The latest Class A apartment report from Delta Associates illustrates how much of a mixed bag the DC area rental market is becoming.
The regional absorption of new apartments remained above the ten-year average, with the 9,714 units absorbed over the last year representing a 7 percent annual increase. However, suburban Maryland and northern Virginia are responsible for the increase, with absorption going up by 26 and 9 percent respectively in these jurisdictions.
Although DC had the highest number of Class A units absorbed over the past year, absorption for new apartments in the city dropped six percent compared to the third quarter of 2018. The Capitol Hill/Riverfront/Southwest submarket had the highest absorption in the area (1,342 units), with NoMa/H Street (975 units) coming in second.
Class A vacancy fell 10 basis points to 4.3 percent in the metro area, although an increase in supply may cause some variation in vacancy rates going forward. Between October 2019 and September 2020, 14,602 units are slated to deliver in the region, more than 3,300 units over what delivered (11,270 units) in the year prior.
Delta Associates expects northern Virginia to continue to experience increased absorption, bolstered by Amazon-induced demand and the delivery of additional units in Arlington and Alexandria through the end of 2019.
"Given projected absorption and the delivery schedule of projects currently under construction, we expect the region-wide vacancy rate for stabilized Class A apartment properties will increase by 20 basis points in three years compared to today – resulting in a metro-wide rate of 4.5 percent," the report states.
Here is a quick snapshot of average rents for high-rise Class A apartments in DC area sub-markets, as defined by Delta:
- Alexandria: $2,152 per month
- Bethesda: $2,830 per month
- Capitol Hill/Capitol Riverfront: $2,631 per month
- Central (Penn Quarter, Logan Circle, Dupont Circle, etc.): $2,961 per month
- Columbia Heights/Shaw: $2,739 per month
- Crystal City/Pentagon City: $2,482 per month
- NoMa/H Street: $2,507 per month
- Northeast: $2,119 per month
- Rosslyn-Ballston Corridor: $2,604 per month
- Silver Spring/Wheaton: $2,035 per month
- Upper Northwest: $2,813 per month
Note: The rents are an average of studios, one and two-bedroom rental rates at Class A high-rise buildings in the DC area.
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/class-a-absorption-down-6-percent-in-dc-proper/16151
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