“Lynn, Lynn the city of…” well, nevermind… Lynn, yes, Lynn slid into relevancy in the Greater Boston real estate development landscape over the course of 2018 and 2019. Based on its sheer population, and even its landmass (13.5 square miles), maybe this should not be surprising. Lynn is a city of nearly 95,000 which places it within the top 10 largest cities in Massachusetts. Geographically, it sits less than 10 miles from downtown Boston but less than 4 miles north of the Boston border by Suffolk Downs. A number of large scale projects slated to take place on the Lynnway and deeper into the city around the Central Square area have placed Lynn on a similar developmental trajectory as some other lesser thought of areas beyond Boston’s core (Hyde Park, Chelsea and even Beverly come to mind).
In 2019, apartment rentals in Lynn averaged $1,825 per unit, which calculated to $2.08/SF. In comparison to 2015, these figures represent increases of 31.7% for average rent per unit and 34.1% for average $/SF. In today’s market, a renter could find a 3-bedroom in Lynn for $2,089 per month, which represents a 9.2% discount from nearby Chelsea, another on-the-rise market.
On the sales side, in 2019, condo units in Lynn traded for an average of $283,431 or $272/SF. However, the vast majority of units planned for development within the next 3 to 5 years are positioning the city to have a robust supply of new apartment inventory. The most recent Census Bureau reporting suggests that 44.6% of Lynn’s residential housing supply is owner occupied. Compared to its neighbors like Saugus (80.7%), Peabody (64.5%) and Swampscott (77.9%), Lynn remains on the drastically low side of this statistic. Consistently, so does the city’s per capita income ($26,000, 2018) greatly lagging surrounding communities.
The most impactful development in terms of sheer volume is 843 Lynnway. The $500 million project slated for the former General Electric Co. Gear Works site is expected to bring almost 1,300 apartment units to the 65.5 acre site. Perhaps more importantly, the project adds newfound accessibility and capacity to the Riverworks Commuter Rail station. A less-than 20 minute train ride to North Station would offer accessibility to Boston that Lynn area commuters have not previously had. This new found accessibility would be a boon for not only the residents of 843 Lynnway but also 810 Lynnway as well as other potential development sites nearby. MassDot is also currently studying the feasibility of extending the Blue Line into Lynn, adding yet another public transit service for the North Shore. Although the decision on whether these extension plans will be realized is expected to be revealed in spring of 2020, a history of failed attempts to extend the Blue Line are keeping expectations relatively low.
Anybody familiar with the active developers in the Greater Boston area would quickly point out that there are no “household” developers listed next to the projects currently in the queue in Lynn. The list is almost entirely made up of developers who operate out of Lynn and have a day job that has not, historically, been real estate development. The National Developments, Samuels and Davis Companies of the world are not quite ready to roll the dice on this (still) speculative market. Their focus remains in more established neighborhoods like Southie, Fenway and East Boston. This does not mean that well-known developers aren’t land banking in Lynn. WS Development’s ownership of an 11.15 acre Walmart adjacent to 810 Lynnway and across from 843 Lynnway seems to be the site where an institutional developer could make a leap towards a large mixed-use development, but there’s no time frame as to when this could occur… and Walmart happens to be in a good business environment at the moment.
A major question that developers need to wrestle with before investing in Lynn is whether they can achieve $3.00 to $3.50/SF for apartment rents. In real dollar terms, that typically equates to a one bedroom unit renting for $1,800 per month and a two bedroom renting for close to $2,600+ per month If those prices cannot be attained, the price of land and construction costs likely outweigh potential development returns. Between the ocean views and potential for prime transit oriented development, this figure doesn’t seem too far-fetched, but that doesn’t mean renters would be easily persuaded to move to Lynn when they could live closer to Boston for a similar price point. Pricing in Revere, Chelsea, East Boston and Charlestown are detailed in the chart below. As these prices rise, Lynn’s real opportunity should come into focus.