Rents are still rising in Greater Boston, but not as quickly as they were a couple of years ago.
The opening of new apartment buildings in the region has helped to blunt the surge in rents, according to two new reports, the latest sign that the wave of development is starting to have an effect on housing costs.
Rents were essentially flat in the last three months of 2017, according to real estate data firm Reis Inc. The average rent of $2,117 a month is 2.9 percent higher than a year ago. That’s half as much as the rate of increases in 2014 and 2015.
That’s mostly because the supply of apartments has increased. In 2017, large apartment complexes opened from the Seaport to Brighton to Jamaica Plain, and in several cities and towns around Boston. All told, about 6,000 units have opened in the core of Greater Boston in the last 12 months, according to The Collaborative Companies, a real estate marketing firm in Boston.
That’s prompting landlords to compete for tenants by offering incentives like a month’s free rent. It’s giving renters — at least at the high end of the market — a bit of a break.
“You have to be flexible on concessions. That has become the norm,” said Sue Hawkes, managing director of TCC. “But investors still clearly have a lot of faith and confidence in the Boston marketplace.”
Indeed, more new building projects are getting underway. The long-awaited Fenway Center complex just broke ground on 312 apartments. Kelly Saito, managing partner at codeveloper Gerding Edlen, said his firm is aware of the slowing rent growth, but decided to push ahead with construction because of the high number of new jobs in the region.
“We see a lot of new buildings fighting for tenants,” he said. “But we also see a lot of demand.”
So does Bruce Percelay. His Mount Vernon Company — one of Boston’s biggest landlords — filed plans with the city Monday to build an 83-unit building on North Beacon Street in Allston, with 74 apartments and nine condominiums. That’s on top of a 132-unit apartment building Mount Vernon is building on Western Avenue in Brighton, set to open later this year. While rents at the high end may be leveling off, Percelay says he still sees opportunity for mid-priced apartments.
“The demand for middle-market and entry-level apartments is still very strong,” he said. “Providing units like that, and creating a really interesting environment at the same time is a terrific formula.”
Not far from Mount Vernon’s Western Avenue project, Boston-based Dinosaur Capital on Monday also told the city it wants to build 211 apartments and 38 condos on Soldiers Field Road in Brighton.
Boston officials said the city issued permits for more housing in 2017 — 5,349 units — than it has in any year since it started keeping records in the early 1990s. Through November, the region as a whole was on track for its second-busiest year for multifamily permits since 2004, behind only 2015. Those are buildings that will open in two or three years, a sign that developers believe strong demand will continue.
Modest rent growth is probably healthy for the market, said Sheila Dillon, the city’s top housing official. It gives developers an incentive to keep launching new projects, and adding to Boston’s housing stock, but doesn’t overwhelm tenants worried about steep increases.
“It means rents are stabilizing,” Dillon said. “Ideally, we want to get rents down, but that sort of increase is manageable.”
Still, the Boston area remains one of the most expensive rental markets in the country. Of the 79 markets Reis tracks, only New York City, San Francisco, and San Jose had higher average rents. And rents have generally climbed faster in less-expensive neighborhoods and adjacent cities — such as Quincy and Chelsea — as well as in areas with relatively little development than they have in the pricey core of Boston, where the pace of construction has been brisk.
That has housing advocates, business leaders, and, increasingly, elected officials, calling for more construction across Eastern Massachusetts — not just in the city itself.
The Baker administration recently rolled out new programs it hopes will spur more building in suburban communities, and the mayors of 14 inner-ring cities and towns have pledged to spur more development, with a regional housing goal due to be set in March.
As part of that effort, Dillon said, the Walsh administration may increase its current target of 53,000 housing units by 2030 — a target the city is on track to meet — and, in particular, may raise goals for affordable housing.
“That’s certainly on the table,” Dillon said.
If it does do that, and if builders keep building, rent price growth could stay in check for some time to come.Tim Logan can be reached at firstname.lastname@example.org. Follow him on Twitter @bytimlogan.