Across America, multifamily lending volumes are up 40 percent, and locally many banks have either already increased their lending to the asset class or say they plan to. iStock illustration
Multifamily has become the almost last asset class standing when it comes to ground-up commercial development in Massachusetts, and banks are increasing their involvement in the sector accordingly.
Recent research by commercial brokerage CBRE found nationwide multifamily lending volume was up 40 percent year-over-year, primarily driven by increases in non-agency loan production from banks and life insurance companies.
One of New England’s biggest locally based banks, for example, Eastern Bank increased its multifamily balance by 20 percent year-over-year according to its first-quarter earnings presentation.
“The Greater Boston market, from both a rental and for-sale housing standpoint, is significantly supply starved,” said Matthew Osborne, Eastern Bank’s executive vice president and chief credit officer. “While the unfortunate by-product of this is increased affordability challenges, it does drive a more attractive investment and lending profile when compared to other asset classes due to its strong demand and relatively higher barriers to entry.”
Other publicly traded local banks noted increases in multifamily lending volume in their earnings reports. Rockland Trust – poised to enter the New Hampshire market by buying Enterprise Bank – increased its from $1.88 billion in the first quarter of 2024 to $2 billion in the first quarter of 2025.
Why? Bankers interviewed for this story say they’re all being attracted by the sector’s promise of stability.
Multifamily Has Structural Advantages
Multifamily has become such a low-risk investment due to a collision of an unstoppable force and a currently-immovable object: the innate need that humans have for housing and the lack of housing production in many New England communities.
“Investors are gaining more clarity (and a growing conviction) for strengthening fundamentals,” Matt Vance, Americas head of multifamily research for CBRE, said in an email. “Looking ahead, as rent growth recovers (even in the most negative of markets), renter demand remains strong, a dwindling supply pipeline, and the Fed—who is not posturing to raise rates without significant reason to—buyers recognize an opportunity to invest in what they feel is the beginning of the next appreciation cycle.”
With a slowdown in multifamily project completions after a small, pandemic-era boom, rental market observers and investors all generally expect area apartment buildings will enjoy continued rent growth for the near future.
Lenders and investors are assuming rents will grow a steady 2.7 percent at core assets and 3.1 percent at value-add assets over the next three years, according to CBRE. Zeroing in on Greater Boston, CBRE research says the market’s rent growth sits at 3.5 percent and 4.5 percent.
“Rent growth plays several key roles in how buyers, lenders, and sellers view real estate performance,” said Vance. “Higher rent growth means higher returns.”
