We all know the three most important things about real estate are location, location, location. But what does that really mean?
In Washington, one major locational factor that drives apartment demand is the renter’s ease of commute. For most people who work in the District, that means finding an apartment near a Metro station or a bus line to get you downtown, or maybe to major employment centers in Maryland or Northern Virginia. But just how much more are you willing to pay for that access to mass transit?
A transit-accessible development, or TAD, is defined as a property that is located within a 10-minute walk from a transit station. In larger, more expensive cities with traffic congestion, TAD alleviates many commuting issues. Renters are willing to pay up for that accessibility, especially in areas outside the city limits, that lack D.C.’s extensive rail infrastructure.
In Northern Virginia, for example, renters at TAD properties are paying 35 percent more than renters without such access. The higher rents found at Northern Virginia TAD properties can also be attributed to the volume of new and future development in the area. More than 8,000 new units are proposed in Virginia.
And while only about a third of those are now considered TAD, that number will go up with the opening of Metro’s Silver Line next year. Given the previous success of TAD properties on the Orange and Blue lines, developers are lining up to get projects going near the new stations.
TAD is successful in D.C. as well, and one example of the new TAD buildings in the city is a complex called “the District.” Less than a 10-minute walk to the U Street Metro station and a short walk to trendy restaurants in Logan Circle, the apartments provide much of what urban renters want. With that, however, comes the price tag: One-bedrooms rent for almost $3,000 a month.
Still, leasing for TAD has been strong and properties in D.C. have a 5 percent higher occupancy rate than non-TAD properties in D.C., while occupancy levels for TAD properties in Maryland and Northern Virginia almost mirror that in their non-TAD counterparts.
TAD is likely here to stay. Developers love it just as much as renters do. The Washington market has more than 15,000 TAD units under construction, with even more scheduled to break ground before the end of the year. And with the new proposed Purple Line, a 16-mile east-west light rail transit line extending inside the Capital Beltway from New Carrollton to Bethesda, even more of these commuter-friendly properties are expected.
Walter Page is director of U.S. office research and Connor Bevans is a real estate economist for CoStar Group.