Concessions Help Upscale Buildings Fill Apartments

New Complexes Competing for Tenants Offer Sizable Savings

Adam Paper moved into an apartment at the V at City Vista in the District this summer after the landlord waived the $600 upfront amenities fee, the $500 security deposit and two months of rent.

"I got an awesome deal, and I wasn't even pushing hard for it," Paper said. "We're paying $1,616 a month for a one-bedroom, one-bath apartment with a 10-foot-high ceiling in a building with amenities you would not believe. . . . I've been blown away by this place."

An unusually high number of upscale apartment buildings have opened in the Washington area this year, setting off an aggressive battle to fill vacancies. About 47 were on the market for the first time as of June, compared with 14 at the same time three years ago, when the supply of apartments was chronically low, according to the real estate research firm Delta Associates. The new buildings make up 14 percent, or one in seven, of the region's high-end apartment complexes.

"The thing about concessions is they are contagious," said Julie A. Smith, a partner at the Bozzuto Group, which owns and manages dozens of area apartment communities. "All you need is a few owners to start doing them and everyone jumps in."

Window of Opportunity

The phenomenon has created a short-term window of opportunity for bargain hunters in the region, home to a large population of transient workers who rent to accommodate job-related moves.

Rents fell 1.8 percent in June from a year ago among high-end buildings, a recent Delta report said. Given that local rents have climbed more than 4.2 percent a year on average for the past decade, the recent drop is a shift of six percentage points from the norm.

Most affected are areas with a large concentration of new projects. The ones around Nationals Park, for instance, collectively have offered the deepest concessions since Delta started tracking rents 18 years ago. Some of those projects gave away the equivalent of four months' rent in concessions, which helps explain why effective rents in the District plunged 7.8 percent in June compared with a year ago. Without the ballpark area, rents fell 4 percent.

"Apartment communities all over the region are feeling the pressure," said Gregory H. Leisch, Delta's chief executive. "The new buildings are actively marketing. They're running specials to suck tenants out of other buildings."

One of them lured Aimee Engel and her roommate away from their apartment near Bethesda after the landlord raised their rent by $100, to $2,200 a month.

Now they live close to White Flint mall, paying $75 less each and getting more for their money, including easy access to the Metro and amenities such as a resort-style pool and gym. They got two months' free rent to boot.

"The free rent drew us in at first, and then we saw the place and said, 'We have to have it,' " Engel said.

Trend Reversal

Today's rental market reverses the trend of three years ago, when there was an apartment shortage at the tail end of the real estate boom. In the boom days, developers cut back on apartment projects and converted the ones they had into condos. Now, the opposite is true. The market has tanked, condos are being converted into apartments, and apartment projects started a few years ago are entering the market.