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The Increase in DC Rents Is Slowing Down

by UrbanTurf Staff

DC area rents are still on the rise, but not surging like they have done in years past.

According to Delta Associates’ 2011 fourth quarter report, rents in the region for Class A and B apartments rose 2.1 percent over the past twelve months. The increase still may make renters quiver, but it pales in comparison to 2010, when it was reported that rents in the region had increased 7.8 percent over the course of the year.

As for vacancy, rates now sit at 3.8 percent. While low, the vacancy rate has actually increased slightly compared to the fourth quarter of 2010 when it was 3.4 percent. (DC’s apartment vacancy rate is still the third lowest for any metro area in the country, except for Philadelphia and New York City.)

image
Courtesy of Delta Associates.

Class A rents in the city in the fourth quarter averaged $2,579/month, up from $2,454 in December 2010. For Class B buildings, rents also increased, to $1,863/month from $1,808/month in the fourth quarter of 2010. However, a huge supply of new rental units coming online in the next two years will likely buck the trend of continued rent increases.

From the report:

Class A rents will face downward pressure in 2012 at the metro level due to the large slate of scheduled deliveries compared to likely demand levels. Given headwinds on the demand front, and a robust delivery schedule, modest rent declines are probable at the metro level by the end of 2012. Better projects in stronger submarkets will outperform these market averages.

So just how many new apartments will the DC area see coming online? Delta Associates vice president Grant Montgomery told UrbanTurf that over 6,200 units started construction in the fourth quarter, the largest number that the firm has seen in 18 years, and over 23,000 new units are expected to deliver in the metro region in 2012 and 2013.

Definitions:

  • Class A apartments are typically large buildings built after 1991, with full amenity packages. Class B buildings were generally built in the 1950s, 1960s and 1970s, with more limited amenity packages.

This article originally published at https://dc.urbanturf.com/articles/blog/dc-area_apartment_rents_rise_vacancy_third_lowest_in_the_country/4848

6 Comments

  1. MP said at 2:11 pm on Wednesday January 4, 2012:

    Are these the average rates for 1BR apartments? 2BR? Any size?

  1. Brian Larkin said at 2:31 pm on Wednesday January 4, 2012:

    How are “Class A” and “Class B” apartments defined? Or where can I find a definition?

  1. Rachel said at 2:35 pm on Wednesday January 4, 2012:

    @Brian Larkin,

    The definitions for Class A and Class B apartments are at the bottom of the article.

  1. KT said at 2:42 pm on Wednesday January 4, 2012:

    I beg to differ…as a firm that rents quite a few apartments in the area for our personnel, we are coming up on renewal with many of our apartments in the area right now and even though it’s dead of winter/slow season, we are experiencing $2-300 per month rent increases. Frankly, it’s absurd. Thankfully, there’s enough competition out there and we can take our business elsewhere.  It’s just a shame that building managers are playing this game…just as the housing bubble resulted, soon enough, so will the apartment industry.

  1. KT said at 2:52 pm on Wednesday January 4, 2012:

    The classification of apartments is not necessarily defined by when they were built…I worked in the apt industry for years and can tell you, it’s more so based on the caliber of building. Modern, newer buildings with amazing amenities and top of the line finishes are considered Class A.  Class B are a bit older, but have been renovated and/or still have the amenities and nice finishes.  Class C are older, 60’s & 70’s, buildings and have not been renovated and/or with basic amenities and standard finishes.  Hope this helps clarify some.

  1. Mark Wellborn said at 3:51 pm on Wednesday January 4, 2012:

    MP,

    The rents are a weighted average of all the units in the region, so they’re not for a specific unit type. The report did not break out the average rates for one-bedrooms, two-bedrooms, etc.

    Mark Wellborn
    Editor

Comments are closed.

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