D.C.'s luxury apartment market is having the unintended effect of driving up rental rates across the board, even for more affordable rental units.
WASHINGTON — The vast majority of real estate construction in the District is residential, and the majority of those that are rentals are considered luxury apartment buildings — and in places that weren’t upper-end residential neighborhoods a decade ago, including Mount Vernon Triangle, 14th Street and around Nationals Park.
That is having the unintended effect of driving up rental rates across the board, even for more affordable rental units.
“We’re seeing 56 percent of all new construction (in D.C.) coming in at the high end, versus 13 percent at the low end,” said Svenja Gudell, chief economist at the real estate firm Zillow.
Those luxury rents keep rising. It is not unusual for rents in new luxury D.C. construction to be $4,000, $5,000 or even $6,000 a month, with the average rent at the high end in D.C. up 26 percent from just a year ago.
Who can afford those rents?
D.C.’s growing contingent of well-paid millennials for one, who don’t want homeowner commitment but do want a residential lifestyle that increasingly includes rooftop resorts that rival South Beach with pools, fire pits, grilling stations and cabanas, and a long list of building amenities, from dog washing stations to 24-hour concierges.
One new rental building, The Hepburn — where rent is as high as $13,000 a month and likely out-prices most millennials — even includes room service from the adjacent Washington Hilton’s restaurants, its own car-sharing service and $32,000 rooftop binoculars.
But there are signs that luxury apartment developers are having to step up concessions to rent them.
“You see things like first and second month free, free parking attached or moving costs. You are starting to see some slowness, especially at the high end.”
All those luxury buildings are not helping the majority of D.C. renters who can’t afford them.
The lack of supply of more reasonably priced rentals — just 13.3 percent of new construction since 2014 — is driving rents at the low end up too, rising an average of 7.7 percent from a year ago.