Vacancies and rents both rose slightly in the DC area’s Class B apartment market in the second quarter of 2014, according to a recent report, which also predicted that downward pressure will be put on rents in the coming year.
The report, issued by real estate research firm Delta Associates, looks at year-over-year changes in the Class B market. Class A apartments are typically large buildings built after 1991, with amenities like gyms, pools and the occasional dog park or roof deck. (UrbanTurf reported on the changes in the Class A market last week). Class B buildings are generally older buildings that have been renovated or have more limited amenities. Delta’s analysis doesn’t include privately rented homes.
Overall, the Class B vacancy rate rose from 4.0 percent to 4.4 percent, and rents in the region increased, but only very slightly. The changes make more sense when you look at the breakdown by region. Rents in suburban Maryland are up 1.7 percent, while vacancy is down to 5 percent. Opposite yet less pronounced trends occurred in both northern Virginia, where rents dropped by 0.3 percent and vacancy rose to 6.1 percent, and DC proper, where rents fell 1.2 percent and vacancy rose to 4.9 percent, up from 2.5 percent last year.
Here’s a look at average rents for high-rise, Class B apartments in certain Delta-defined submarkets:
From the Delta report on the trajectory of rents:
Rents will likely trend negative for Class B assets during the balance of 2014 and through 2015 due to the over production of Class A assets and consequently continued increasing vacancy in B product. Several contributing factors will keep vacancy down; but rents will be under pressure through 2015.
This article originally published at http://dc.urbanturf.com/articles/blog/rents_vacancies_edge_higher_in_dc_area_class_b_apartments/8745
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