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If You Build Them: Class A Apartment Absorption Above Average for Sixth Consecutive Quarter

  • July 18, 2016

by Nena Perry-Brown

If You Build Them: Class A Apartment Absorption Above Average for Sixth Consecutive Quarter: Figure 1
Rendering of mixed-use building planned in Arlington.

As DC-area employment continues to grow at an impressive rate, with year-over-year growth exceeding the national average, demand for Class A rental housing remains strong in the region, according to Delta Associates’ second quarter report.

With an annual rate of over 10,000 units, absorption of Class A apartments in the DC metro area exceeded the long-term average for the sixth consecutive quarter. The above-average absorption is coupled with rental rates for Class A and Class B apartments rising 2.5 and 2.4 percent, respectively, since the second quarter of 2015.

It is projected that over the next 36 months, absorption rates will continue to exceed the ten-year average. “This projection is predicated upon the “de‐nesting” and “un‐grouping” of potential renters currently living with parents or roommates, along with job growth and a stable or rising ratio of renters to owners,” the report states.

While 33,000 new apartment units will come online in the region over the next three years, the report predicts that region-wide vacancy will drop 40 basis points to 3.7 percent in 2019, but vary notably from sub-market to sub-market.

If You Build Them: Class A Apartment Absorption Above Average for Sixth Consecutive Quarter: Figure 2

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

  • Central (Penn Quarter, Logan Circle, Dupont Circle, etc.): $2,876 a month
  • Upper Northwest: $2,920 a month
  • Columbia Heights/Shaw: $2,660 a month
  • NoMa/H Street: $2,394 a month
  • Capitol Riverfront: $2,350 a month
  • Rosslyn-Ballston Corridor: $2,390 a month
  • South Arlington: $2,027 a month
  • Bethesda: $2,595 a month

Note: The rents are an average of studios, one and two-bedroom rental rates at new buildings in the DC area.

Definitions:

Class A apartments are typically large buildings built after 1991, with full amenity packages. Class B buildings are generally older buildings that have been renovated and/or have more limited amenity packages.

This article originally published at http://dc.urbanturf.com/articles/blog/apartment_absorption_above_average_for_sixth_consecutive_quarter/11477

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