Politicians on Capitol Hill might still be struggling to deal with the aftermath of the Great Recession, but the D.C. metro area’s multifamily market is having no such problems. After two years of competitive conditions, the D.C. metro has turned a corner.
Last year, vacancy rates for all apartments were cut in half, declining from 4.9 percent to 2.5 percent. Consequently, rent growth surged, rising 7.3 percent in 2010. Meanwhile, demand continues to increase. Solid job growth in the D.C. area—the metro’s 5.9 percent unemployment rate pales in comparison to the national average of 9.6 percent—has helped attract renters from across the country. A 450 basis point (bps) swing in the propensity to rent vs. own since 2007, coupled with dwindling supply, has D.C.’s apartment market eyeing strong market conditions in 2010 and beyond.
Further buoyed by Uncle Sam and private sector job growth, the Washington, D.C., metro boasts a supply/demand balance favorable to owners, a transient workforce with high renter propensity, and an outlook for new development and transactions outpacing any other metro in the country.
DIRT FLIES, STARTS RISE
With limited starts in 2009 and 2010 and new construction of mid- and high-rise product taking 20 to 24 months, the city is likely to experience an extended lag in new product.