The latest quarterly report from Delta Associates shows that, in the 12 months ending in September, 9,052 Class A apartments were absorbed in the DC area, the second straight quarter where annual absorption fell below 10,000 units.
This slowing in the market is due to underperforming Class A markets in Northern Virginia and suburban Maryland, where absorption fell by a respective 40 and 14 percent, year-over-year. Absorption over the past year in the District only increased by 1.7 percent, but accounted for roughly 42 percent of the units absorbed in the region.
As in the region, the Class A market in DC proper was also carried by certain submarkets. Absorption in the Northeast submarket increased five times over, however this high absorption coincided with a 2.9 percent drop in rents, making it the only DC submarket besides Columbia Heights/Shaw to observe a drop in rents.
Overall, rents increased by 1.4 percent regionwide and by 1.1 percent in DC proper, led by a 6.1 percent increase in the Capitol Hill/Riverfront/SW submarket.
"While job growth continues and supply remains plentiful, the wave of new Millennial households that helped the region absorb a record 13,249 apartments in calendar year 2015 and maintained annual absorption above 10,000 units until early 2018 appears to be subsiding," the report states. "We project annual demand averaging 9,000 Class A units over the next three years."
Here is a quick snapshot of average rents for high-rise Class A apartments in DC area sub-markets, as defined by Delta:
- Alexandria: $2,114 per month
- Central (Penn Quarter, Logan Circle, Dupont Circle, etc.): $2,845 per month
- Upper Northwest: $2,913 per month
- Columbia Heights/Shaw: $2,687 per month
- NoMa/H Street: $2,378 per month
- Capitol Hill/Capitol Riverfront: $2,564 per month
- Rosslyn-Ballston Corridor: $2,494 per month
- Silver Spring/Wheaton: $1,958 per month
- Bethesda: $2,716 per month
- Northeast: $2,077 per month
- Crystal City/Pentagon City: $2,403 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 https://dc.urbanturf.com/articles/blog/dc-is-carrying-the-class-a-apartment-market-in-the-region/14576.
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