Kendall Square: An Overview of the Rental and Housing Market
Renting a place anywhere in Greater Boston is more difficult than ever, and the problem is particularly acute in Cambridge. If you have been eyeing that city’s wildly successful Kendall Square neighborhood as a potential new place to live, you should know from the start that you’re in for a major challenge. Between high demand, low supply and staggeringly expensive rent prices, securing the right apartment in that area is no easy feat. Fortunately, Boston City Properties is here to educate you regarding this topic so you can more easily find the perfect rental.
High Rents and Low Availability in the Square
The square itself long ago spread from its initial boundaries, so the entire neighborhood now takes its name from the square. This eastern section of the city spent many decades in virtual squalor – but that all changed starting in the 1990s. Today, this neighborhood now boasts a commercial market that rivals that of Midtown Manhattan – at least in terms of prices – and approximately one-third of the city’s tax revenue comes from the hundreds of high-tech tenants, including many biotech and information technology firms, that call the area home.
Finding Places to Rent with Boston City Properties
If you are in the market to rent a place in this bustling neighborhood near MIT, you’re going to want all of the help that you can get. This article is a great place to start because it outlines the current state of the rental market in this neighborhood and city, and it provides useful information for locating and securing a rental that suits your needs and budget.
Of course, this article is only a starting point in terms of the types of support that Boston City Properties can provide to apartment seekers throughout the area. For one thing, we operate one of the most comprehensive online databases of searchable Massachusetts real estate listings around. Listings are updated continually around the clock, and they’re culled from reputable and reliable sources like the MLS. Gaining access to these listings is easy. Just complete the simple signup form, and you can start searching right away with no restrictions.
Our powerful search tool makes it a snap to quickly zero in on places for rent in this bustling neighborhood. For example, you can select this neighborhood to limit your search to within its boundaries. From there, you can adjust filters for things like total square footage and total bedrooms and baths to quickly pinpoint promising options. Boston City Properties also has connections with experienced real estate agents in this neighborhood and in neighborhoods elsewhere in this city and Boston, and we can put you in touch whenever you are ready to proceed.
The Current State of the Rental Market
In 2019, rent prices across metro Boston are up by 2.97 percent over the previous year. In the last month alone, in fact, they have increased by more than 1 percent. This indicates that the upward trend in rent prices is poised to continue, so you shouldn’t expect to see any reprieves any time soon. In places like this city, Boston and Brookline, year-over-year increases have been even more dramatic. A one-bedroom unit in this city, for example, now averages around $2,500 per month – an increase of 4.5 percent over the previous year.
Rent increases in this city, Boston and other popular areas have prompted people to move outward for more affordable options. A prime example of this can be seen in Waltham, where median rents skyrocketed dramatically recently. Between December 2017 and December 2018, rent prices there experienced double-digit increases. One-bedroom unit rents rose by 16 percent to $2,180 per month, and two-bedroom unit rents rose by 15.9 percent to $2,550. Much of the blame for the increase in rent prices in Waltham is being attributed to the boom of key commercial areas like the Square.
In this city, the average size of a rental is around 850 square feet. You can find everything from tiny studios with a couple hundred square feet of space to sprawling three- and four-bedroom units with upwards of 2,000 square feet. Naturally, you will pay increasingly higher rent the bigger you go. Older buildings with fewer amenities tend to be a bit cheaper, and you can expect to pay market rate or higher at the many luxury developments that are located here.
About the Boston Housing Market
You can’t hope to be educated about renting a place in this bustling neighborhood without having a decent understanding of the region’s housing market as a whole. After all, housing prices and availability play strong roles in rental prices. Not surprisingly, the overall residential housing market has been and continues to be on a major upswing. Since last year, for example, median home sale prices increased by $24,000, or about 3 percent. The average price per square foot rose from $1,045 to $1,065 during that same period.
At the same time, the number of home sales may have flattened out for a while, but they appear to be back on the upswing again. Still, home prices are exceeding high across the city of Boston, with the average for all homes hovering around $909,000. One-bedroom homes average around $644,500 at the moment while two-bedroom abodes cost upwards of $1.1 million. Three-bedroom homes have a median sale price of around $2 million, and four-bedroom homes average around $2.95 million. With home values so astronomical, it makes sense that many people must rent – but those very people are struggling to find affordable rentals too.
Why is the Rent So High in Cambridge?
As you will quickly see after checking current availability for rentals in this neighborhood via Boston City Properties’ searchable online database, rent prices in this neighborhood, across the city and throughout metro Boston continue to be astronomical – and they are poised to keep increasing for the foreseeable future. Many factors have converged to create this high-rent situation, and the top ones are highlighted below:
1. The Biotech Boom
As difficult as it may be to believe, Kendall Square was long a rundown and uninviting place to live. Today, it is home to one of the most valuable real estate markets in the world. The neighborhood owes almost all of that to the influx of biotech firms, pharmaceutical companies and information tech companies that have flooded in over the last several years.
For many decades, this neighborhood didn’t have much to offer in terms of business. Today, more than 60 public companies valued at more than $170 billion are located within its borders. The vast majority of these are biotech firms, but global pharmaceutical behemoths like Takeda Pharmaceutical Company have also set up research and business operations there. Incredibly, the city now competes with Midtown Manhattan in terms of commercial real estate value. The average rent for the third quarter of 2018 in this city for office space was $82.23 per square foot; in Manhattan, office space rents for around $82.51 per square foot. Even more notable is the fact that commercial space in the Square is even pricier at a whopping $85.10 per square foot.
2. Millennial Culture
For long stretches of history, the trend was for young people to relocate to big cities for their educations and early careers but to move out into surrounding suburbs as they moved further into adulthood. Millennials, however, are changing all of that. The trend for this generation is to not only move into big cities for their educations and work opportunities but to stay put there for the long haul – even if it means raising families in the city. Since younger folks aren’t moving away as regularly as before, vacancies just aren’t as available.
3. Graduate Students
One can’t overlook the impact of graduate students from places like Harvard and MIT when assessing the high rent situation in this city. In addition to requiring copious amounts of housing, grad students are better capable of affording larger places with higher rents because they typically pool together. With multiple sources of income, these students can often more easily afford a place than many single professionals or small families.
4. Demand versus Supply
A serious lack of available housing for rent also plays a major role in the ongoing rental price situation in this city. Despite the many efforts that are being made to improve things, construction of new rental units isn’t happening nearly fast enough to keep up with demand. A booming economy continues to bring in new workers, but vacancy rates remain resolutely low. When supply is limited and demand is high, of course, rent prices tend to rise – and that is definitely the case in this city and neighborhood.
As you will see later in this article, many developers are working feverishly to develop new housing. However, the vast majority of the new units that are hitting the market are luxury residences. The developments in which they are housed are new and offer high-end amenities and services to residents. As a result, these luxury developments can charge even higher prices than the going market rate – and this tends to make other developments raise their prices too.
5. A Lack of Rent Control
In many ways, the Square owes its existence and massive popularity to the fact that rent control was abolished in this city, Boston and Brookline in the mid-1990s. Before that – starting in 1970 – strict limits on rent increases were enforced on buildings that were built in 1969 or prior. Out of the three communities that were affected by rent control, the city that is home to Harvard enforced rent control the most strictly. For a while there, almost 40 percent of rentals were under rental caps, so finding affordable housing wasn’t too difficult.
During the rent control era, landlords complained about losing money and about dropping property values because of their inability to increase rent prices as they saw fit. Another common complaint was that many well-to-do people enjoyed the perks of rent control, including many judges – and even the mayor. Rent control was abolished via a 1994 mandate that barely got passed, and then everything really started changing around the Square.
Although property owners did well with the cancellation of rent control, many people lost their homes due to rapidly increasing rent prices. Indeed, from 1994 to 2004, home values increased by $1.2 billion. At the same time, rents rose by over 50 percent. Currently, there are two bills at Beacon Hill seeking to reverse the rent control situation. So far, it is unclear whether either one will succeed. With Governor Barker officially opposing the repeal of the 1994 mandate, it may be something of an uphill battle for proponents to make it happen. Boston City Properties will continue to keep a close eye on the rent control situation; should it change, a lot will also change in the way that rentals work in this neighborhood and city.
6. Zoning Laws
Massachusetts in general and Boston in particular are known for their very restrictive zoning laws. The state has notoriously long given control over zoning to local municipalities, and many communities have their zoning laws set up to discourage high-density housing. As you will see later in this article, however, steps are being taken to address this problem. Whether any changes will actually happen – and whether they’ll happen in time to help you to find an affordable place to rent – remains to be seen.
Efforts to Address the Issues that are Causing Sky-High Rent Prices
On any given day, you are apt to see a news story bemoaning the sad state of rent prices in Boston and in this city, which is located across the Charles River. In other words, it’s no secret that rents are too high here and that availability is too low. Many efforts have been proposed or undertaken to address the issue, and we’ve highlighted some of the most notable ones below:
1. Affordable Housing Requirement Doubled
For many years, new construction for housing in metro Boston was subject to a regulation that required for 10 percent of all units to be designated as affordable. The definition of “affordable” in this context is rent and housing costs that do not exceed 30 percent of household income. In a building with 500 units, then, only 50 would have to be designated as affordable. In November 2018, however, the law changed. New developments are now required to have 20 percent affordable housing. A building with 500 units, then, would be required to earmark 100 of them as affordable.
2. MIT Rezoning Efforts
Not surprisingly, local universities have played prominent roles in addressing the city’s rent price and availability issues. MIT, for example, filed a rezoning petition a few years ago with the city seeking the redevelopment of a large section of the Square. The university wanted the zoning to allow for residential units, and the city ultimately agreed. Because of MIT’s efforts, 250 new housing units for graduate students became available in the city – but that’s just a drop in the bucket when you consider the big picture.
3. Harvard’s 20/20/2000 Initiative
Harvard University has been even more impactful in helping to address the high rent issue in the city. The university launched its 20/20/2000 initiative a while back, and it has been wildly successful. Through the initiative, Harvard committed to spending $20 million over 20 years to provide low-interest loans for affordable housing across all neighborhoods. So far, the university has spent $14.6 million of those funds to develop 33 new housing developments offering more than 1,600 rental units.
4. Changes to Zoning Laws
One of the longest traditions concerning Massachusetts land and housing is that control over zoning is always given to local city councils and the like. Due to the high rent problem and the low availability of housing across the region and state, many people have urged Massachusetts to encourage and even require more multifamily housing across its 351 towns and cities. With new construction only developing at a rate half of that of the 1970s and 1980s, many point the blame on restrictive zoning that tends to frown upon high-density housing.
Concerned about potential issues like over-crowded schools, heavier traffic and increased population density, many suburbs, in particular, have steadfastly refused to open their doors to the development of more high-density housing. What this implies is that communities around the state are unlikely to voluntarily start building multifamily developments. For that to happen, sweeping changes to the state’s zoning laws will be necessary.
Governor Barker now backs a bill that could force communities to allow such developments more easily. The main problem with the local control of zoning is that it has long been subject to local city councils’ high approval thresholds. For years, they have typically required a two-thirds majority for the approval of things like zoning laws. The new legislation, which is backed by the governor, will change that to a simple majority – meaning 50 percent plus one – which would make it much easier for zoning changes to be made. Although the bill has massive support, it has still been challenging to pass, and its fate remains uncertain at this time.
5. More Housing
The bottom line for places like the Square is that more housing is needed. Efforts to promote this are being made, but they are meeting with mixed results in Massachusetts. Governor Barker set a goal of adding 135,000 new homes across the state by the year 2025, but it doesn’t appear that the effort is happening at the appropriate pace – and it is unlikely that adding even that many new homes will help a whole lot.
Massachusetts isn’t the only state that is grappling with the issue of low housing inventories. Oregon just addressed its issues by passing a statewide rent control measure – the first of its kind in the U.S. Under the new rent control laws, most Oregon landlords may now only increase the rent annually by a maximum of 7 percent. In California, where housing is also a major issue, Governor Gavin Newsom is backing a bill that would cut state transportation funding to cities that fail to meet their construction goals for new housing. Many in Massachusetts believe that Governor Barker will need to impose more drastic measures, like CA and OR, to get anywhere with the state’s housing problem.
The History of the Square
The square from which the neighborhood gets its name is situated at Main Street and Broadway, but the neighborhood now boasts a commercial district that expands northwest of the Charles River; east of Portland Street; north of MIT and south of Binney Street. Now considered “the most innovative square mile on the planet” by some, the neighborhood wasn’t always such a hot place to be.
Originally a salt marsh, the land on which the neighborhood now exists was gradually filled in as the population of the city swelled in its early years. In the 19th century, it became a major industrial center. In the 20th century, the neighborhood became filled with electric power plants, factories and distilleries. In fact, the Square gets its namesake from one of these former factories: the Kendall Boiler and Tank Company.
Things changed a bit in 1916 when MIT moved to its current campus in the city. This helped to increase interest in the neighborhood, but the area remained one of squalor and disuse. It looked like things would change dramatically when President Kennedy proposed the removal of old industrial and manufacturing sites via eminent domain. The original goal was to establish the new NASA Mission Control headquarters there, but Kennedy’s successor, LBJ, succeeded in getting them placed in Houston. Instead, a smaller NASA Electronic Research Center was established; it was closed by Nixon just a handful of years later.
The space was mostly inhabited by a Department of Transportation Research Center for the next two decades, and nearby lots stayed mostly unoccupied. Changes to regulations in the late 1970s that made the city more favorable for research and development organizations prompted the creation of the Kendall Biotech Cluster. From the 1990s through the 2000s, the neighborhood evolved from an industrial area to one that was studded with office and research buildings. By 2011, more than 150 biotech and info tech firms had set up shop.
Currently, the population of this neighborhood is around 14,200 people, which gives it a population density of 59,064 people per square mile; for the city as a whole, that figure drops to 17,211 people per square mile. Covered mostly by the 02139 and 02142 zip codes, this neighborhood had a median income of $78,722 in 2016. The vast majority of the homes here were built prior to 1939, with the next largest segment being built during the 1980s.
The Influence of Alexandria Real Estate and Joel Marcus
In 1994 – the same year in which rent control was abolished in MA – Joel Marcus, a real estate developer based in California, set his sights on this city. Clients of his in CA, primarily biotech firms, were actively seeking lab and research space near major academic centers. This prompted the development of Alexandria Real Estate, a real estate development firm that specialized in building labs and the like.
Started with an initial investment of $19 million, Alexandria is valued today at $13 billion. Its growth and influence in this city started around the early 2000s, when Novatis, a Swiss pharmaceutical company, stated its intention of moving its headquarters to the Square. Around that time, Alexandria bought its first building in the city. In 2006, it purchased a seven-building parcel, Technology Square, from MIT. Alexandria converted the buildings from offices to labs, doubled the rent and started filling leases quickly.
Between 2006 and 2008, Alexandria was instrumental in the development of a biotech campus in the neighborhood. It bought parcels along Binney Street even during the recession. Today, the Binney Street corridor is home to firms like IBM Watson and Sage Therapeutics. All told, the developer now owns 35 buildings in the city that generated $318 million in rent in 2017 alone. There is little question that without the intervention of Marcus and Alexandria, the Square wouldn’t be the thriving biotech and commercial center that it is today.
Apartment Developments in the Square
Like many who want to rent a place in the Square, you may have already started looking at the available options. As mentioned before, however, the easiest and best way to do that is by signing up for free, unlimited, instant access to Boston City Properties’ online real estate database. For now, though, we will highlight five great examples of the types of developments and rental units that you can expect to find in the Square:
- Watermark Kendall West – Located at 350 Third Street, this development was built in 2006, stands 23 stories tall and offers 321 apartments for rent. Pets are okay, but pet rent is charged. The premises boast a rooftop deck and an outdoor terrace, and units include washers and dryers and stainless-steel kitchen appliances. One-bedroom units here offer around 700 square feet and currently cost around $3,200 per month. Two-bedroom units offer around 1,200 square feet, and monthly rent is around $3,600.
- The Lofts at KS – This five-story building, which was built in 1979 and boasts 186 units, is located at 195 Binney Street. Assigned garage parking spaces are available for an additional rent charge. Pets are allowed, but pet rent is assessed. The premises include a fitness center, and apartments offer perks like walk-in closets. A studio unit here offers around 600 square feet and rents for around $3,000 per month while a two-bedroom unit offering 775 to 1,000 square feet costs between $3,500 and $4,500 monthly.
- Proto – One of the newest developments in the Square, Proto is located at 88 Ames Street. The building, which was constructed in 2016, stands 22 stories tall and offers 280 rental units. Among its many perks are a 24-hour concierge, a fireside lounge and available housekeeping services. Units here include washers and dryers, walk-in closets and stainless-steel appliances. A Studio unit with 400 square feet currently rents for $2,800 per month while two-bedroom, two-bathroom units offer around 900 square feet and rent for around $5,000 per month.
- Third Square – Situated at 285 Third Street, Third Square was built in 2008 and is housed in an eight-story building offering 292 rental units. With a 2,200-square-foot fitness center, a clubhouse and other prime amenities, it is a popular choice. Units here include washers and dryers and walk-in closets, and pets are allowed with an additional rental fee. A studio unit here offers around 550 square feet of space and will set you back by around $3,000 per month. Two-bedroom units, which offer between 1,100 and 1,200 square feet, rent for around $4,400 per month.
- Vivo – Another of the neighborhood’s newer developments, Vivo is located at 270 Third Street. Built in 2015, it is situated in an eight-story building that offers 91 rental units. Assigned parking is available for an additional rental charge; likewise, dogs and cats are allowed for an additional pet rent charge. Units here boast washers and dryers and smart home technology. A studio here costs around $2,800 per month and offers roughly 450 square feet of space while a two-bedroom unit offers around 1,050 square feet and costs around $4,600 per month.
New Construction Projects Currently Underway in the Square
Although there is a definite dearth of new construction across the city, a fair amount of development activity has been happening in the Square over the last year or so. Boston City Properties is a great source for up-to-the-second information regarding new rental developments in this neighborhood, so you can check back with us to learn more about them as opening dates get closer. Some developments of particular note include:
- Kendall East development – In spring of this year, ground was broken on Urban Spaces’ new housing development, Kendall East. So far, most of the work has involved the demolition of old, unused buildings on the site, which is located across from CambridgeSide. Ultimately, the development will consist of two buildings – a four-story building and a six-story building – and it will offer 136 luxury units. The property will also boast 14,800 square feet of ground-floor retail, which should help it to blend seamlessly in with the rest of the neighborhood.
- CambridgeSide renovations – Located in the north section of the Square, CambridgeSide, an old mall, is enjoying new life as developers have started showing renewed interest in it. In particular, plans are underway to transform the third floor from retail and commercial to office space. Expected to be finished by early 2020, the renovated space will offer around 140,000 square feet of office space total. Additional plans to add around 600,000 square feet with the addition of new buildings at the mall – including ones that could be as tall as 135 feet – are also in the works. At least 20 percent of that 600,000 square feet is slated to be used for housing. No firm plans or timeline have been established for this project yet.
- First Street Corridor – Starting in March 2017, Urban Spaces has been redeveloping the one-mile-long First Street Corridor. Situated between the Square and the Lechmere MBTA station, the corridor spans four parcels. Upon completion, the $275-million development project will add 53,000 square feet of office space; 50,000 square feet of retail space; 23,000 square feet of public open space; 250 parking spaces; and at least 250 new housing units.
How to Find a Place to Rent in the Square
Now that you know a lot more about the rental market situation in this city in general and in the Square in particular, you probably realize more than ever that you are facing a daunting task in looking for a place to rent there. You will definitely want all of the help that you can get, and Boston City Properties is here to provide it. For now, though, here are 10 tips for renting a place in this highly competitive market:
- Start early – If you need a place to rent in, say, September, you should probably start looking by June or July at the very latest. Indeed, with the market so on fire and vacancies so few and far between, you will need plenty of time to locate the right place to rent here. Just remember to be patient and persistent; other people find places to rent here, and you will too.
- Be specific – You’re going to want to know what you want and need in an apartment before beginning your search in earnest. Zeroing things down to a specific neighborhood is a good first step, and you can limit your search on our search feature to the Square to more easily find what you need. Decide if you want a luxury development or a simpler one, and think about the things that you absolutely can’t do without. For example, if you have pets, you’ll want a place that allows them.
- Research rent prices – Long before even getting close to identifying a place to rent in the Square, you’re going to want a firm handle on how much people are paying for rent in the neighborhood. You have already been given a primer in this article, but it’s crucial to remember that rent prices change rapidly in the city. As you move toward selecting a place, keep an eye on prevailing rent prices by checking in often with Boston City Properties. You can even get an idea about how often and by how much a development increases the rent, which can help to make your decision easier.
- Connect with Boston City Properties – If you haven’t done so already, sign up now for free, instant access to Boston City Properties’ convenient online database of searchable MA real estate and rental listings. You can then use our search tool to search for places for rent in or near the Square that suit your specific requirements. When you’re ready to look at places, Boston City Properties can connect you with a local real estate expert who can take you to visit rentals and more, so be sure to stay in touch.
- Be flexible – Even when the rental market is “normal,” beggars can’t be choosers when renting a place in the big city. In other words, forget about getting everything that you want. Rather than being disappointed again and again, go into the process with the ability to be flexible about things. Sure, it may be nice to have an on-site ZipCar service, but do you really need that? Are you willing to miss out on a potentially great place just because it lacks a “nice-to-have” amenity?
- Understand how brokers work – If you’ve never rented an apartment in Boston or any big city, you may not be familiar with the concept of brokers. Basically, they are among the only ways to rent many units in the Boston area. They usually charge a fee that is equal to one month’s rent, so you can expect to part with a few thousand dollars to hire one.
- Visit rental units ASAP – After locating a place that seems doable, act quickly to go and check it out in person. As tempted as you may be to just snag the place sight unseen – as a means of fending off the competition – doing so can have some pretty unpleasant consequences. Instead, get a referral to a local real estate professional from Boston City Properties, and have that person ready to take you to see places. It may seem like a lot of effort, but it will pay off in the long run when you find a great rental.
- Walk the neighborhood – You might think that you are good with living in the Square, but it is still worthwhile to take a stroll around any development where you are considering renting a place. How easy will it realistically be for you to live your life from this location? If you will be paying exceptionally high rent, you will want to be particularly careful. If you are bargain hunting, on the other hand, you probably shouldn’t be too particular.
- Talk to current tenants – While visiting the area where a potential rental is, try to stop and speak to a current tenant of the building. Although it can be awkward to approach random people, people are also generally helpful. By springing the question on them about whether or not they like the place, you are apt to get an honest and useful answer. In the long run, this could help you to avoid renting a place that just isn’t right for you – or help you to secure one that is absolutely perfect.
- Act fast – The importance of acting quickly – and being able to do so – can’t be emphasized enough when it comes to renting a place in this bustling neighborhood. You will want to have all of your ducks in a row in terms of what you will need to lease a place, and you can learn more about that in the following section. Have an agent referred by Boston City Properties at the ready to assist you too. That way, if you find the perfect place during a visit, you should be able to seal the deal then and there.
What to Expect when Applying for a Lease in Boston
Whether you’ve rented a place in metro Boston before or not, it never hurts to brush up on what you’ll need to have to make it happen. Here’s a quick rundown:
- Credit score – Obtain your credit report before starting your search. Get one that provides you with a credit score. Understand that if your personal credit isn’t very good, you will most likely need someone to cosign on the lease for you.
- References – Have at least two or three references available for prospective landlords. Ideally, they should be previous landlords.
- Stipend confirmation – If you are among the thousands of graduate students relying on a stipend to afford housing, make sure to have your stipend confirmation ready to go when applying for an apartment.
- Proof of income – You will also need to provide proof of income to show that you can afford to rent the place. Gather your paystubs, W-2s, 1099s and anything else that will help you to establish your income.
- Be prepared for upfront costs – Make sure that you have enough cash to cover the upfront costs of moving into an apartment in Boston. They typically include the first- and last-month’s rent; a security deposit that is equal to one month’s rent; and a broker’s fee that is also equal to one month’s rent. If you are bringing pets or need a parking space, expect to pay more.
How Boston City Properties Can Help
Although renting a place in Kendall Square isn’t easy, it’s doable. The trick to securing the right apartment for rent in this area is having the right help at your disposal. To that end, you can’t go wrong by connecting with Boston City Properties. Sign up now to start searching our listings, and contact us for a referral when you’re ready to proceed with a real estate agent. In the meantime, contact us with any questions.