BOSTON—While investment interest is still very strong in multifamily product and development here, potential warning signs of some markets becoming overbuilt have emerged.

Panelists at last week's RealShare Boston event held at the Omni Parker House related that some multifamily landlords are offering free rent to attract tenants, a sign that the heady days of some niche sectors of the rental apartment market may be slowing.

The Multifamily Focus panel included moderator Daniel J. Bailey III, director of Rackemann, Sawyer & Brewster; Simon Butler, vice chairman/partner with CBRE; Andrew Chaban, CEO of Princeton Properties; Paul Donahue, senior vice president, Bellwether Enterprise; Andrew Gnazzo, managing director, Walker & Dunlop and Tim Thompson, senior manager, Boston, for Marcus & Millichap.

Moderator Bailey began the discussion questioning panelists on the accuracy of some media reports that the Boston multifamily market is cooling off. CBRE's Butler quickly responded, that the Boston real estate market is still one of the top three markets in the nation for investment and believes Boston is a “strong, long-term solid bet to make as compared to other options across the country.” Due to the region's diverse workforce and strong economy, Butler said the greater Boston region, including Cambridge, “has become a cool place to live” and is viewed by young professionals “as one of the 'in' places they want to be.”

He noted, “If anything in downtown the supply side is starting to slow.” Butler says that the suburbs are very popular for investors and has significant tenant demand. The problem he sees will be for the supply to keep up with the demand due to the lack of developable land in the suburbs.

Chaban agreed with Butler on the overall strength of the Boston market. However, he did say, “Being the suburban guy, I will agree with Simon that the marketplace in Boston is still hot. I don't think it is necessarily cooling to the point where you can touch it and it is cold, but I do think it is trending toward cooling based on supply and demand and economics alone. How many folks can continue to pay $450-$550 a foot in the marketplace?”

He added that some multifamily property owners are beginning to offer free rent, a sign of perhaps the market softening, but not necessarily cooling. Chaban says multifamily in the Boston suburbs is becoming stronger and pointed to a number of developers moving forward with projects in the Greater Burlington area that should lead to higher demand for rental apartments there.

Gnazzo said that investment dollars are shifting towards the Greater Burlington area. “I think the suburbs are under-discussed and under-valued,” in terms of multifamily development.

Marcus & Millichap's Thompson said that there is no doubt that greater Boston is currently in one of its largest multifamily expansion periods in its history. He said that while the risk to the market is overbuilding, he believes that will not become an issue, noting Boson Mayor Martin Walsh's goal of creating 53,000 new housing units by the year 2030. He also agreed that there is increased demand for multifamily developments in the suburbs of Boston.

Donahue said that Boston is a very strong market as compared to other major cities across the United States and should remain so due to the growth in its population, which has grown faster in the last four years than New York City, Los Angeles, Chicago and Philadelphia.

“People are saying we are building too many apartments, compared to what? Donahue said. “The vacancy rates are still pretty low in the city, the demand is substantial.” He noted that with 60,000 new people in Boston in the last six or eight years and another 200,000 people living in the outlying suburbs, prospects are good for the multifamily market going forward.

He said that while there may be times when free rents are given, “relative to the size of the market, the supply is modest.”