Morning Poll: Rising Rents to Start Falling?
For those who argue that the rent in the area is too damn high, there’s some good news and some bad news.
The bad news: you’re right. The Washington, D.C. area has the second-highest rent of any large metropolitan area in the country, according to the 2010 U.S. Census.
At a median rent of $1,391 per month, the region’s rent is more expensive than San Francisco, New York and Los Angeles, and second only to San Jose. Adding to the misery, D.C.’s rent has been rising faster than any other large metro area, according to the Washington Examiner.
The good news: expect rents to start going down, at least in some areas. According to Bloomberg News, D.C. area rent is expected to decrease up to 2 percent this year, and fall even faster next year, due to an oversupply of new apartment buildings. There will “‘no doubt’ be a ‘glut’ of apartments in the next 12 to 18 months,” Bloomberg was told.
Just don’t expect the rent to keep falling. Bloomberg reports that the local apartment market should stabilize by 2016 and rents should start increasing, once again, by about 4 percent annually.
We’re interested to find out if Arlington has seen any impacts from the expected apartment glut. If you rent an apartment and you’ve renewed your lease in the past 12 months, how much did your rent change?
File photo
Morning Notes
State Legislators Hold Public Hearing — Arlington’s delegation to the Virginia General Assembly listened to nearly 50 speakers make the case for various legislative and funding priorities at a public hearing Friday night. Among the issues discussed were gun laws, mental health and disability funding, and Medicaid. [Twitter, Sun Gazette]
Rent Rises in Arlington — The average rent in Arlington in the third quarter of 2012 was $2,500.06, a 2.5 percent increase from a year prior. The average rent for single-family homes had the steepest increase — 4.4 percent — compared to apartments and townhouses. [Sun Gazette]
D.C. United Coach Regrets Living in N. Va. — Ben Olsen, the 35-year-old coach of the D.C. United soccer team, says he regrets living in Fairfax and Arlington before moving to his current home in the District. Olsen said in an interview that he was “kicking myself for wasting all those years living in Northern Virginia.” [DCist]
Va. ABC Stores Report Record Profits — Virginia ABC stores reported a record profit of $132.1 million in the last fiscal year. “There is something to say that people continue to drink in good times and in bad, but generally speaking as the economy improves, people have more disposable income to spend,” a Virginia ABC executive said. [CBS DC]
Flickr pool photo by Ddimick
Myerton Again Changes Course on Housing Project
Just five months after announcing its units at The Myerton would be sold as condominiums instead of rented as apartments, JBG has reversed course on the project.
Realtor Laura Rubinchuk Schwartz tells us that slow sales and a hot rental market prompted JBG to stop selling the units at 108 S. Courthouse Road. The developer had made the decision in February to begin sales instead of renting the units.
All buyers are being offered $1,000 for their time and for agreeing to a contract release.
Morning Notes
District Taco Announces Taco Eating Contest — This sounds like a recipe for some fun, or vomit, or both. District Taco (5723 Lee Highway) will be holding a taco eating contest at 6:00 p.m. on Monday, Jan. 10. Ten contestants will compete to see who can eat the most tacos (without throwing up — seriously, it’s a rule) in 15 minutes. If you think you’ve got what it takes, fill out an entry form and submit it by Thursday. See more information on the District Taco web site.
Blame Technology for Rising Rents — Has your rent gone up recently? If so, a software program may be to blame. A number of large landlords are now using “sophisticated computerized models” to figure out how to price rentals. Arlington-based AvalonBay Communities, which owns rental communities in Ballston and near Shirlington, recently started widespread use of a software package called “Rainmaker” to squeeze every last dollar out of its properties. More from the Wall Street Journal.
Rustico Does Brunch — Rustico’s new Ballston location has launched a Sunday brunch service. Go for the ricotta doughnuts, stay for the oatmeal and coffee-infused beer. More from We Love DC.
Flickr pool photo by BrianMKA
Morning Poll: Rising Rents
This morning the Washington Post quantified what many people have observed in the past year: rents in the area are going up, fast.
According to a Delta Associates study cited by the Post, local apartment rents have increased 8.2 percent this year, to an average of $1,643. Rents in the Washington area are at 20-year highs, as people flee the housing market for rentals. Only New York City has a lower vacancy rate.
Earlier this year, we reported on the red-hot rental market in Pentagon City, where the average rent at the beginning of the year was $1,902 and rising. And Pentagon City certainly wasn’t alone in terms of rent hikes in the county.
Just how fast have rents been increasing in Arlington in the past year? Let’s find out.
Rent on the Rise in Pentagon City
It’s getting more expensive to live in Pentagon City. Rent is expected to grow 4 to 7 percent over the next five years, according to online real estate publication GlobeSt.com. That follows a 4.9 percent increase in rent over the past year, according to a report from RED Capital Group.
The rise in residential rent comes at a time when a number of Pentagon City apartment complexes have sold at sky-high valuations. The Hampton Apartments at 1425 South Eads Street recently sold for $33.5 million, and the Metropolitan at Pentagon City luxury high-rise at 901 South 15th Street just sold for $125 million, according to the GlobeSt.com article.
RED’s report states that between the first quarter of 2009 and the first quarter of 2010, Pentagon City posted the fastest rate of multifamily rent growth of any Northern Virginia submarket. The 4.9 percent year-over-year growth in Pentagon City compares to 2.4 percent growth along Columbia Pike and -1.4 percent rent growth along the Rosslyn-Ballston corridor.
The effective first quarter rent was $1,902 in Pentagon City, compared to $1,700 in Rosslyn-Ballston, $1,407 along Columbia Pike and $1,327 in Falls Church. Apartment vacancy in Pentagon City decreased from 8.8 percent in 2009 to 6.2 percent in 2010.
Arlington Economic Development Director Terry Holzheimer says part of the reason for the increase in effective rent in Pentagon City may be due to the pricey new luxury apartment buildings which have recently started leasing in the area, bringing up the average. He said market fundamentals — higher-than-usual unemployment, stagnant personal income growth — don’t seem to support significant rent increases.
But higher rents on existing apartments have been pushing some residents out of the area. The Lenox Club apartment building at 401 12th Street South has been raising rent across the board by a minimum of 5 percent this year, according to a building representative. The rent increase has prompted a crush of moving van traffic as residents flee for cheaper buildings. That, in turn, has prompted management to bring in sign spinners to help attract new tenants.
It’s not clear what effect BRAC job losses will have on rent in Pentagon City, especially at a time when housing inventory continues to increase. As of the first quarter of 2010, 308 apartment units were under construction.
Optimism for Arlington’s Economic Present and Future
The current state of Arlington’s economy — recession and all — would make most other jurisdictions jealous, even during good years. And the county’s director of economic development sees even better times ahead.
“Arlington is still a highly attractive market,” Terry Holzheimer, the head of the county’s Arlington Economic Development (AED) office, told a gathering of developers, real estate brokers and business leaders this morning.
Citing a new AED study, Holzheimer said he expects job growth to continue (Arlington was the only local community with significant job growth from 2007 to 2009), residential and commercial rents to rise, and development to soldier on, eventually.
“Arlington is not built out by any stretch of the imagination… we have a lot more to build,” especially when the commercial lending markets clear out, Holzheimer said.
Holzheimer expects a lull in new construction over the next couple of years, since projects currently in the development pipeline have stalled due to a lack of financing. He does not expect the financing issues, which have been plaguing the entire economy, to be fixed this year.
Counting both residential and commercial development, 24 projects are currently under construction or beginning construction this year. 32 projects have been approved and are awaiting financing or site plan changes. 13 projects are in the review stage.
