Note -- Following publication of this article, we learned that the Delta report may also include rent-controlled units. DC banned rent increases on vacant rent-controlled units through the public health emergency, contributing to lower rents among Class B apartments.
While demand has significantly risen for Class A apartments in the DC area, a new report paints a starker picture for more outdated Class B rental units.
Rents for high-rise Class B apartments dropped by 8% year-over-year in the second quarter, per a new report from Delta Associates. None of the three major local submarkets were exempt from this trend, as rents were down by 11.4% in DC, 7.6% in Northern Virginia, and 5.5% in Suburban Maryland.
Broken down by neighborhood, the largest drop in Class B rents occurred in Arlandria, were rents went down by 12.4% year-over-year. Next were the Southwest DC, Upper Northwest, and Mount Vernon Square submarkets, where rents went down by about 11% across the board. Mount Vernon Square remains the priciest submarket for Class B units, however, at $2.58 a square foot. Silver Spring is the least expensive, at $1.66 per square foot.
Because renovations of Class B units usually raise rents to make these apartments more competitive with those at Class A properties, a drop in under-renovation apartments has helped keep rents down for the former. There were 7,644 units under renovation across at least 17 projects this past June compared to 8,122 units in June 2020 and 16,283 in June 2019. Vacancy rates have also gone down year-over-year, however, by 1.9% areawide and by at least that much in each submarket.
"Class B" generally refers to well-maintained older apartment stock with fewer amenities or other features that are considered "dated". On average, rents are $544 lower per month in high-rise Class B apartments in DC than high-rise Class A; the deltas are respectively $460 and $421 in Suburban Maryland and Northern Virginia.
Here is a quick snapshot of average effective rents for mid- and high-rise Class B apartments in DC area sub-markets, as defined by Delta:
- Arlandria: $1,456 per month
- Bethesda/Chevy Chase: $1,721 per month
- Crystal City: $1,996 per month
- Mount Vernon Square: $1,708 per month
- Silver Spring: $1,589 per month
- Southwest: $1,845 per month
- Upper Northwest: $1,864 per month
- West Alexandria: $1,572 per month
Note: The rents are an average of studios, one-, two-, and three-bedroom rental rates at Class B mid- and high-rise buildings in the DC area.
This article originally published at https://dc.urbanturf.com/articles/blog/class-b-apartment-rents-down-11-in-dc-per-report/18513.
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