Gary Kerr, Managing Director at Greystar since 2019, has been instrumental in reshaping Everett, a historic city just outside of Boston, into a thriving mixed-use community. With over 1,900 units already established in Everett and a new 416-unit building breaking ground this summer, Kerr has shown unwavering commitment to the area’s housing needs. Greystar, the largest multifamily developer in the U.S., manages about 789,000 units nationwide, underscoring its role as a significant player in the sector. Kerr credits Greystar’s conviction in the market as central to their success, emphasizing the company’s long-term vision for housing at scale in markets like Everett where others may hesitate.
Navigating Market Challenges: A Time of Transition
Operating in Greater Boston for almost two decades, Kerr reflects on the evolving dynamics of the commercial real estate market, particularly the current struggles in the office sector. The office market’s downturn, which Kerr observes as “incredibly weak,” may represent a pivotal shift in the real estate ecosystem. All asset classes, from industrial to residential, interact in a finely tuned system, and the lack of clarity surrounding office valuations and asset function impacts the entire sector.
Kerr notes the potential for a long-term transformation in real estate as an industry, speculating that we could be at a juncture where the business of real estate evolves significantly over the next decade. This uncertainty, he says, makes it challenging to predict the future for asset values and investor confidence in sectors like office space, which may either bounce back or fundamentally transform.
Impact of Interest Rates on Multifamily Development
The recent easing of Federal Reserve interest rates may open new doors for multifamily development. Kerr sees this as a favorable development for investors and developers alike, as lower interest rates enhance the attractiveness of real estate relative to fixed income investments. According to Kerr, real estate as a sector often suffers in high-interest-rate environments where bond yields rise, making real estate cash flows seem less lucrative in comparison. Lower rates, in turn, should help facilitate capital flows back into the sector.
For Greystar, the stable nature of multifamily assets, albeit with relatively lower profit margins, becomes more viable as borrowing costs decrease. Kerr asserts that lower rates provide the necessary support for multifamily real estate’s stable but low-return profile, making it once again an appealing option for investors.
Overcoming Construction and Cost Hurdles
High-interest rates and rising construction costs have complicated the development process across the country, making many projects less viable. Kerr explains that beyond the higher debt costs, interest rate hikes devalue real estate by reducing the worth of its cash flows. For developers, this dual challenge — increased building costs and depreciated post-construction value — has been particularly tough to navigate.
Greystar has mitigated these risks by focusing on projects that are either “heavily de-risked” in terms of permitting or located in high-value areas where Kerr and his team have high conviction. They prioritize transparency in project timelines and select markets where they have confidence in property values. Kerr emphasizes that Greystar seeks either highly promising sites or those with short-term market stability, allowing the firm to navigate today’s turbulent environment with a steady hand.
University Partnerships for Student Housing Solutions
Addressing housing shortages requires multifaceted approaches, and Greystar has worked extensively with universities in the Boston area to alleviate off-campus housing demands. In a recent partnership, Greystar collaborated with Merrimack College to develop a 540-bed student housing project. This collaboration, part of a larger trend, was four years in the making and reflects Greystar’s longstanding commitment to supporting academic institutions.
Kerr notes that working with universities requires flexibility and a long-term commitment, as these partnerships often evolve through years of planning. The goal is to help academic institutions optimize their real estate resources while enhancing the student experience through Class-A housing. Greystar’s vertically integrated business model — managing construction, development, and operations — allows it to specialize in student housing and build strong partnerships with smaller universities that lack the capital or expertise for such projects.
Everett as a Model for Urban Development
Greystar’s work in Everett exemplifies the potential of public-private partnerships in driving urban transformation. Kerr credits the city’s administration for providing a straightforward permitting process, which enabled Greystar to proceed with confidence. With proximity to Boston, Somerville, and Cambridge, as well as connectivity to transit hubs, Everett presents unique opportunities for housing development.
The city’s support for multifamily zoning and commitment to transparency has made it an attractive location for Greystar, which values both the convenience and potential of the area. Kerr believes other cities could benefit from a proactive stance on development, noting that zoning for multifamily housing can catalyze community revitalization and bring economic benefits to municipalities. He suggests that cities willing to embrace change will attract the inward investment necessary to spur growth and improve quality of life for residents.
The Role of Massachusetts’ MBTA Communities Act in Expanding Housing
The MBTA Communities Act has encouraged municipalities to reassess zoning and, in some cases, view development more positively. Kerr sees this legislation as a catalyst for change, forcing municipalities to confront housing needs and consider the benefits of multifamily development. Cities such as Lexington, Westford, and Westwood have revised zoning policies to accommodate new housing projects, signaling to developers that they are open to growth.
Kerr believes this shift in municipal attitudes represents a promising development in tackling the housing crisis. He remains optimistic about the opportunities emerging as more towns and cities recognize the value of partnering with developers to meet housing demands. However, he acknowledges that sustainable progress requires a balanced approach, one that combines development with preservation of community values.
Looking Ahead: A Vision for Multifamily Real Estate
Kerr’s insights highlight the complexities of today’s multifamily market, shaped by factors from interest rates to evolving urban policies. With Massachusetts taking proactive steps to address housing needs and the broader real estate sector at a potential pivot point, Greystar remains committed to building at scale in promising locations. Kerr’s experience underscores the importance of adaptability and forward-thinking in navigating an industry in flux, where a mix of public-private partnerships and resilient investment strategies will be key to success.
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