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Despite a Crush of Class A Units, Rents Rise in the District

by Lark Turner

Despite a Crush of Class A Units, Rents Rise in the District: Figure 1
A Class A micro-unit development catering to millennials is planned for Shaw’s Blagden Alley.

Despite a wave of new Class A apartment buildings that some developers worried would flood the region’s market with vacancies, people are moving into DC’s Class A apartments at a record-setting rate and rents are heading north.

Rents for Class A apartments increased metro-wide over the last 12 months, most noticeably in northeast DC, where rents are up 7.7 percent over last year, according to a third-quarter report from real estate research firm Delta Associates. In DC proper, rents rose 2.6 percent, over suburban Maryland’s 1.2 percent increase and Northern Virginia’s basically static 0.1 percent decline. Some neighborhoods took more of a hit than others; high-rise rents fell 2.9 percent in Bethesda and 1.5 percent in South Arlington.

Meanwhile, DC has a burgeoning pipeline; construction on 905 apartments began in the last quarter alone. Those incoming units are the most notable threat to what Delta calls an “unprecedented” absorption rate. The biggest question for the city’s multifamily developers is whether or not DC’s supply of renters will continue to grow as more units come online.

From Delta Associates:

Largely due to favorable demographic and lifestyle trends, the region has been able to weather the onslaught of supply with record-setting absorption — thus far. This onslaught has been building up in intensity since the credit markets began lending again in 2011. Whether the region can continue on this track is questionable, given an additional 26,500 units that will deliver over the next 24 months and projected job growth that is slower-than-average for a recovery cycle.

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

  • Central (Penn Quarter, Logan Circle, Dupont Circle, etc.): $2,871 a month
  • Upper Northwest: $2,964 a month
  • Columbia Heights/Shaw: $2,664 a month
  • NoMa/H Street: $2,362 a month
  • Capitol Riverfront: $2,267 a month
  • Rosslyn-Ballston Corridor: $2,430 a month
  • South Arlington: $2,034 a month
  • Bethesda: $2,567 a month

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

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 https://dc.urbanturf.com/articles/blog/despite_crush_of_class_a_units_rents_rise_in_the_district/9056

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