Project starts have become more common in the second half of 2010, reaching the long-term average of nearly 1,900 units per quarter during the third quarter—the first time this milestone has been achieved in two years. As key market indicators continue to show strong performance, expect to see an increasingly diverse field of players getting back into development. First dirt movers have included the public REITs, developers with the wherewithal to self-finance, and those early out of the HUD financing gauntlet.
FAST FACTS: Washington, D.C.
Population: 5.5 million
Median age: 37
Median income: $81,213
Average rent*: $1,643
Occupancy*: 97.5%
Unemployment: 5.9%
Notable: Major Pierre Charles L’Enfant designed the District in 1791, making D.C. the first planned American city. The construction of the Cairo apartment building in 1894—the tallest residential building in the District at 164 feet—resulted in the passage of the Building Heights Act. Today, the District’s population swells during the weekday from about 600,000 to 1 million, an increase of almost two-thirds, more than any other city in the country.
* Class A and B product only
Sources: ESRI; Bureau of Labor Statistics; Census; Capital Bikeshare
Particularly active development sites include District submarkets such as the Mt. Vernon Triangle, the U Street and H Street corridors, and the Northern Virginia submarkets of Alexandria and the Rosslyn-Ballston corridor. While starts have been more constrained in suburban Maryland, several projects are underway, seeking to tap into the expected demand driven by the 10,000 to 15,000 jobs relocating to Ft. Meade, as part of the latest Base Realignment and Closures (BRAC) cycle.
A little more than 8,800 units are under construction or recently delivered in the D.C. metro, with another 10,000 units expected over the next 36 months. These deliveries include: Lyon Place at Clarendon Center, a 244-unit apartment tower opening in early 2011, located one block from a metro station in the bustling Rosslyn-Ballston corridor; as well as Boston Properties’ 333-unit Residences on the Avenue, which is across from a metro station and set to deliver in the first quarter of 2011 in D.C.’s Foggy Bottom neighborhood. Both projects incorporate ground-floor grocers into their plans—a 12,000-square-foot Trader Joe’s at Lyon Place and a 37,000-square-foot Whole Foods at Residences on the Avenue.
THE CONDO PULSE
The Washington, D.C., metro condo market is slowly coming back to life as well. The pipeline of actively marketed units is at its lowest level since 2004—only 4,200 new units are currently on the market. Condo sales in the 12-month period ending September 2010 totaled 2,400 net sales, up 12 percent vs. a year earlier. At the current sales velocity, there exists a 1.8-year inventory of new units to sell. In the city center, however, there is less than six months of product for sale; a year ago, there was a 3.3-year inventory of new units there.