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40% of Class A Apartments Absorbed Last Year Were in Northern Virginia

by Nena Perry-Brown

The new Century Center redevelopment in Northern Virginia.

The latest Class A apartment report from Delta Associates highlights the growing demand in Northern Virginia's rental market. 

Last year, Northern Virginia had the highest apartment absorption rate in the region, with absorption increasing by 47% even as deliveries increased by 37%.

However, a closer look at regional submarkets reveals that DC neighborhoods still remain area leaders in apartment absorption: 1,496 units were absorbed last year in the Capitol Hill/Capitol Riverfront/SW submarket, followed by 1,066 in NoMa/H Street and 942 apartments in Columbia Heights/Shaw.

Project supply and demand through 2022. Click to enlarge.

Virginia's Reston/Herndon submarket came in fourth with 807 units absorbed, and overall, northern Virginia accounted for 40% of the 10,960 units absorbed in the area in 2019. However, the 36-month pipeline of 13,528 units in Northern Virginia is only a 0.4% increase year-over-year, and 37% fewer units are expected to deliver this year than last.

The area market-rate rental development pipeline over the past decade. Click to enlarge.

2020 is the ninth year in a row with over 30,000 units on the horizon for the DC region; 12,835 of those units in the pipeline broke ground last year, and another 13,750 are expected to deliver in 2020.

And increased supply and pipeline are not interrupting rent growth: 2019 as the second consecutive year that Class A apartment rents in the DC area went up by 2.6%, and this rate was relatively consistent across all three substates.

"We expect regional Class A rent growth to remain below over the next three years, increasing by 2.75% in 2020 and 2021, eventually reaching 3.0% in 2022," the report states.

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

  • Alexandria: $2,153 per month
  • Bethesda: $2,790 per month
  • Capitol Hill/Capitol Riverfront: $2,741 per month
  • Central (Penn Quarter, Logan Circle, Dupont Circle, etc.): $2,927 per month
  • Columbia Heights/Shaw: $2,687 per month
  • Crystal City/Pentagon City: $2,505 per month 
  • NoMa/H Street: $2,454 per month
  • Northeast: $2,080 per month
  • Rosslyn-Ballston Corridor: $2,521 per month
  • Silver Spring/Wheaton: $1,977 per month
  • Upper Northwest: $2,789 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.

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.

See other articles related to: pipeline, delta associates, class a apartments, absorption rate

This article originally published at http://dc.urbanturf.com/articles/blog/forty-percent-of-apartments-absorbed-last-year-were-in-northern-virginia/16379

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