Apartment rents dropped by double digits in many high-priced Boston neighborhoods in 2020 amid a rate war as tenants looking for cost savings opted for suburban locations, according to a new report.
The average asking rent declined 11 percent in 14 Boston neighborhoods, with biggest declines in the downtown area, according to Boston-based brokerage The Collaborative Cos. In addition to reducing rents, many landlords offered up to three months free rent both for new residents and renewals.
Downtown Crossing, Chinatown and the Midtown neighborhood which includes the Theater District had the biggest declines, all with asking rents down over 20 percent.
“They rely on both the student population, and people who work in the Financial District in buildings that closed down,” said Sue Hawkes, managing director of The Collaborative Cos. “You had a greater degree of outmigration in that grouping.”
Some of the biggest rent declines took place at newer luxury properties. Monthly asking rents at AvalonBay Communities’ Ava Theater District tower dropped 29 percent to $1,963, while Lendlease’s Clippership Wharf in East Boston saw rents fall 25 percent to $2,536.
Properties with extensive amenity spaces suffered as COVID-19 forced landlords to close lounge and fitness areas. Microunits with square-footage under 400 square feet saw the smallest rent dips, according to TCC.
Only one neighborhood included in the report, Brighton, had an increase in asking rents, but that figure was skewed by the opening of the 500-unit Overlook at St. Gabriel’s complex. Rents elsewhere in the neighborhood declined 15 percent.
By contrast, suburban apartment rents were largely stable and increased in many buildings outside Interstate 495, the TCC report said.
The benefits to renters are likely to be short-lived as the ongoing vaccine distribution points to a recovery for urban living, and a rebound in Boston rents that have consistently ranked among the nation’s four priciest apartment markets in recent years.
“We’re starting to see the market come back, but it’s going to take a while [for rents to rebound],” Hawkes said. “You don’t want to erode your stabilization and everybody leaves again because they can’t afford a 12 percent increase in their rent.”