2018 Mid Year Review: Greater Boston Market

2018

CONTENTS:

mid-year review

Recent Sales

Greater Boston Market

About UMF

Market Overview

Who We are Since its inception in 1998, UMF has successfully completed 1,200 transactions of investment properties resulting in $1.8 Billion in total investment sales. With direct experience in the acquisition, management, development and finance of investment properties, the UMF team is supported by the latest marketing technology, sophisticated market research, and comprehensive training.

UMF Analysts and Associates apply their varied experiences in real estate, with their extensive knowledge of local and national investment trends, to a pricing and disposition strategy that yields the highest maximum value for clients.

our deal management We CREATE a due diligence file with all relevant property and financial data. This helps us speed up the due diligence process by providing investors information up front making the timeline of the sale much easier for all parties involved.​We do all of this while working with only the most qualified investors and doing it in a manner that ensures no tenants and/or staff find out about the sale until the deal is closed.

Rich Cawley

Kurt Cawley

Jack Creahan

President

Senior Director

Director

617.529.1141

617.875.1073

617.842.0141

rcawley@umf.com

kcawley@umf.com

jcreahan@umf.com

Multifamily, Commercial:

Multifamily, Commercial:

Multifamily: Boston North

Greater Boston & RI

Greater Boston

Shore

how we market To get you the highest price we do things the right way. We spend the time and money to present your property in the best possible way.

we brand

we Maximize

we feature

each property we market with it’s

exposure by utilizing regional trade

your property on our website and

own unique landing page and custom

journal advertising and provide

create an individualized email blast

domain. Our deals are marketed with

additional deal exposure to millions

which goes out to our proprietary list

drone/professional imagery and full

of investors nationwide through the

of 10,000+ investors.

marketing brochures.

most popular commercial real estate sites including Loopnet & CoStar.

E-blast

Interested in selling your property?

Want to get the highest possible price in the shortest period of time?

To find out what your property could sell for in today’s market and how we would market your property please contact Rich Cawley at 617-529-1141 or email rcawley@umf.com.

Landing Page

2018 Mid-Year Review

Greater Boston MULTIFAMILY Sales volume Providence

Essex

$54,090,674

$46,287,800

# of Transactions

Worcester

Bristol

$148,330,000

$59,200,000

Suffolk

$334,681,100

Norfolk $286,925,000

7.9%

$168

$128,383

Bristol

4

7.7%

$100

$120,301

Plymouth

3

7.9%

$163

$173,722

Suffolk

14

5.5%

$435

$310,151

Norfolk

8

5.2%

$252

$268,713

Middlesex

24

5.6%

$284

$248,446

Worcester

6

9.6%

$119

$140,906

Providence

10

8.2%

$100

$82,530

Total/Avg.

84

6.8%

$239

$203,017

The Boston Metro Multi-family market remains white-hot as rent growth continues to climb in Boston’s urban core and surrounding suburbs. It may be difficult to remain on this kind of pace as Boston has not seen this many units under construction since the 1980s. With such a robust pipeline, the general consensus is that vacancies in the area are expected to trend upwardly at a tolerable rate for much of the forecast. The metro area’s strong renter base is expected to keep the demand buzzing, but the big question right now on the minds of many market players is “how much is too much?”. Will the steady rent growth in the Class B/C multifamily product continue with all

Market Indicators $2,500 $2,000

these new construction deliveries? In Worcester, there is expectation of long-term growth in the multi-family sector due to over a half billion dollar revitalization of downtown’s CitySquare.

After having one of the highest unemployment rates in the country from 2011 to 2013, Providence has bounced back and now has an unemployment rate that is in line with the US average. With a record number of units under construction and one of the lowest vacancy rates in New England, watch for this multi-family market to improve alongside its economy.

Units Under Construction Units Under Construction 5.0% 330

4.4% 4.4%

3.6% 3.6%

$1,500

1,416

4.0% 3.4% 3.4%

3.0%

1.0%

$1,388

$500

$1,382

2.0% $2,238

$1,000

$0

Avg. Price Per Unit

15

$9,295,000

$328,468,000

Avg. Price PSF

Essex

Plymouth

Middlesex

Avg. Cap Rate

Boston Metro

Worcester

Providence

Average Rent

18,848

0.0%

Vacancy Rate

Copyright 2018 United Multi Family│Data Provided by CoStar

Boston Metro

Worcester

Providence

2018 Mid-Year Review

Greater Boston office Sales volume Providence $46,514,961

# of Transactions

Avg. Cap Rate

Avg. Price PSF

Essex

8

7.3%

$124

Bristol

4

9.3%

$165

Plymouth

6

8.1%

$178

Suffolk

15

4.7%

$449

Norfolk

16

7.5%

$202

Middlesex

36

7.3%

$218

Worcester

8

9.6%

$120

Providence

12

7.5%

$120

Total/Avg.

105

7.3%

$218

Essex $45,375,824 Bristol

Worcester

$37,630,000

$19,343,469

Plymouth $27,813,494

Middlesex $795,480,123

Suffolk $1,300,450,940

Norfolk $291,009,309

The Boston Metro Office market is as strong as it’s ever been as developers continue to build dynamic new office space capable of attracting major corporations and tech tenants. While construction ticks up, office vacancies have been consistently falling since 2010 and are now the lowest they have been in over a decade. The city’s strong fundamentals call for continued rent growth throughout the next few years. While it’s unknown the decision on Amazon’s HQ2, the city continues to impress new companies with innovative space in desirable locations. Vacancies have also compressed in Worcester to the point where they are comparable with the Boston metro area largely because there has

Market Indicators

SF Under Construction

Office

10.0%

$40.00

$30.00

7.9%

not been much new construction activity over the past five years.

However, rent growth has not correlated as expected for this type of vacancy shrinking but long-term hope does exist for this market due to the City’s downtown revitalization efforts. The key to growth in this market is the retention of millennials who contribute to the young population attending the nine universities that are located here. A sluggish Providence market has new hope based off a local government sparked trend of incoming companies due to tax credits and other incentives. So far over 20 companies have taken advantage of these incentives and set up shop in the market.

154,000

288,000

8.0%

7.8% 3.6%

5.5%

$20.00

6.0% 4.0%

$10.00 $35.44

$19.02

$19.67

$0

Boston Metro

Worcester

Providence

Average Rent/ SF

2.0% 5,000,000

0.0%

Vacancy Rate

Copyright 2018 United Multi Family│Data Provided by CoStar

Boston Metro

Worcester

Providence

2018 Mid-Year Review

Greater Boston retail Sales volume

# of Transactions

Avg. Cap Rate

Avg. Price PSF

Essex

19

6.8%

$182

Bristol

19

7.1%

$148

Plymouth

23

8.3%

$164

Suffolk

21

5.4%

$368

Norfolk

16

5.7%

$314

Middlesex

34

7.0%

$324

Worcester

14

8.1%

$155

Providence

38

6.4%

$157

Total/Avg.

184

6.8%

$228

Providence $88,420,482 Essex

Worcester

$91,833,976

$60,111,754

Bristol $51,885,623

Suffolk

Middlesex $334,681,100 Middlesex

$328,468,000

$107,307,892 Suffolk Norfolk $87,430,558 $286,925,000

Plymouth $54,778,782

Norfolk $31,083,686

The Boston Metro Retail market is experiencing a significant amount of new transit-oriented retail development with strong lease-up rates upon completion. Even with all the new major developments coming on-line vacancy rates remain low. With so much new inventory it appears the downward trend on cap rates since the end of 2009 is now apparent. Nevertheless, the metro area contains only 5.3 SF of neighborhood center space per resident as compared to 7.8 SF nationally, which should help mitigate any risk associated with the large amount of supply that is under construction. The fears of demise for brick and mortar retail is much less in a metro like Boston with such strong fundamentals.

Market Indicators

SF Under Construction

Office

5.0%

$30.00 4.4%

$25.00

3.9%

4.0%

2.0% $24.30

$14.65

$15.29

$0

100,000

3.0%

2.7%

$10.00 $5.00

163,000

3.6%

$20.00 $15.00

Worcester has added more inventory since 2015 than any other New England market, and the vacancy rate still sits more than 50 basis points below the national average. Compared to the Boston metro area rate of 2%, Worcester’s inventory growth since the beginning of 2015 has been 3.5%. Vacancies in Providence are at a cyclical low, but rent growth has not correlated as expected.

Stock growth has been absent in Providence as the market already contains the second largest inventory in New England. However, the market is quite active coming in at 3rd place in the region with a 13% turnover rate over the trailing 5 years.

Boston Metro

Worcester

Providence

Average Rent/ SF

1.0% 1,400,000

0.0%

Vacancy Rate

Copyright 2018 United Multi Family│Data Provided by CoStar

Boston Metro

Worcester

Providence

2018 Mid-Year Review

Recent Sales by UMF

Saugus, MA 69 Units $14,025,000

Quincy, MA 18 Units $3,420,000

Easton, MA 12 Units $1,384,256

z

Interested in selling your property?

Want to get the highest possible price in the shortest period of time?

To find out what your property could sell for in today’s market and how we would market your property please contact Rich Cawley at 617-529-1141 or email rcawley@umf.com.

Rich Cawley

Kurt Cawley

Jack Creahan

President

Senior Director

Director

617.529.1141

617.875.1073

617.842.0141

rcawley@umf.com

kcawley@umf.com

jcreahan@umf.com

Multifamily, Commercial:

Multifamily, Commercial:

Multifamily: Boston North

Greater Boston & RI

Greater Boston

Shore

INSIDE: Market Overview Recent Sales About UMF