Boston's multifamily rental market experienced a modest uptick in 2024, with rents rising 2.6 percent compared to 2023. However, the sector showed signs of deceleration in the fourth quarter, as growth fell 30 basis points behind the previous quarter's performance, according to a Colliers report.
Also, the vacancy rate hit 5.9 percent, up 30 basis points from the third quarter and 10 basis points from the city's historical decade average. Vacancies were the highest in the Malden and Everett submarkets, at 6.1 percent and 5.5 percent, respectively.
"Recent deliveries contributing to this trend gave tenants more leverage," Colliers said of the elevated vacancies in the fourth quarter.
"Landlords, especially in recently delivered communities, are offering renters a variety of concessions."
Since 2020, institutional inventory in the Greater Boston multifamily sector has spiked by over 17 percent, as developers in the metro have chased the demand following the pandemic, according to Colliers. Also, high supply caused vacancies in the luxury apartment segment to reach 8.3 percent, exceeding the pandemic low of 6.3 percent.
"The Inner Suburbs and Worcester led in growth. Notably, neighborhoods such as Fenway/Mission Hill and Allston/Brighton in Boston added supply, with nearly 1,500 units in Fenway since 2022, and more than 1,600 units in Allston/Brighton," Colliers wrote.
"Suburban areas like Route 128 North are now leading the pace of construction as construction dwindles."
That said, multifamily in the city still appears to be in a strong position.
Out of the 80 largest multifamily national markets, Boston currently ranks 14th for occupancy, according to CoStar. Add that to the fact that rent growth in the city is still outpacing the national average.
Additionally, the local economy looks solid. The 2.3 percent GDP growth in the city for the last three months of 2024 was on par with the nation's quarterly average since 2000.