In a research report, Delta Associates said that before theterrorist attacks, class B apartment real estate was expected tomaintain low vacancy rates and have rent increases at or near 5%each year for the next two years. However, the report notes thattenants in this submarket tend to be the very people that had jobsin tourism, hospitality and transportation that were affected oreliminated after the attacks. Thousands of people in the Districthave filed for unemployment from positions they formerly held atone of the more than 100 hotels in the city, or at Ronald ReaganNational Airport just across the Potomac River in Alexandria. Sincefolks in these types of positions tend to occupy class Bapartments, the firms said, they both expected a flattening ofrents over the next six months. The report expected vacancy ratesto inch up further.

Delta Associates said it surveyed 31 class B apartmentsubmarkets in the Washington metropolitan area. The firm definesclass B product as well maintained, older product, generally builtin the 1960s or 1970s, does not offer a separate clubhouse nordecorated model unit nor two bedroom/two bathroom floor plans. Thefirm said class B communities typically offer limited projectamenities, and the landlord tends to pay gas and or electric forcommon areas and individual units.

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