Class B Apartment Market Washington Metro Area: Q4 2020

2/1/21

The COVID-19 pandemic continues to devastate the Washington metro area Class B multifamily market as vacancy rises and rents are cut to offset decreased demand. High-rise submarkets remain the most negatively impacted as tenants choose to relocate from this housing type due to health concerns to lower-density multifamily or single-family/townhomes. The sharpest rent decreases continue to affect the District, while Northern Virginia also recorded steep declines; Suburban Maryland has been less affected. In Prince George’s County, low-rise rents are positive in all submarkets. Vacancy in Northern Virginia and Suburban Maryland rose by 90 and 20 basis points, respectively, while in the District it jumped 440 basis points from a year prior. Metro-wide class B rents are down an unprecedented -10.0% from December 2019.

  • Suburban Maryland down -3.7%
  • Northern Virginia down -12.5%
  • District down -19.9%
  • Metro-wide low-rise down -5.1%
  • Metro-wide high-rise down -16.5%


Class B year-over-year rent growth (-10.0%) fell at a rate almost level with Class A (-10.2%), while vacancy in Class B buildings (3.7%) increased 90 basis points from a year ago.

Fourth QUARTER 2020 HIGHLIGHTS

  • The Washington metro area Class B apartment vacancy rate is 3.7% as of December 2020, 10 basis points lower than the 3rd Quarter yet still 90 basis points higher than September of last year.


- Low-rise vacancy is 2.6%, up just10 basis points from a year ago.

- Mid- and high-rise vacancy is at5.5%, 220 basis points higher than December 2019.

• Rents for all investment-grade apartments were down

-10.1% over the year.

- Class B rents specifically were down-10.0% over the year.

  • Annual Net Absorption of3,692 for Class A and B units.
  • The emergence of new renovation projects throughout the metro area continued to stall during the fourth quarter of 2020.Upgrades are still underway in at least 19 projects (7,680 units) as of December 2020.Since fourth quarter 2019, at least 11 projects (4,800 units) have completed renovations.


Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals which has been providing consulting and subscription data services to the commercial real estate industry for over 35years.

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