The coming surge — a whopping 6,000 new units by the end of this year — will give prospective renters a slew of new options and could even halt the upward march of monthly rental payments, according to developers, analysts and real estate professionals.
“There’s going to be a paradigm shift,” said Rick Gersten, chief executive of Urban Igloo, a company that helps connect renters with local landlords. “People are going to have more choices. It’s going to be more difficult to retain tenants.”
During the economic downturn, developers drastically scaled back production of multi- family projects. But construction has come roaring back, with developers last year alone breaking ground on nearly 15,000 apartment units from Landover to Northeast Washington to Manassas — the most in nearly two decades, said Greg Leisch, chief executive of the Alexandria-based research firm Delta Associates.
Much of the building is taking place in the District, including the hot H Street NE corridor and the Mount Vernon Triangle area. But units are also springing up in the close-in suburbs of Fairfax in Northern Virginia and Bethesda and Silver Spring in Maryland.
The vast majority are “Class A” units aimed at young professionals eager to live in walkable communities near shopping and public transportation, developers say. Many boast a profusion of modern amenities, such as open floor plans and granite countertops — even waist-high mini-showers for bathing the well-groomed dog.
The projected number of new units would be more than double the number that went on the market in the Washington area during each of the past two years. And by national standards, the coming boom is exceptional — by comparison, only about 2,500 new units are expected to go on the market in New York City this year.
“We don’t even have demand in an entire year for 6,000” new apartments, Leisch said. “That’s going to disrupt the equilibrium in the market.”
The result, Leisch said, probably will be a slight decrease in average rents by the end of the year, with the potential for additional decreases in 2013. In addition, some landlords could be forced to offer concessions to entice new tenants, such as a free month’s rent.
Still ‘very expensive’
But even with the swelling supply of new apartments, finding an affordable home in the Washington region will remain a challenge, analysts said. The average monthly rent in the District is $1,501, according to Reis Research, a commercial real estate research firm. By comparison, people pay $868 a month in Atlanta, $928 in Austin, $1,085 in Seattle and $1,113 in Miami. Nationwide, the average monthly rent is $1,081.