Same Song: Apartment Rents Up, Vacancy Still Low in DC Area

• July 6th 2011

by UrbanTurf Staff

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According to Delta Associates second quarter report, rents in the DC area have risen 6.3 percent for Class A and B apartments over the past twelve months while vacancy rates sit at 3.1 percent. While that vacancy rate is virtually unchanged when compared to a year ago, the DC area has the third lowest vacancy for a major metro area in the country (behind only New York and Philadelphia), according to the report.

As rents increase and vacancy remains low, the days when a month of free rent was dangled in front of renters to get them to sign a lease are increasingly becoming a thing of the past. Such concessions were widespread in newly leasing apartments at the end of 2009 and in early 2010, but the practice has become less and less prevalent; on average renters have received only 2.9 percent concessions on annual rent this year, compared with 4.1 percent in 2010, and 7.2 percent in 2009.

The Prince William County and Frederick, Md. rental sub-markets saw the largest year-over-year increases, with rents rising around 11 percent in each. In DC, rents rose 5.6 percent in the Columbia Heights/Shaw sub-market; the lowest vacancy (3.4 percent) is in the researched area that includes Dupont Circle, West End, and Logan Circle. Effective monthly rents are also the highest ($2,649) in this sub-market when compared to the rest of the city ($2,481).

Delta Associates vice president Grant Montgomery told UrbanTurf that the number of new projects leasing up in the region has gradually dropped over the last two years (47 projects in 2009, 34 in 2010, and 23 in mid-2011). The drop in deliveries is consequently tightening supply despite the booming rental construction.

“You don’t build an apartment overnight, and we are currently experiencing the effects of this,” he said.

Montgomery also noted that vacancy will continue to decline and rents will continue to increase in the DC area for the remainder of the year, and that the region will see a bump in deliveries of new projects in the second and third quarter of 2012.

“In the first quarter of 2011, 4,000 rental units started in the area. That number is typically 1,900,” Montgomery explained. “This initially gave us pause, but then we realized that for two years there was a 7,500 unit deficit, so the jump in starts was needed to bring the supply up to equilibrium.”

Definitions:

• Class A apartments are typically large buildings built after 1991, with full amenity packages. Class B buildings were generally built in the 1950s, 1960s and 1970s, with more limited amenity packages.

This article originally published at https://dc.urbanturf.com/articles/blog/same_song_rents_up_and_vacancy_still_low_in_dc_area/3762.