The creation of low-wage jobs in the DC area in recent years is having a marked effect on the region’s Class B apartment market.
A report out earlier this week from Delta Associates reveals that vacancy for Class B rentals in the region has dropped 40 basis points to 2.2 percent over the last year, as rents have jumped 2 percent. In DC proper, rents for this apartment class are up almost 4 percent.
The three forces in play that may affect vacancy and rents for the rest of the year and 2016 remain the same as a year ago:
- A growing job market, particularly for lower-wage workers who are looking for affordable apartments, will bolster the Class B market for the foreseeable future.
- The large number of Class A apartments in the pipeline will put pressure on both Class A and Class B rents.
- Rising home prices, even if gains are modest, will lead to more people deciding to rent than own.
Delta’s outlook from the latest report:
Local economic and demographic forces will benefit the Class B market in the period ahead, although we project that rent growth will decelerate by the end of 2015 and into 2016 as the spread between Class A and Class B rents begins to narrow in certain submarkets. Vacancy is likely to increase slightly at the end of 2015 and beginning of 2016.
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/rents_rise_vacancy_falls_in_dcs_class_b_apartment_market/10419
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