Earlier this year, it was unclear how long the record-high absorption levels would last for new apartments in the metro area. A new Class A apartment report from Delta Associates indicates that demand in the District is carrying the market as absorption falls off elsewhere.
For the 12 months ending in June, 8,962 Class A apartments were absorbed — 45 percent of which were in DC proper. During the second quarter, 4,061 units were absorbed in the District, a 31 percent year-over-year increase; meanwhile, only 3,291 units delivered in the city. While new apartments continue to rent at a quick clip in DC, the news is not as rosy in other parts of the region.
In the last year, 3,988 Class A apartments delivered in Northern Virginia, yet only 2,566 apartments were absorbed, a 57 percent drop-off over the year. "The impact that the large influx of new supply has had on Northern Virginia has led to several months of elevated vacancy and slowed rent growth," the report states.
The skewed absorption levels in the region have resulted in an increased vacancy rate (4.1 percent) for Class A apartments, and while that will change, it could take awhile. "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 be 10 basis points lower in three years than it is today – resulting in a metrowide rate of 4 percent," the report states.
There are 37,340 apartments units currently in the 36-month pipeline regionwide. Ten projects, totalling 3,298 units, broke ground in the second quarter of this year; seven of those were in the District, accounting for 3,232 of the units.
Last quarter's projections that high supply would suppress rent growth persist, although high levels of absorption are expected to continue to balance these forces out and keep rents trending positively. In the District, rents are up by 2.3 percent year-over-year, led by a 5.4 increase in the Northeast submarket and a 5.3 percent increase in the Capitol Hill/Southwest/Riverfront submarket.
The latter super-neighborhood, along with the NoMa/H Street submarket, also accounts for over 70 percent of Class A rental inventory citywide, with over 11,300 units between them.
Here is a quick snapshot of average rents for high-rise Class A apartments in DC area sub-markets, as defined by Delta:
- Alexandria: $2,117 per month
- Central (Penn Quarter, Logan Circle, Dupont Circle, etc.): $2,866 per month
- Upper Northwest: $2,865 per month
- Columbia Heights/Shaw: $2,753 per month
- NoMa/H Street: $2,445 per month
- Capitol Hill/Capitol Riverfront: $2,517 per month
- Rosslyn-Ballston Corridor: $2,454 per month
- Silver Spring/Wheaton: $1,941 per month
- Bethesda: $2,769 per month
- Northeast: $2,067 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/dc-renters-are-carrying-the-regions-class-a-apartment-market/14205
Most Popular... This Week • Last 30 Days • Ever
Here's what you need to know about reporting profit made from the sale of your home.... read »
A final look for the year at the DC neighborhoods where home values rose the most thi... read »
Residential development in this jurisdiction-straddling neighborhood got a major kick... read »
A new residential development is on the boards in DC and the design is reminiscent of... read »
DC Council initially passed a bill to regulate short-term rentals over three years ag... read »
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
A Tysons development has the area's five tallest buildings on the boards.... read »
Homeowners will be able to expedite the ADU approval process with two options for one... read »
A rezoning may be in the works for the AutoZone site.... read »
The priciest condo to ever sell in DC just closed last week, nearly a month after the... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro