Wednesday, April 15, 2015

Southwest Rental Market Update

In Delta Associates’ recently-released First Quarter 2015 Mid-Atlantic Class A Apartment Report, it shows that rents in the Capitol Hill/Riverfront submarket (which includes Southwest) increased by 3.2% over the past 12 months, while rents in the city as a whole decreased by 1.3% as a slew of new projects entered the market. Stabilized vacancy in the area, which only includes projects that have reached stabilization (or 95% occupied), is at 3.6% - the lowest rate among submarkets in the District. 

Lex at Waterfront Station, which began leasing units in December, was about 20% leased as of March with a lease-up pace of 13 units per month. Sky House East, Lex’s sister building across 4th Street, reached stabilization in a year at a monthly lease-up pace of 18 units. The other newer project in Southwest, Camden South Capitol, reached stabilization 16 months after leasing began, or a 15-unit monthly lease-up pace. 

However, there are several projects under construction and planned for the neighborhood. There are four apartment projects under construction, including three at The Wharf and one at Waterfront Station, totaling 811 units. Two other apartment buildings are planned that may deliver over the next 36 months, including the St. Matthews site at Delaware Avenue and M Street and an addition to Capitol Park Tower at 4th and G streets for a total of 471 units. 

On the Class B apartment front, Delta’s First Quarter 2015 Washington Metropolitan Area Class B Apartment Report indicates that rents in the Southwest submarket are down 3.3% from a year ago, but over the past 5 years, rents have increased on average by 2.8% per year. Similar to the Class A market, vacancy is low – it is 3.5% in Southwest compared to the city-wide average of 4.4%.

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