Boston Common - Niche Media - A side of Boston that's anything but common.
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Confessions of a Power Broker rental resurgence DEVELOPERS MAKE A STAMPEDE TO BUILD LUXURY RENTALS DOWNTOWN. by kevin J. ahearn B A BLEND OF HOLLYWOOD GLAMOUR & MODERN TECHNOLOGY BOSTON'S MOST LUXURIOUS AND STATE-OF-THE-ART PRESENTATION SPACE THEATRE | FILM | MEETINGS | EVENTS THEATRE1BOSTON.COM CU R R E NTLY BOOK I NG EVENTS FOR THEATRE 1 AND SPACE 57 APR IL 2012 200 STUART STR E ET—BOSTON 617.457.2623 something oston has remained a strong housing market throughout the economic downturn, but interesting has been happening as we move toward pros- perity: Thousands of new rental developments have recently either been approved or begun construc- tion. For the first time in a long time, the rental market has tightened— good news for landlords—so the city needs new rental inventory. The reasons behind the rental surge, in particular luxury rentals, have a lot to do with the strin- gent mortgage environment; it's simply harder to get a mortgage now. Many would-be buyers with limited funds for down pay- ments or other financing hurdles opt instead for luxury rental buildings with all the amenities and conveniences of condomin- ium ownership. But the push for rentals also comes from developers and banks. The national real estate investment trusts prefer to develop rental buildings for the recurring income, AvalonBay Communities, record-low interest so the big players Simpson Housing, rates—has like and Equity Residential choose the rental route, and the low cost of funds— namely, recently made luxury BOSTON'S NEWEST VENUE A BLANK CANVAS FOR THE MOST INSPIRED EVENTS SPACE57.COM rental development more feasible and attractive. Banks are also not lending as much to big developers for new condominium proj- ects, largely because of the flailing national housing figures. Many economists support the theory that, going forward, there will be a much higher, permanent rental profile in housing as we move away from aggressive homeownership policies and sub- prime lending. Interestingly, though, Downtown Boston has survived the global housing bubble admirably well, especially in the luxury segment. The city traditionally has been an ownership profile and is a very mature market with 20-plus years of strong appreciation. This strength will likely lead to a new cycle of condo- minium development, similar to the 1998–2008 period, when the market absorbed more than 3,500 new units across the city. New developments here can be comfortably financed based on current values in the marketplace. Also, the total inventory of condomini- ums is at just a 3.2- to 3.5-month supply—a tight market in any economist's view. The stars are aligned for another good run in luxury rentals, followed by condominiums, and it's a good thing— the city needs the tax base and revenue. Kevin J. Ahearn is the owner and president of Otis & Ahearn Real Estate; otisahearn.com. BC photograph by Jesse burk