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Downtown D.C. Multifamily Submarket Experiencing Rent Increases

CoStar Market Insights: As Absorption Outpaces Supply in Downtown D.C., Rents Rise
September 10, 2018

The 250-unit Mount Vernon Plaza apartment building in Washington, D.C.

Thanks in large part to a rise in occupancies, the downtown Washington, D.C. multifamily submarket experienced a rent reversal from this time last year.

While rent growth is still below the 10-year average, rents strengthened significantly compared to this time last year. In the third quarter of 2017, rent growth was negative 1.5 percent, the lowest it’s been in more than a decade. Rents have since recovered over the past 12 months, posting gains right below the 10-year average of 2.25 percent.

As fundamentals continued to strengthen after the influx of supply in 2013 and 2014, landlords began to once again push rents. Deliveries in the near term should be limited based on the construction pipeline, which could be a boon for a continued surge in rent gains. District landlords are taking advantage of the lull in construction by pushing rents. In Southwest/Navy Yard, which has seen one of the largest supply expansions in the past few years, rents are well above average and growth was highest among District submarkets.

Downtown D.C. rents are among the most expensive in the metropolitan area. DuPont circle boasts the highest rents, at $3.90 per square foot, which have grown about 2.4 percent over the past 12 months. Other areas of the submarket, like Downtown, Shaw and Logan Circle have rents around the $3.50 per square foot level, with rent gains in the 1 to 2 percent range. Mount Vernon is a more affordable neighborhood, with rents averaging $3.15 per square foot, but experienced one of the biggest rent gains over the past 12 months.

CoStar Market Insights provides a snapshot of recent real estate trends. The CoStar Market Analytics team monitors commercial and multifamily real estate across 390 metro areas, with a granular understanding of the projects, players and economic trends that move these markets.

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