The Graduate Student Anchored Project : a new approach to incentivizing multifamily development in the City of Boston

Abstract

Despite a significant addition of new multifamily housing stock into Boston's residential rental market, Boston in 2014 faces a considerable shortage of middle income housing supply relative to demand. Both the supply shortage itself and the related city-wide prevailing high cost of residential rents arise out of conditions attributable in part to (i) high costs of construction within the Boston market and (ii) the greater Boston area's large graduate student population. Boston's public officials, under the new Walsh administration, have been actively searching for approaches that the city might adopt in trying to address this housing supply shortage and its impacts on the city's middle income households. This Thesis advances one such approach by exploring how Boston might implement a specialized permitting process to incentivize the private development of a certain type of large-scale multifamily or mixed-use project. Specifically, these projects are ones that incorporate a component devoted to graduate student housing under a master lease with a Boston area university or teaching hospital. The recommendation for this approach is delivered through an exploration of the various characteristics of this type of real estate development project, referred to as a Graduate Student Anchored Project ("GSAP"), including: (i) the ways in which the specialized permitting and zoning review process applicable to GSAPs might need to differ from existing regulatory conditions; (ii) GSAPs' design, cost and leasing dynamics, discussed both in general terms and with specificity through the use of a hypothetical GSAP development on two parcels of land in Boston; and (iii) an analysis of the financial feasibility of developing a GSAP within the current market conditions -- and the types of participation which might be needed from the city, building trades union and/or university master lessees to ensure such feasibility -- through the use of a pro forma model specifically designed to accommodate this type of real estate development analysis.