Many of those construction cranes dotting the horizons around the D.C. region are building housing, and the area is a leader for new apartment construction.
The D.C. metro ranks 6th in the nation for number of new apartments delivered between 2020 and 2022 — almost 43,000 new units, according to Yardi Matrix. Looking forward, the D.C. region ranks 9th in the nation for number of new apartments that will deliver in 2023, with more than 13,000 added this year.
The District, as well as Arlington and Alexandria in Virginia account for the majority of those new units.
Developers are meeting strong demand for rental units.
“One of the reasons for that is positive net-inbound migration. The D.C. area has increased its population post-pandemic and is one of the few East Coast cities to do that,” said Doug Ressler senior analyst at Yardi Matrix.
Most of those new apartment buildings are amenity-rich, high-end buildings. The average apartment rent in the D.C. metro is currently about $2,400, but it’s not unusual for apartments in some of the city’s most desirable locations to rent for $4,000 a month or more.
That may be changing.
“Primarily, the mix is high-end, but what we see is a trend now toward affordability, because what many developers see now is the growing urgency of the affordable market,” Ressler said.
Almost 90% of apartments completed in the last three years are high-end, targeting upper middle- and high-income renters.
New apartments in the D.C. metro are small, and they are getting smaller. The average size of a newly-delivered apartment has fallen to 745 square feet, Yardi Matrix said. In the District in particular, smaller apartments are what the market supports.
“For example in the Navy Yard, you’ll see about a 60% split between one-bedrooms and studios and 40% all other configurations. Now if you move out toward the suburbs, you’re going to see a little bit more of a split of 60% larger apartments because what you’re building for is millennials who have families and want a little bit more space,” Ressler said.
New apartment construction in the D.C. region is contributing to what has been one of the best several years for apartment construction nationwide on record.
The pandemic boom in building brought 1.2 million apartments to the market in the U.S. between 2020 and 2022, and almost 461,000 are scheduled to be delivered this year, a construction boom that hasn’t been seen since the 1970s.
The number of deliveries will remain high until 2025, when economic headwinds will begin impacting residential construction, Yardi Matrix forecasts.
Almost two-thirds of the apartments built during the pandemic are clustered in 20 high-growth metros, D.C. included. The apartment boom is lead by New York, Dallas, Austin, Miami and Atlanta.
Below are the 20-largest apartment boom markets this year.
