GAITHERSBURG, MD-Arlington, VA-based AvalonBay Communities hasacquired two apartment complexes in suburban Washington for a totalof $146 million. AvalonBay paid $101 million for Grove Park, a684-unit apartment community here and $45 million for Briarwood, a348-unit apartment community in Owings Mills, MD. Grove Parkwas built in 1974 and renovated in 2005 and 2006. The seller wasFederal Capital Partners and Angelo, Gordon. Briarwood is an11-year-old development that includes townhomes.

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The acquisitions were the fifth and sixth purchases made throughthe AvalonBay Value Added Fund II. During the recession AvalonBayrecognized far earlier than other firms that multifamily was goingto recover sooner than other sectors—a fact that is today quiteobvious. Besides snapping up properties across the nation, the REITis also launching an ambitious development program in selectmarkets. In the DC area, it plans to build Avalon Park Crest inTysons Corner, VA, for example.

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In many ways, though, AvalonBay’s acquisitions here is a largerstory about DC, whose fundamentals and demographics are almosttailor-made to produce a multifamily market that will be hot foryears. The common denominator, Ari Firoozabadi, vicepresident of investments at Marcus & Millichap, tellsGlobeSt.com, is the area’s job market.

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Of the 750,000 new jobs added nationwide into the month ofAugust 2010, 50,000 were added in the DC Metropolitan area and19,000 in the Baltimore area, which totals approximately 9.2% ofthe total new jobs added, Firoozabadi says.“Approximately 40% of those new jobs were added in the month ofMarch, and that is around the time we began to see vacancies trenddownward, stabilization and signs of rent growth.”

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For investment sales, those numbers--coupled with the limitedrental product to be delivered in 2010, 2011 and 2012--means thatmost investors are underwriting between 3% to 7% rent growthdepending on the submarket, he says. “I get blue in the face sayingit, but the DC MSA is the most high-demand market in the country,and we regularly get “out-of-towners” calling for newopportunities,” Firoozabadi says. “In fact, we spoke with a NewYork-based operator yesterday that said the majority of its focusfor year-end 2010 and 2011 will be multi-housing investments in thegreater DC marketplace.”

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