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Report: Pricey Class A Market Creating Demand for Class B Apartments
Demand for Class B apartments is on the rise despite a rush of inventory in the Class A market.
That’s mostly due to the units’ comparative affordability, according to a new report on the Class B apartment market from real estate research firm Delta Associates.
The report looks at year-over-year changes in the market. Class A apartments are typically large buildings built after 1991, with sought-after luxury amenities. (UrbanTurf reported on the changes in the Class A market earlier this week). Class B buildings are usually older buildings, with more limited amenities. Delta’s analysis doesn’t include privately rented homes.
Class B rents increased 0.9 percent while vacancy decreased 3.2 percent, according to the third-quarter report from Delta. Rents in DC proper drove the increase. Rents there jumped 3 percent. That figure was 0.5 percent in suburban Maryland and 0.9 percent in Northern Virginia. Vacancy in the region is down from a year ago, when it was 4.4 percent.
The report says the trend of low vacancy will likely continue next year thanks to added jobs in the DC area and increasing home prices. Despite that, though, Class B rents will likely remain low, the report projects, because “the delivery of Class A units reached a peak in 2014 and we still have many more deliveries coming in 2015, so pressure on the Class B market will mount and this will lead to rent compression, putting downward pressure on Class B rents.”
Here’s a look at average rents for high-rise Class B apartments in certain Delta-defined submarkets:
* Upper Northwest: $2,206 a month
* Mt. Vernon Square: $1,890 a month
* Bethesda/Chevy Chase: $2,043 a month
* Silver Spring: $1,664 a month
* South Arlington: $1,541 a month
* Falls Church/North Arlington: $2,051 a month
* Crystal City: $2,168 a month
Note: The rents are an average of studios, one and two-bedroom rental rates at new buildings in the DC area.
See other articles related to: delta associates, class b apartments, class b
This article originally published at http://dc.urbanturf.com/articles/blog/report_pricey_class_a_market_creating_demand_for_class_b_units/9073
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