DC Metro Multi Family Snapshot 2Q12

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2nd Quarter Multi Family market report

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DC Metro Multi Family Snapshot 2Q12

  1. 1. Multifamily Snapshot DC Metro • Second Quarter • 2012 Market Tracker Vacancy Net Absorption Completions Asking Rent *Arrows = Current Qtr Trend 3.9% 894 Units 327 Units $1,476 Vacancy Drops, Despite New Supply A large portion of apartment demand is driven by an expanding economy and employment growth. Despite a slowdown in federal job creation, the Washington regional employment market continues to expand. After a robust first quarter in 2012, second-quarter employment growth continued in the metro area, albeit at a slower pace. The Washington DC region added 12,200 non-farm payroll jobs in the first quarter of this year, and 8,000 jobs in the second. We expect this moderate job growth to continue through the November elections and into 2013. However, the types of jobs being created have changed. Twelve to eighteen months ago the Federal Government and the Professional and Businesses Services sector were the top job producers in the region. At the end of the secondDC METRO MULTIFAMILY quarter 2012, the Education and Healthcare sector led employment growth gaining 8,000 payrollsEconomic Indicators since the beginning of 2012. The Federal Government downsized by 4,900 payrolls – the equivalent of 1.3% of the regional federal workforce – during the same timeframe. 2Q 2012 2Q 2011 As the regional employment picture generally continues to improve, more people are forming Employment 3.030 M 2.987 M households. More of those households are renting. The homeownership rate in the Washington metro area decreased for a second consecutive quarter, registering 65.8% in the second quarter of Population 5.765 M 5.704 M 2012 after reaching 68.2% in in the fourth quarter of 2011. Based on the total number of households, this decline in homeownership equates to an additional 48,000 households who rent. Median Income $89,170 $86,654 Such increased demand from these additional renters is helping to prop up multifamily fundamentals MF Permits Issued 2,650 2,163 in the region. Net absorption for apartments in the second quarter of this year was 894 units metro- wide – a slight up-tick from that reported in the previous quarter. The number of new apartment MF Starts 1,887 1,199 completions in the second quarter was more than double that of the first quarter. Despite new apartment deliveries, the vacancy rate decreased 0.1 percentage point over the quarter ending at 3.9% metro-wide. Average asking rental rates were $1,476 per month across the region, a 0.9Absorption, Completions & Vacancy percentage point increase over the quarter. Once again, Northern Virginia boasted the highest rate increase on average, a gain of $16 during the quarter to $1,569. Rents in the District increased $14 10,000 7% to $1,500, while those in suburban Maryland rose $10 during the quarter to $1,359. 9,000 6% 8,000 7,000 5% After a slow start early in the year, multifamily sales picked up steam in the second quarter. For the# of Units 6,000 5,000 4% first half of 2012, $1.4 billion in multifamily sales transactions took place. A majority of these sales 3% 4,000 occurred in the suburbs with $576 million transacting in Northern Virginia and $569 million in 3,000 2% 2,000 1% suburban Maryland since the beginning of the year. The average price per unit was $202,000. The 1,000 0 0% highest dollar transaction in 2012 to date has been Equity Residential’s purchase of 4701 Willard 2007 2008 2009 2010 2011 2012 Avenue in Chevy Chase for $209 million or $393,000 per unit. YTD Net Absorption Completions Vacancy ForecastSource: REIS • Multifamily construction continued to increase in the second quarter of 2012. Multifamily starts were up 57% compared to one year ago while permits were up 23% during the same time frame. Through 2014, an estimated 30,100 multifamily permits will be pulled comparedAsking Rents to the 13,800 permits issued from 2009 to 2011. Expect single family construction to make$1,600 a recovery as well with over 40,000 permits being issued through 2014. That is a 77%$1,550 increase compared to the prior three years.$1,500$1,450 • Net migration to the Washington DC metro area will continue to increase, albeit at a slower$1,400 rate. Moody’s estimates a net 66,300 people migrating to the region through 2014. This$1,350$1,300 compares to the 140,700 people who migrated to the metro from 2009 to 2011. Therefore,$1,250 multifamily demand will stem more from current residents versus new populace to the region.$1,200 2007 2008 2009 2010 2011 2012 YTD • We expect employment growth to be tempered through the federal elections later this year. DC NoVA Suburban MD This may push some demand for housing from this year into 2013. With large amounts ofSource: REIS supply forecast to deliver over the next 12 to 24 months, certain submarkets may see vacancy rates rise in the short term. Still, the Washington Metro continues to boast one of the lowest multifamily vacancy rates in the U.S. www.cassidyturley.com
  2. 2. Cassidy Turley Multifamily Market SnapshotDC Metro • Second Quarter • 2012 VACANT OCCUPIED AVERAGE SUBMARKET INVENTORY* COMPLETIONS VACANCY NET ABSORPTION STOCK STOCK ASKING RENT RATE Anacostia/Northeast DC 33,688 - 1,879 31,809 5.6% 64 $1,068 Capitol Hill/Southwest 7,662 - 452 7,210 5.9% 15 $1,548 Downtown/Logan Circle 10,075 - 282 9,793 2.8% 20 $1,780 Dupont Circle/Adams Morgan 11,716 - 199 11,517 1.7% 24 $1,654 Foggy Bottom 5,487 - 274 5,213 5.0% 28 $1,876 Northwest D.C./Georgetown 10,058 - 412 9,646 4.1% 10 $1,762 Woodley Pk./Cleveland Pk./Van Ness 10,162 - 254 9,908 2.5% - $1,983 DISTRICT MARKET TOTALS 88,848 - 3,752 85,096 4.2% 161 $1,500 Columbia Pike/Shirlington/NE Alexandria 19,617 - 803 18,814 4.1% 65 $1,524 Falls Church/Annandale/Skyline 34,116 - 933 33,183 2.7% 68 $1,472 Loudoun County 7,805 - 359 7,446 4.6% 8 $1,480 Old Town 5,169 - 202 4,967 3.9% 25 $1,669 Pentagon City/Crystal City 9,841 - 384 9,457 3.9% 29 $2,211 Prince William County 15,885 - 620 15,265 3.9% 79 $1,187 Rosslyn/Ballston 16,477 46 626 15,851 3.8% 44 $1,901 SE Fairfax County 15,588 - 436 15,152 2.8% 78 $1,477 Tysons Corner/Fairfax City 12,261 - 662 11,599 5.4% 25 $1,666 W Fairfax County 21,582 281 626 20,956 2.9% 145 $1,517 NORTHERN VA MARKET TOTALS 158,341 327 5,651 152,690 3.6% 566 $1,569 Bethesda/Chevy Chase 8,545 - 239 8,306 2.8% 60 $1,989 Gaithersburg/Germantown 16,090 - 434 15,656 2.7% 33 $1,392 Kensington/Wheaton/NE Montgomery 16,741 - 497 16,244 3.0% 2 $1,389 Rockville 10,603 - 615 9,988 5.8% 11 $1,772 Silver Spring 9,649 - 550 9,099 5.7% 19 $1,559 Takoma Park 10,845 - 206 10,639 1.9% 11 $1,249 Central Prince Georges County 23,659 - 820 22,839 3.5% 51 $1,179 N Prince Georges County 24,503 - 1,328 23,175 5.4% (38) $1,330 S Prince Georges County 24,273 - 1,251 23,022 5.2% 18 $1,088 SUBURBAN MD MARKET TOTALS 144,908 - 5,940 138,968 4.1% 167 $1,359 DC METRO TOTAL 392,097 327 15,343 376,754 3.9% 894 $1,476Sources: REIS, Cassidy Turley*All figures are multifamily units except vacancy rate.Key Sales Transactions 2Q 12 PROPERTY UNITS SELLER/BUYER PRICE PRICE/UNIT 4701 Willard Apartments 532 Irene S. Pollin/Equity Residential $209,325,000 $393,468 Jeffrey Kottmeier Axiom & 909 at Capitol Yards 493 JPI/JPMorgan Asset Management $189,306,000 $383,988 Vice President, Director of Research Villages of Morgan Metro 1242 Hunt Companies/Harbor Group Management $182,000,000 $146,538 2101 L Street, NW Palladium Court 556 LaSalle Investment Management/The Praedium Group & The Milestone Group $125,500,000 $225,719 Suite 700 Washington, DC 20037 Woodway At Trinity Centre 504 CBRE Global Investors/Home Properties, Inc. $96,000,000 $190,476 Tel: 202.463.2100 Fax: 202.223.2989About Cassidy Turley Jeffrey.Kottmeier@cassidyturley.comCassidy Turley is a leading commercial real estate services provider with more than 3,600 professionals in more than 60 offices nationwide. The The information contained within this report iscompany represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm gathered from multiple sources considered to becompleted transactions valued at $22 billion in 2011, manages 455 million square feet on behalf of institutional, corporate and private clients and reliable. The information may contain errors orsupports more than 28,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated omissions and is presented without any warranty or representations as to its accuracy. commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, projectand development services, and research and consulting. Cassidy Turley enhances its global service delivery outside of North America through a Copyright © 2012 Cassidy Turley.partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit www.cassidyturley.com for All rights reserved.more information about Cassidy Turley. www.cassidyturley.com

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