Washington, DC has quickly gone from the can’t-miss market to one of concern – as the DC metro is taking on an historically high load of new supply. How’s the market responding? The latest fundamentals show the story – while it isn’t great – isn’t as dire as some had feared.
Washington DC Performance Highlights for Q2 2014
No apartment market has seen expectations drop off faster than Washington, DC. Coming out of the recession, DC was widely considered one of the best apartment markets across the country. But with a surge of new supply hitting the metro, apartment fundamentals have softened.
But the news isn’t all bad. While supply is tracking ahead of demand, the gap is not as great as many feared. In fact, only Dallas and Houston have absorbed more apartment units over the past 12 months than Washington, DC.
Occupancy in the metro is still healthy at 95.1%, that’s an increase of 20 basis points over the first six months of 2014. A bigger concern for the metro is rent growth but Q2 2014 brought a pleasant surprise as quarter-over-quarter rents jumped 1.7%. Year-over-year rents were only up 0.3%, one of the most meager numbers across the nation.
What does the future hold for the metro as nearly 24,000 units are still in development? MPF Research expects demand to remain healthy but for rent growth to be flat to slightly negative through 2015.
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