Generally speaking, it isn’t cheap to rent an apartment in the nation’s capital. In fact, the region ranks in the upper echelon of expensive apartment markets, among the top 10 metro areas in the U.S. for sheer cost.
The average monthly apartment rent of nearly $1,600 requires that households have at least $65,000 in annual income. And in the Washington region, as in most other major metropolitan areas, premier housing in the crème de la crème locations are able to command significantly more than the average apartment.
If “Beverly Hills 90210” helped crystallize the notion that addresses do matter, stratifying the Washington area to analyze average apartment rent at the zip code level illuminates that fact. More than one dozen zip codes in the metro area host apartment properties that command more than $2,000 per month in monthly rent, requiring a $75,000 household income or 43 percent more than the median renter household income in the region.
Dominating the list are the usual sought-after enclaves, such as Adams Morgan, Woodley Park and Rosslyn, among others. These addresses offer residents access to Metro stations (more than two, on average) and an outsized share of restaurants and retail establishments that cater to young affluent professionals, (70 percent more establishments than the average zip code.) Sixty percent of adults in these zip codes hold a bachelor’s degree or higher, in comparison to 47 percent for the metro area and 40 percent are between 20 and 34 years old, in comparison to 22 percent for the metro area.
Despite their high price tags, demand for apartment units in these neighborhoods has remained extraordinarily high with an average occupancy rate of more than 96 percent.
Given the exceptional performance of these properties, it’s no surprise that new construction is focusing on these locations. Nearly 50 percent of the units under construction in the metro area today, about 7,850, are located in these top-rent-commanding zip codes. Clearly, developers are delivering a highly desirable product for which there is white-hot demand.
While oversupply is always a concern given the 16,000 units under way in the metro area currently, these developers are betting that a superior location will continue to win out over less-desirable destinations.
Erica Champion is a senior economist with CoStar Group in Washington.