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Traditionally Affordable Suburban Maryland Community Faces Uncertain Future from Nearly 2,000 New Multifamily Units

CoStar Market Insights: Gentrification Hitting Hyattsville as Majority of New Units Skew to High-End of Rent Spectrum, Arrival of Whole Foods Market
October 10, 2018
The Edition apartment building in Hyattsville, Maryland.
Credit: Fore Property Co.



The Hyattsville apartment market has long benefited from the spillover demand from the University of Maryland and a renter-by-necessity population. But that is beginning to change as residents and development continue to migrate northeast into Hyattsville. From 2010 to 2017, Hyattsville's total apartment inventory expanded by 6.5 percent, as developers introduced new luxury apartments to a relatively untested market offering renters alluring access to four metro stops and convenient proximity to the District of Columbia.

The nearly 2,000 new multifamily units under construction in Hyattsville will double the higher-quality 4- and 5-Star inventory, which could put further strain on the already elevated vacancy rate. As of the fourth quarter, vacancies in the market's 4- and 5-Star properties was 17 percent.

This represents a major change as approximately 90 percent of Hyattsville's apartment inventory is rated as more affordable 1-, 2- or 3-Star. Rents in Hyattsville average $1,400 per month, which ranks 39 out of the 54 D.C. submarkets, among the most affordable in the area.

Meanwhile, the average 4- and 5-Star apartment rents for about $1,950 per month. That 40 percent spread could be further widened when the five, 4-Star properties deliver to Hyattsville over the next couple of years.

The recent performance of other new apartment properties in the area could be an indication of slower absorption for new developments. The 235-unit Monument Village at College Park was still about 75 percent occupied more than 24 months after delivery with asking rents in this predominately one-bedroom building at $1,900 per month. To help fill vacant units, the new project is offering large concessions and rent reductions.

And more recently, the 351-unit The Edition, which completed construction in August 2018, is about 12 percent occupied, leasing about 20 units per month. Asking rents average nearly $2,000 per month, an almost 50 percent premium over the submarket average.

The last time a significant amount of new supply was added to the Hyattsville apartment market, vacancies expanded by more than 200 basis points, and rent growth went from 3.7 percent year-over-year to about 2.5 percent.

About half of the approximately 2,000 units currently under construction are part of a single new project, one that may have the necessary catalysts to bring major changes to the neighborhood.

Cafritz's Riverdale Park development includes a 160,000-square-foot retail center anchored by Whole Foods Market, as well as a 22,000 square feet of office space and a 120-room hotel. Whole Foods opened in July 2017, and the residential component broke ground a few months later, with an anticipated delivery date in 2019.

Cafritz plans to build 875 apartments and 100 townhouses in the project along with a Hyatt House Hotel. The 36-acre parcel has been owned by Cafritz since 1950, giving it an attractive low basis in the property, and the developer plans to privately fund the project, which is expected to cost between $350 to $400 million.


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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