Rising interest for apartments has kept the rental market in the District relatively strong, despite a lagging economy and decreased demand in other parts of the country.
While weaker than it has been in the past five years, D.C.’s market is still stable compared to the national market, according to data from the National Association of Realtors. While the vacancy rate for the entire country is about 6 percent, the D.C. area had a 5.2 percent rate in the first quarter of 2009, said Walter Molony, NAR senior public affairs specialist.
“When you get at a vacancy rate of around 5 percent, it’s generally considered a landlord’s market because that supports higher rents,” Molony said, since rental prices are often pushed up due to increased demand.
Pittsburgh, in comparison, has a vacancy rate of 4.8 percent, one of the lowest of any metropolitan area, Molony said. Phoenix, Atlanta and Jacksonville, Fla., have some of the highest vacancy rates – all more than 10.7 percent. Baltimore, Boston and Minneapolis all have vacancy rates within 0.1 percent of the District’s, he added.
Brett Cory, property manager for Mass Apartments at 1210 Massachusetts Ave., said the apartment market in the District is still strong because of recent job creation. While prices have fallen outside the Beltway, there has been a steady demand for apartments because many jobs have been moved to the District, said Elena Solorzano, assistant property manager.
“Law firms and accounting firms, instead of laying people off, they relocate their employees to D.C.,” Solorzano said. “We’ve seen a lot of people coming from New York City, Chicago and L.A.”
Monthly rental prices in D.C. have increased roughly 3 percent each year for the last five years, said Grant Montgomery, vice president of the real estate group Delta Associates. An analysis of several apartment buildings in the area found that rental prices in Foggy Bottom in particular have risen over the past few years. Increases in monthly rent since 2006 ranged from $200 to $400.
“[GW students] are in the type of market that, from a renter’s viewpoint, unfortunately, there will not be a lot of downward pressure on rents,” Montgomery said.
Montgomery did say, however, that apartment rent prices across D.C. have held relatively steady over the past year.
Rising rents in the Foggy Bottom and West End areas of D.C. result from continued high demand and little new supply, he said. In the last three years, only two new apartment complexes have opened in the area, Montgomery said, including the 2400 M Street Apartment building.
Rent prices have gone down in other, developing parts of the city with many new apartment buildings, he added, especially in the area around the new Nationals Park stadium. But the difficulty of getting proper permits to build new apartment complexes, combined with the steady demand from students and other professionals gives landlords in the Foggy Bottom area more ability to push rent up, he said.
Equity Apartments, which took over management of both the Mass Apartments and the 2400 M Street Apartment building last March, saw a 3 percent rental price increase in those buildings since last year, Cory said.
In addition, Cory and Solorzano at Mass Apartments said many renters have downgraded their apartments to save money because of the poor economic climate.
“People who were renting the penthouses are now renting the second- or third-floor apartments,” Cory said. “People are still renting from us but instead of getting the Cadillac, they’re getting a lower-quality apartment.”
D.C. rent control laws allow a maximum rent increase of 2 percent plus the percentage increase in the Consumer Price Index, according to D.C. Department of Housing documents. These controls only apply to apartments built before 1975, so Mass Apartments and 2400 M Street are not bound by them.
Apartment buildings like the Statesman, located on 21st and F streets, however, are bound by the rent control law, said Statesman Community Manager Lisa Nanni. The Statesman’s monthly prices have increased by roughly $500 since 2004, she added, with a studio ranging from $1,150 to $1,350 in 2004 and between $1,550 and $1,800 today.
This article appeared in the April 23, 2009 issue of the Hatchet.