Last week, residents began moving into Bozzuto’s Alder at Allston Yards, a new community atop a full-sized Stop & Shop supermarket in Boston.
The property, the preliminary residential phase of the Allston Yards mixed-use development, includes 165 apartments, 21 of them permanently affordable, and additional ground-floor retail. It sits steps away from the Boston Landing commuter rail station, one stop away from downtown Boston.
“We've all been working on it for a very long time — the better part of probably six, seven years,” Mike Henehan, president of Bozzuto Development Co. and Bozzuto Homes, told Multifamily Dive. “So we are very excited.”
The Allston Yards project, being developed by Bozzuto, Ahold Delhaize, New England Development and Southside Investment Partners, will include 1,000 residential units, 117,000 square feet of retail space, 420,000 square feet of office and lab space and a 1-acre community park.
While Bozzuto likes Boston, the company is also focused on other areas as it starts projects in this challenging financing environment. Here, Henehan talks with Multifamily Dive about adjusting to volatile capital markets, housing demand and construction costs.
This interview has been edited for brevity and clarity.
MULTIFAMILY DIVE: Bozzuto has a long history of development — both rental and for sale. How is the company adjusting to this higher interest rate environment?
MIKE HENEHAN: From our standpoint, we're a long-term company. We have a long view. We're continuing to be bullish and actively plan, design and entitle projects. We're being very thoughtful in the types of projects that we commit to and spend time and money on.
That means focusing on the location of those projects, the partners that we work with on those projects and the overall structure associated with those projects because we need to maximize flexibility. We’re still very active.
What type of long-term demand do you see for housing?
In the near term, starts are really tough because the capital markets are not flowing right now. But long term, many metrics show that housing is needed. There is tons of demand. Obviously, some markets have a lot of near-term supplies, but we also monitor starts, and there are not a lot of starts today. So, there will be a supply issue at some point in the not-too-distant future.
We're fortunate to have a vertically integrated company. We don't have to force deals if they don't make sense, and we can be pretty selective about what we decide to spend our resources on.
Have construction costs started to move?
We hear many anecdotes about groups that are more hungry and have limited supply from a subcontractor standpoint. We're hearing a lot of that. We're seeing many reasons why construction costs should get better.
We're seeing some really good pricing, but we haven't seen the significant reductions in cost that, frankly, we need to see. And I'm not sure we’re going to see it, to be honest. There's a lot of demand for labor outside of the multifamily market. We're competing for labor sources with a lot of different industries.
Are you seeing more opportunities to build in certain markets?
We're really excited. We're working to start projects in a few months in southwest Florida — just south of the Tampa and Sarasota areas. We're excited about that southwest Florida market. Some of it is because we're so committed to it, and we’ve spent so much time on it.
Boston continues to be a market we really love. There are a lot of great storylines to it, with the demand and, frankly, the difficulty of producing housing, which makes supply relatively restricted. In addition to Boston, Northern Virginia continues to be a great market and one where we're continuing to find good opportunities and, frankly, seek more.
Do you have other projects in the pipeline in Boston?
Not in the city but in greater Boston, we are finishing up our project at the North Quincy station. We delivered our third phase late last year. We're actively leasing that up. It's called The Abby, and the lease-up is going really well.
It has a Target store on the ground floor in partnership with the Massachusetts Bay Transportation Authority. And, we have a few other retail uses.
We also delivered a project a little further south in Plymouth. That is a beautiful master-plan community, which is called Rowen at the Pinehills. We're actively leasing that up right now as well. We have a few products in planning in the Boston market where we're actively designing and working through entitlements.
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