Delta President William Rich
WASHINGTON, DC–Ungrouping. It sounds like a word Gwyneth Paltrow might use to describe the breakup of a living arrangement among roommates or family members and in fact, that is exactly what it means in this particular context. Ungrouping will continue to drive annual absorption rates of Class A apartments in the Washington DC area as rents will likely stay below average and new supply will continue to flood the market, at least until 2018.
That is according to Delta Associates, which reports that, after dipping below the five-figure mark in the fourth quarter of 2016, annual absorption of Class A apartments reached over 10,000 units in the first quarter of 2017. Specifically, the Washington DC area recorded 10,381 Class A units absorbed during the 12 months ending March 2017.
This is not to say fundamentals uniformly suggest endless growth for this asset class.
Rent growth remained below average in Q1, registering a 1.5% increase for all investment-grade apartments. (Class A rents increased by 1.7% and Class B by 1.1%). Meanwhile, oncoming supply has averaged above 30,000 units since 2011, and, according to separate stats from Axiometrics, projected apartment deliveries this year in the area will rise 33.7% to 13,141 and then drop in 2018 to 7,997.
The bottom line, according to Delta, is that absorption of Class A units over the next 36 months will likely be significantly higher than the region’s 10-year annual average. As it says in its report:
This projection is predicated upon the ‘denesting’ and ‘ungrouping’ of potential renters currently living with parents or roommates, along with job growth and a stable or rising ratio of renters to owners.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
