"It takes two years to develop a condo project so that means even ifwe start building today the market will still be tight in 2012,"principal Chris Ballard tells GlobeSt.com. Certainly, though, themarket will not begin any projects today--a year out is thebest-case scenario, according to Ballard.
How bad the supply constraint becomeswill be determined on a submarket-by-submarket basis. In 2009 therewere approximately 2,500 gross sales and 700 cancellations ordefaults, resulting in 1,800 net new condominium sales in the DC area,McWilliams|Ballard reports. The close-in markets accounted for 62% ofthe gross sales for DC area in 2009, and are likely to experience thegreatest supply constraints. Areas outside the beltway, by contrast,are oversupplied, averaging 6.5 years of available product based on2009 sales pace.
McWilliams|Ballard predicts that of the 4,400 multifamily units thatare currently under construction as rental product, between 10% and40% will deliver as condominiums to fill the impending lack ofinventory in supply constrained submarkets.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
