Overbuilding Tempers Growth in Washington, DC
- Jan 30, 2018
More than 50,000 multifamily units have come online in metro Washington, D.C., since 2014, and overbuilding is finally taking its toll, with rents dropping in most core submarkets as of November 2017. However, anchored by a still-stable public sector, and bolstered by the counterweights of Northern Virginia and suburban Maryland, the capital region remains one of the nation’s most stable multifamily markets.
Washington’s economy is slowly diversifying, with professional and business services gaining 16,600 jobs through September. The addition of high-paying positions is driving the metro’s economy, fueling demand for office space and upscale residential units, while at the same time generating jobs in lower-paying sectors.
The second phase of the Silver Line expansion, set to link Ashburn to the city by 2020, continues to fuel transit-oriented developments, such as Soave Enterprises’ proposed 3,700-unit mixed-use project along the line. Meanwhile, the $6.5 billion Purple Line light-rail project in suburban Maryland broke ground, with completion expected in 2022. In addition, several large projects are moving forward, including the $2.5 billion The Wharf and The Boro in Tysons.
Development dampened, as only 7,600 units came online in 2017 through November. However, the metro has 25,128 units underway, making overbuilding a lingering issue. And as occupancy dropped by 50 basis points in 12 months to 95.4 percent, rent growth is likely to remain flat in the foreseeable future.