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DC Area Rents Drop 3% As New Apartment Supply Rises

  • January 9, 2014

by UrbanTurf Staff

DC Area Rents Drop 3% As New Apartment Supply Rises: Figure 1
The Shay, a 245-unit apartment project planned in DC.

A report out today from Delta Associates analyzing the regional apartment market in the fourth quarter of 2013 reveals that rents for Class A apartments (large buildings built after 1991, with full amenity packages) in the DC area dropped 3 percent last year, a clear sign that the supply of new apartments is catching up to demand in the area.

Class A rents fell year-over-year by about a percentage point in upper NW DC and also dropped in the Rosslyn-Ballston Corridor (-2.4%) and Silver Spring (-6.8%) Rents did not fall everywhere, however. In DC proper, rents actually rose by 0.8 percent despite the large number of new apartments delivering, thanks to a continued high level of demand. In the NoMa/H Street sub-market, rents increased 3.9 percent.

DC Area Rents Drop 3% As New Apartment Supply Rises: Figure 2
Courtesy of Delta Associates. Click to enlarge.

Here is a quick snapshot of average rents for Class A apartments in DC area sub-markets, as defined by Delta:

  • Central: (Penn Quarter, Logan Circle, Dupont Circle, etc.) $2,822 a month
  • Upper Northwest: $2,648 a month
  • Columbia Heights/Shaw: $2,480 a month
  • NoMa/H Street: $2,295 a month
  • Alexandria: $1,955 a month
  • Rosslyn-Ballston: $2,337 a month
  • Tysons Corner: $1,746 a month
  • Bethesda: $2,580 a month

Note: The rents are an average of studios, one and two-bedroom rental rates at new buildings in the DC area.

There are a number of reasons that rents are now falling, but primarily it is due to high levels of new supply and a pipeline that now seems oversized compared with demand. For loyal UrbanTurf readers this should not come as surprise. In 2012, we reported that the delivery of new apartment projects (and resulting increase in vacancies) will put downward pressure on rents.

Definitions:

  • 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_area_rents_drop_3_as_new_apartment_supply_rises/7979

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