High-end (or Class A) apartments in the Georgetown-West End area are among the priciest in the region. As of of the third quarter, high-rise Class A effective rents in the area averaged $2,785 a month, or $3.28 a square foot.
Overall vacancy in the area, including newly completed projects, is 8.4 percent. However, vacancy for buildings that are past their first lease-up is just 2.8 percent, so low that rents over the past year have increased 5.1 percent. Since 1998, rents have increased at a more modest pace of 2.2 percent a year. Rent discounts and other concessions equal just 2 percent of face rents.
There are no units under construction in the Georgetown-West End area, and the closest planned development is in Dupont Circle, which over the next 36 months is scheduled to deliver three projects with a total of 641 units. Although the pipeline is minimal in the immediate area, the pipeline in the surrounding areas is extensive. This may cause increased vacancy in the Georgetown-West End area and the District as a whole, which would drive down rents.
Limited new condominiums available
Since 2003, 745 new condominium units have been sold in the Georgetown-West End area. There are two condominium projects currently selling new units in the neighborhood, 22 West and 2501 Pennsylvania Avenue, which have a total of five units available. Two additional projects with a total of 32 units are under construction or actively marketing in the Georgetown/West End area. Over the next three years another 180 units in two planned projects are likely to begin marketing.
Office market quiet
The Georgetown office market is 3 million square feet centered along M Street and Wisconsin Avenue, with about 308,000 square feet available to lease. The vacancy rate was 10.4 percent in the third quarter, but rises to 10.6 percent with sublet space, slightly higher than the District-wide rates of 8.3 and 9.3 percent respectively.
Tenants on average fill about 6,000 square feet more annually than they vacate since 1997, but they vacated 33,000 square feet more than was leased during the third quarter of 2012.
The West End office market is a 4.1 million-square-foot market concentrated north of K Street. Approximately 263,000 square feet are available to lease, equating to a third quarter vacancy rate of 6.4 percent. If sublet space is added, the vacancy rate rises to 6.8 percent, but both of which are significantly lower than the District-wide rates of 8.3 and 9.3 percent. However, during the third quarter, 8,000 square feet more space was vacated than leased. The average effective rent for Class A (high-end) space in Georgetown-West End was $42.10 a square foot at the end of the third quarter, down from $42.60 a square foot at year-end 2011, a decline of 1.2 percent.
Overall, despite the recent inactivity, the Georgetown-West End office area remains one of the most upscale and desirable in the area.
Michael Donnelly is a senior associate at Delta Associates. Staff at Delta Associates contributed to this article. For more information, please visit www.deltaassociates.com.