of a ‘boom and bust’ feel to it as the city’s economy continues to attract consistent corporate investment and create jobs.” 

That’s in part due to the city’s universities and colleges and highly educated workforce. Slightly more than half of Boston metro area adults have at least a bachelor’s degree, compared with 35.7% nationwide, according to the U.S. Census Bureau. 

Investors seeking or refinancing apartment loans while interest rates remain elevated may want to explore options that provide flexibility when interest rate relief arrives.

Keep an eye on transit hubs

Recent legislation requiring certain communities to allow multifamily housing near transit hubs could provide opportunities for multifamily development. 

Easy access to public transit is often in high demand, and not just within the multifamily sector. Employers also value commuter-friendly locations. But the current interest rate environment may have reduced one source of competition, Keenan said. 

“Competition with biotech developers for sites near public transit has diminished with the increase in interest rates, hence multifamily developers with longer investment horizons may want to consider opportunities to take advantage of a lull in life-sciences development,” he said.