Industry experts within the Boston real estate market have recently been speculating that there is an oversupply of luxury apartments in the city, with an estimated 11,000 units coming online in the next few years.
With rents rising and square footage decreasing, many developers find themselves competing for the same target group of prospective tenants: affluent young professionals. A major driving factor as well is the types of apartments that are being developed. Tina Bacci, Principal and Director of Research at RESIS, recently attributed the glut to a lack of studios in the marketplace, stating that many of the existing luxury rental buildings have little to no studios.
Some developers are modifying their plans to condominium development, instead of rental units, to combat the lack of supply in the Boston for-sale market and rid themselves of this fierce rental competition. Those who have chosen to remain in the rental space and battle it out with their competitors are now faced with the question of how to effectively market and differentiate their units to those young prospective tenants. One way they are choosing to ramp up leasing efforts is by offering residents incentives. These include things such as waiving security deposits or first month rent and/or including utilities in the rental price.
As more rental units come online, the possibility of increased incentives grows and gives Boston apartment hunters more reason to shell out the extra buck and call one of Boston’s new luxury residential buildings home. Only time will tell, but this surplus of luxury apartments could be a major benefit and deciding factor for Boston apartment hunters going forward.