DC-Area Apartment Leasing Jumps as Rent Growth Hits Two-Decade High
By Keith Loria April 21, 2022 1:14 pmreprints
The number of apartments occupied in a single year in the Washington, D.C., region is expected to surpass 15,000 in 2022, a record high number and a similar pace as in 2021, according to the latest report by Marcus & Millichap.
Additionally, availability is on pace to fall to 2.8 percent by year-end, roughly 120 basis points below the metro’s pre-COVID-19 rate.
“A plethora of high-paying jobs from a diverse set of industries is attracting young, educated workers to the region, bolstering apartment demand,” said Brian Hosey, first vice president and division manager at Marcus & Millichap, who was one of the authors of the report. “Over the past 12 months ending in March, renters absorbed more than 32,000 units, contracting availability to the lowest rate in over two decades.”
Rents increased 11.7 percent year over year, landing at an average of $1,945 per month in March, the highest annual growth rate in more than two decades. In the Washington Central Business District, the average effective rate increased 8.4 percent, to $2,358 per month, while the suburbs saw a 9.5 percent rise, to $1,794 per month.
“Renter demand is widespread, with all but one of the metro’s 36 submarkets recording vacancy compression during the last four quarters,” Hosey said in the report, adding that D.C.’s renter pool is expected to expand along with the population, which is forecast to grow by 200,000 residents over the next five years.
In the past year, D.C. saw 13,826 new multifamily units come online, expanding inventory by 1.9 percent. Many of these new units were in Northeast D.C., Navy Yard-Capitol South and the Reston-Herndon submarkets, accounting for approximately 45 percent of all deliveries over the past year.
Currently, there are 33,000 units under construction, with builders targeting sites proximate to Metro stations, the report notes. Besides the District, other areas of high growth include North Arlington, Bethesda and East Alexandria.
Even though deliveries will be the highest since 2014, demand is still expected to outpace supply additions, Hosey said.
Keith Loria can be reached at Kloria@commercialobserver.com.