Washington, D.C., is bucking national multifamily market trends, with rents rising and vacancies stable. But with a recession looking more likely, can local apartment demand hold up? Victor Calanog, Ph.D., Commercial Real Estate Economist, leverages data from Moody's Analytics CRE and shares his take.
Washington, D.C., apartments outperform in Q1
The multifamily sector in Washington, D.C., bucked the overall trend in Q1 2023, with asking and effective rents both rising 1.6%. That’s in stark contrast to many other markets and the nation as a whole, which posted rent declines, Calanog says.
The Northwest D.C./Georgetown submarket posted the strongest rent growth figures, with asking rents rising 3.5% and effective rents up 2.4%.
Washington vacancies also remained stable in Q1 and were unchanged from the end of 2022 at 7.4%. All this despite close to 4,000 units coming online, each year, in 2021 and 2022.
Modest supply growth could shield Washington from economic headwinds
And yet, the recent turmoil in liquidity threatens to upend credit. Will Washington be immune to any pullback in apartment demand?
Moody’s forecasts suggest rents will continue to grow this year. Calanog says a big part of what’s driving that is the fact that the city’s expected to have a moderate amount of new apartment supply, unlike New York and Chicago, which are expected to see record levels of multifamily construction deliveries.
Cautious apartment investors will do well to prepare for near-term volatility, but Washington appears to be in a more resilient position to weather bumps in the road over the next 12 to 18 months.
By the editorial team at Story by J.P. Morgan
What’s the multifamily outlook in other U.S. metro markets? Watch our mid-2023 analyses for more cities across the country.
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