Rent Growth Slows, Vacancy Rises: A Look at the Class A Apartment Market

• August 1st 2023

by UrbanTurf Staff

Class A apartment rents were still rising in the DC region in the second quarter of 2023, but that growth was slowing as vacancy began to creep up in buildings across the area. 

Delta Associates released their second quarter report for newer apartment buildings last week, which shows that the pace of rent growth is slowing in the DC area as the result of more product coming online. Class A apartments are typically large buildings built after 1991, with full amenity packages.

"Annual rent growth in the Washington metro area Class A apartment market is trending below the long-term average, which is the result of a highly competitive environment as a record number of new projects are now available," the report stated.

Below, UrbanTurf gathered data regarding the trajectory of apartment rents around the region over the last year. 

As the table illustrates, the largest increases were seen in South Arlington and Bethesda, however at just 5-6%, they are significantly lower than the double digit increases seen over the last 2-3 years. As more apartments come online, the rise in rents displayed above will become more common.

"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 increase by 80 basis points in three years compared to today – resulting in a metro- wide rate of 5.1%," the Delta report stated. "We expect rent growth to be mostly below the long-term average over the next three years. Rent growth will average between 2.5% and 4.5% in 2023 – 2026."

This article originally published at https://dc.urbanturf.com/articles/blog/rents_slowing_vacancy_growing_the_dc-area_class_a_apartment_market/21318.