NEW BEDFORD — Most of the city’s renters can’t afford to live at 105 William Street.
Inside this former office building steps from City Hall, 20 newly renovated apartments feature 16-foot ceilings, stainless steel appliances, and new flooring. There’s a fitness center and an app-operated entry system.
“The building is a luxury building inside,” said Denis Keohane, the property’s developer. “It’s all marble and granite and decorated to high specs.”
Monthly rent for these units ranges from $1,550 to $2,500. That means the smallest one-bedroom apartment in the building would be too expensive for more than half of New Bedford’s full-time workers, census data shows.
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But city officials and housing advocates say developments like 105 William, which opened this fall, will make housing more affordable for everyone. Adding more units, even on the high end of the price spectrum, will help relieve the housing shortage that has caused rents to skyrocket, they say.
“More housing, period, is what we have to do,” said Rev. David Lima, a housing advocate and executive minister of the Inter Church Council of Greater New Bedford.
Maintaining a mix
As hundreds of affordable, income-restricted apartments make their way into the city’s housing supply, there’s a parallel pipeline delivering dozens of pricier, market-rate units.
One newly redeveloped building at 1049 Pleasant St. offers 10 two-bedroom apartments with monthly rents in the $2,000 range. A proposal for the vacant Keystone lot on Union Street would build 45 new apartments, with none reserved for low-income tenants.
Lauren Jezienicki, the developer of the Keystone lot, said she considered using government subsidies that would have required her to set aside low-income units, but city officials persuaded her not to, because they said the city already has enough affordable housing.
“Market-rate seems like a nice fit to complement the rest of the housing stock,” she said.
Keohane, the William Street developer, said he had similar conversations with city officials.
In total, 288 income-restricted apartments have recently hit the market or are currently in the works, according to an inventory provided by the city. That includes 71 affordable units in the Cliftex II development at 170 Riverside Ave., which opened last year. The rest of the units are spread across three projects under construction and nine projects in the planning stage.
Maintaining a mix of market-rate and income-restricted rentals is part of the city’s broader housing strategy, said Josh Amaral, who directs the city’s Office of Housing and Community Development.
“We have to attack the housing shortage at all levels,” he said.
The city’s housing crisis isn’t limited to those with the lowest incomes, Amaral said. Many families make too much money to qualify for low-income housing, but they still struggle to find an affordable place to live, he said.
Another reason for the city’s strategy: Developers set aside income-restricted units in exchange for certain government subsidies or tax credits. Some projects aren’t financially viable without the extra funding. Encouraging developers to consider a market-rate approach first leaves that money for projects that need it most, Amaral said.
Lima, the housing advocate, said the city could use more low-income housing units, but that can’t be the only housing the city builds. New Bedford needs housing for people with higher incomes to support its economy, he said.
“If we build only low-income housing, then the disposable cash isn’t going to exist here,” he said, “whereas, if you have people with disposable cash, then they’re able to eat in our restaurants and shop in our stores.”
Cascading effects
Building apartments for more affluent tenants will help to ease rent increases for everyone by increasing the overall number of apartments, advocates said.
“A rising tide floats all boats, and the yacht goes up as much as the power boat as much as the dingy,” Lima said.
New Bedford’s housing crisis boils down to a supply and demand problem, the advocates say — there aren’t enough apartments for all the people trying to rent in New Bedford. Landlords can charge high rents because they can easily find tenants willing to pay their asking price. But if apartments were plentiful, landlords would have a harder time finding tenants, so they would have to keep their rents lower to compete with other landlords.
When an affluent tenant moves into one of the new apartments on William Street or Pleasant Street, they leave their old apartment empty for someone else to fill.
“More units on the market give people more choices,” Amaral said. “It has this cascading effect throughout the market.”
Advocates also say that providing more apartments for affluent tenants keeps them from outbidding other renters for lower-priced apartments, which has contributed to the eye-popping rent increases that some have characterized as price gouging.
Still, the comments section of virtually any news story about a new housing development in New Bedford includes residents worried that the development will gentrify the city, attracting out-of-towners and making it unaffordable for locals.
“Just what this city needs, more unaffordable housing,” one commenter wrote under a Facebook post about the Keystone development.
The “gentrification of new bedford is very sad,” another commenter typed.
But research shows that new construction tends to slow down rent increases, not accelerate them.
“I think the reason people get that impression is that these buildings tend to go into neighborhoods that are already changing,” said Evan Mast, an assistant professor of economics at the University of Notre Dame who has studied the effects of new construction on rents.
Developers want to maximize their profits, so they tend to build housing in desirable neighborhoods, where they expect to see the highest rent increases, Mast said. So they build in places where new businesses have already opened and where affluent renters are already interested in living. In other words, rents in these neighborhoods were likely going to go up anyway.
Providing more housing to “soak up” affluent newcomers keeps them from competing with low-income locals for the same apartments and driving up prices, Mast said.
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“If you look at the area immediately around the new building, you see that rents don’t rise faster than in a similar neighborhood that didn’t get a new building,” he said.
In fact, Mast’s research found that the new construction caused rents to rise 5% to 7% slower than they otherwise would — because the increased supply of apartments made the housing market less competitive for renters.
A 2018 literature review by three New York University professors found that adding more housing, even luxury apartments, increases affordability for low- and moderate-income families. Newer, nicer buildings might attract more demand to the neighborhood, but not enough to cancel out the effects of having more supply, the researchers wrote.
New Bedford’s housing advocates agreed that the need for more apartments outweighs the risks of gentrification.
“Our rents are already rising exponentially,” said City Councilor Shane Burgo, who chairs the affordable housing committee. “But I don’t think it has to do with the fact that nice apartments are coming around. I think it has to do with the fact that we don’t have enough apartments.”
A new tier of renter
Some might question whether developers can find tenants interested in luxury housing in New Bedford.
“Well, you absolutely can,” said Keohane, the William Street developer. Of the building’s 20 apartments, 14 are already filled, and Keohane said he expects to rent the rest by year’s end. The tenants are mostly younger professionals, he said. Some are older former homeowners who were looking to downsize.
Ben Marshall, the developer of 1049 Pleasant Street, said he hasn’t had any trouble filling his 10 apartments.
“I think people are looking for nice housing in New Bedford,” he said.
While Marshall admitted that his development may fall under the definition of “gentrification,” he didn’t think that was necessarily a bad thing.
“There’s a view of gentrification that what you’re really saying is, ‘We want to scare away the people who live here and bring in rich people,’ and I don’t think that’s true,” he said. “I think that, especially in this neighborhood, there’s a lot of people there who would appreciate having good housing for their friends, families, children.”
Both Keohane and Marshall said their tenants are mainly from the South Coast.
Affluent renters moving from elsewhere are not the main cause of the city’s housing woes, Burgo said. He said he knows local young professionals who are ready to move out of their parents’ homes, but can’t get into an apartment because the rental market is too competitive.
“There are a lot of people that are in the situation I am — young people who work and have the disposable income,” he said.
Amaral, the city’s housing director, pointed to a new gap in the housing market. He said a growing number of young people can afford more than their $1,200 monthly rent payment, but can’t afford a mortgage at $3,000 a month or more. So they’re trapped in the rental market, competing with other tenants.
“There’s a whole new tier of renter and it complicates the market even further, so everybody’s kind of stuck,” he said.
New Bedford renters with $2,000 a month to spend on housing might have bought a home in the mid-2010s, Amaral said, but rising property values and mortgage rates in the last few years have put homeownership out of reach for them. These high-end apartments can absorb that “new tier” of renters and make more room for everyone else, Amaral said.
Also, many empty nesters occupy apartments with bedrooms they don’t need anymore, Burgo said, but those renters can’t downsize because the one-bedroom apartment market is so tight. That means they’re taking up space that a family could use.
Housing advocates said the city needs more housing at all levels, including for those with low income. Keohane agreed — the Boston-based developer said he also wanted to see more income-restricted housing.
“I have three daughters, who are all in their mid- to late 20s, who are all professionals, and they really can’t afford much currently unless I help them,” he said. “It’s changing my outlook on rentals and on sales in general.”
Email Grace Ferguson at gferguson@newbedfordlight.org
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