SEPTEMBER 2016

Are Charter Schools the New Urban Amenity?

by Aaron Jodka

In November, Massachusetts voters will be choosing more than the next president—they’ll be deciding whether or not to expand charter schools across the Commonwealth.  The debate is heating up, and for those residing in districts with statewide assessments in the bottom 25% of schools, this could have long-term ramifications for the real estate market.  Apartment landlords should pay attention.

Today 40,000 students are enrolled in more than 120 charter schools across the state, averaging about 300 students per school.  Per WBUR, more than 30,000 students are on waiting lists to get into a charter school.  If Question 2 passes, up to 12 new charter schools could be created each year, with preference given to underperforming school districts.  This could lead to an increase in charter school attendance by up to 1% of total public school enrollment per year. Boston, with its public schools in the bottom 25% of school districts, could be a target for more charter schools.

The Census estimates that the population of the city of Boston was 667,000 in 2015 (see chart below).  And using recent population trends, that figure likely topped 671,000 in July of 2016 (final figures are not yet available). An estimated 34,000 children under the age of five live in the city, 5.3% of the population.  The ranks of those 25–34 years old—the most likely to rent by historical standards and to have children—have surged in the city of late. This cohort has grown nearly three times faster than the population growth for the city as a whole.  This age group made up 22% of the total population (as of 2014), a solid increase from 2010’s Census estimate of 20.6%. And if recent growth rates have continued, that total likely tops 23% in 2016.

City of Boston Population
Sources: U.S. Census Bureau, Colliers International As of September 2016

For landlords seeking stability, more charter schools may help.  Aside from overbuilding, the biggest risk to the apartment sector is a reversal of the urban living trend of recent years.  As people start to have children, many no longer find staying in the city as appealing, and they consider the suburbs.

More available charter schools could help mitigate that risk, keeping today’s younger residents renting for longer than they might otherwise.  This would help boost occupancies, rental rates, and sales prices over the long term.

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