loading...

Rents Drop at DC Area’s Class B Apartments as Vacancies Rise

by Lark Turner

image
1500 Massachusetts Avenue NW

UrbanTurf has already projected that 2014 will be the year of the renter in the DC area. That’s because the number of new buildings going up in the region is catching up with (and in some cases surpassing) demand. That same increase in inventory is affecting rents in older buildings, which are expected to drop in the area this coming year, according to a new report.

The report, issued by real estate research firm Delta Associates, looks at changes in the Class B apartment market over the previous year. Class A apartments are typically large buildings built after 1991, with amenities like gyms, pools and more (UrbanTurf reported on the changes in the Class A market last week). Class B buildings are generally older buildings that have been renovated or have more limited amenities (privately rented homes aren’t included in the analysis).

Class B vacancies rose to 5.9 percent in 2013, up 1.8 percent from 2012, and DC rents decreased by 1.1 percent over the year. Northern Virginia rents also dipped by 1 percent, as suburban rents in Maryland rose by 1.5 percent.

image
Courtesy of Delta Associates. Click to enlarge.

Those figures are in stark contrast to a 2012 third-quarter report, when UrbanTurf reported that finding a Class B apartment in DC could be a “virtually impossible” task.

Though the report projects that vacancy will stay under control through the year, it predicts a continuing downward trend in rents as more Class A units open up.

That’s good news for renters. Among other things, the nicer, newer Class A inventory should drive Class B properties to renovate and offer renters both more competitive rent and more amenities than they have in the past. The report noted:

  • More than 31,878 Class B apartments are currently being renovated.
  • The renovation budget averages $24,375 per unit.
  • Renting a renovated Class B apartment can still be a better deal than renting a new Class A apartment.

Here is a quick snapshot of average rents for Class B mid- and high-rise apartments in DC area sub-markets, as defined by Delta:

  • Upper Northwest: $2,018 a month
  • Mt. Vernon Square: $1,882 a month
  • Bethesda/Chevy Chase: $1,969 a month
  • Silver Spring: $1,629 a month
  • South Arlington: $1,442 a month
  • Falls Church/North Arlington: $1,856 a month
  • Crystal City: $2,035 a month

Delta Associates projects that the low rents and high vacancy will be “shallow and short-lived.” But in the meantime, the advantage goes to the renter this year.

Similar Posts:

This article originally published at http://dc.urbanturf.com/articles/blog/rent_drops_slightly_in_districts_class_b_apartments_as_vacancy_rises/7992

9 Comments

  1. StanislausBabalistic said at 11:14 am on Tuesday January 14, 2014:

    But what about average Class B rents in neighborhoods that people under the age of 50 actually want to live in? Those neighborhoods seem left off your list.

  1. Lark Turner said at 11:37 am on Tuesday January 14, 2014:

    Hi Stanislaus,

    Thanks for your comment. We included a selection of the sub-markets analyzed by Delta. If there is a specific area you are interested in, let us know and we will try and respond in the comments if the data are available.

    Lark Turner

  1. StanislausBabalistic said at 12:08 pm on Tuesday January 14, 2014:

    Shaw, Logan Circle, Columbia Heights, U Street, Adams Morgan, Dupont Circle, NoMA, H Street, Gallery Place, Foggy Bottom, Petworth, Capitol Hill, Waterfront, Navy Yard, etc. Thanks.

  1. Lark Turner said at 12:15 pm on Tuesday January 14, 2014:

    Stanislaus,

    Unfortunately, the report does not get that granular in terms of neighborhood data, but we will reach out to the authors and see if we can get the data sets you are looking for.

    Thanks,

    Lark Turner

  1. Jp said at 10:13 am on Wednesday January 15, 2014:

    Stanislaus,

    The prior reports indicated that rents in central DC (Logan Circle & Shaw) were stable, and the further out neighborhoods were getting hit the hardest.  NOMA, Upper NW, Navy Yard, North Arlington, and Petworth had the largest drop in rents.  I doubt much has changed since the last report. 

    Also, not sure where you live, but North Arlington and Mt. Vernon Square are notorious post-grad ‘hoods.  Mt. Vernon Square is the idea sample neighborhood for these reports because it is centrally located in DC proper and there is a ton of development happening right now.

  1. Tom M said at 12:09 pm on Wednesday January 15, 2014:

    This tracks the rent actually charged for ALL UNITS rented or the rent charged on NEWLY rented units only?  Second, does the data only report EFFICIENCY apartments?  Is there reason to think that the rental market beyond efficiency apartment tracks that small segment of the market?  And finally, is a reported 1% decline or so actually statistically significant?  In other words, does the data density and quality support drawing such a conclusion?  Thanks

  1. The Editors said at 12:39 pm on Wednesday January 15, 2014:

    Tom M,

    The report tracks newly rented units or available units for rent in Class B buildings. So, it doesn’t take into account a lease signed six months ago, as that’s not a good indicator of the current market.

    The report analyzes studios to 2-brs in buildings built prior to 1991.

    Yes, the data density supports drawing the conclusion of a 1% decline. 73,789 units were surveyed for the report which is about one-third of institutional Class B units in the region.

    Hope this helps.

    The Editors

  1. Non LTR said at 1:01 pm on Wednesday January 15, 2014:

    Any recent data on the correlation between average Class A/B rental rates and demand for home/apt purchases?  I.e., degree to which dropping rental rates correlates with fewer people buying homes.

  1. Tom M said at 3:03 pm on Wednesday January 15, 2014:

    Sorry to be a data nerd. But a 1% decline is too “single point” and summary IMHO. It would be useful to see the distribution.

Join the discussion

UrbanTurf now requires registration in order to post comments. Register here, or login below if you are already registered.

Click here if you forgot your password.



DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!

Northern Virginia

Profiles of 14 neighborhoods across Northern Virginia

Ballston
Looking to Give People A Reason to Stay Past 6pm
Clarendon
Happily Straddling the Line Between City and Suburb
Columbia Pike
Arlington’s Neglected Stepchild is Getting a Makeover
Crystal City
Turning Lemons into Lemonade
Lyon Village
Developing An Air of Exclusivity?
Rosslyn
Hitting Its Growth Spurt
Shirlington
An Urban Village Hitting Its Stride
Del Ray
Virginia’s Small Town Near the Big City
Eisenhower Avenue
The Vibrancy Might Take a Few Years
Huntington
The Quiet Neighborhood By the Beltway
Old Town
Mayberry By The Potomac
Parkfairfax
132 Commerical-Free Acres
Downtown Falls Church
Staying the Same in the Midst of Change
Tysons Corner
Radical Change Could Be On The Way

See more Northern Virginia »

Maryland

Profiles of 14 neighborhoods in suburban Maryland

Annapolis
Small-Town Living in the State Capital
Bethesda
Bedroom Community Gets Buzzing Cache
Cabin John
In With The New While Maintaining the Old
Chevy Chase
Affluence, Green Lawns and Pricey Homes
Downtown Silver Spring
Experiencing a Resurgence After a Bumpy History
Potomac
A Suburb on Steroids
Rockville Town Square
Despite the Dynamism, Still Somewhat Generic
Takoma Park
More Than a Little Bit Quirky
Wheaton
A Foodie Magnet on the Verge of Change
Capitol Heights
Kudzu, Front Porches and Crime
Hyattsville
Glass Half Full or Half Empty?
Mount Rainier
Artists, Affordable Homes and A Silo Full of Corn
National Harbor
A Development Rises Next to the Potomac
Riverdale Park
A Town Looking For Its Identity

See more Maryland »

Northwest DC

30+ neighborhood profiles for the city's biggest quadrant

16th Street Heights
DC's Sleeper Neighborhood
Bloomingdale
Where (Almost) Everyone Knows Your Name
AU Park
One of DC’s Last Frontiers Before the Suburbs
Brightwood
DC’s Northern Neighborhood on the Cusp
Burleith
DC’s 535 House Neighborhood
Cathedral Heights
Do You Know Where That Is?
Chevy Chase DC
Not to Be Confused With the Other Chevy Chase
Cleveland Park
Coming Back After A Rough Year
Columbia Heights
DC’s Most Diverse Neighborhood, But For How Long?
Crestwood
An Island of Serenity East of the Park
Dupont Circle
The Best of DC (For a Price)
Foggy Bottom & West End
Where the Institutional Meets the International
Forest Hills
Ambassadors and Adventurous Architecture
Fort Totten
Five Years Could Make a Big Difference
Foxhall Village
350 Homes Just West of Georgetown
Friendship Heights
A Shopping Mecca With a Few Places to Live
Georgetown
History, Hoyas and H&M
Glover Park
One of DC’s Preppier and More Family-Friendly Neighborhoods
Kalorama
A Posh View From Embassy Row
LeDroit Park
A Quiet Enclave in the Middle of the City
Logan Circle
Trendy Now, But Not By Accident
Mount Pleasant
Sought-After Homes Surround Main Street in Transition
Mount Vernon Triangle
From Seedy to Sought-After
Palisades
The Long, Skinny Neighborhood at the City’s Northwest Edge
Park View
It’s Not Petworth
Penn Quarter/Chinatown
DC’s Go-Go-Go Neighborhood
Petworth
Getting a Vibrancy of Its Own
Shaw
The Duke’s Former Stomping Ground
Shepherd Park
DC’s Garden of Diversity
Spring Valley
A Suburb With a DC Zip Code
Takoma
Not To Be Confused With Takoma Park
Tenleytown
Not Quite Like Its Neighbors
U Street Corridor
The Difference a Decade Makes
Woodley Park
Deceptively Residential
Adams Morgan
No Longer DC’s Hippest Neighborhood, But Still Loved by Residents

See more Northwest DC »

Southwest DC

The little quadrant that could

Southwest Waterfront
A Neighborhood Where A Change Is Gonna Come

See more Southwest DC »

Northeast DC

Profiles of 10 neighborhoods in NE

Brookland
New Development Could Shake Up Pastoral Peace
Deanwood
A Little Bit of Country Just Inside the District’s Borders
Eckington
Not to Be Confused With Bloomingdale
H Street
A Place To Party, and To Settle Down
Langdon
The Northeast Neighborhood That Few Know About
Michigan Park
A Newsletter-On-Your-Doorstep Community
NoMa
Evolving from a Brand to a Neighborhood
Rosedale
Ripe for Investment Right About Now
Trinidad
The Difference 5 Years Makes
Woodridge
Big Houses, A Dusty Commercial Strip and Potential

See more Northeast DC »

Southeast DC

6 neighborhoods from Capitol Hill to East of the River

Capitol Riverfront
Still Growing
Hill East
Capitol Hill’s Lesser Known Neighbor
Congress Heights
Gradually Rising
Hillcrest
Notable for Its Neighborliness
Historic Anacostia
Future Promise Breeds Cautious Optimism
Eastern Market
A More European Way of Living

See more Southeast DC »

Upcoming Seminars ▾