DC Apartment Trends from Delta, Part II: The Renter’s View

In Part I of our interview with Delta Associates VP Grant Montgomery, we shared the latest numbers on the DC rental market and captured the landlord’s point of view. Now we shift to what it all means for renters.

Despite lower vacancy rates than much of the rest of the country, the DC region remains a renter’s market, according to Montgomery. The boom in new apartment property construction over the last couple years has meant good things for renters:

1. Lower prices and aggressive rental incentives. “There are enough [new buildings] out there that rents are still decreasing” and many landlords are aggressively using “concessions” to attract renters. The percents of rents landlords are taking off through incentives are “among the highest we’ve ever seen,” according to Montgomery. In some cases, “you’re getting 3 months off your rent.” And in extreme cases “you might be getting 3 months and a year’s free parking.” If you are really value-focused, notes Montgomery, you can likely get better deals in lower-end apartments “because they’re facing pressure from above.” And if you want something new, “you’re going to get a deal there. For not much more [in price], you might be able to move up [in quality] for a year or two.”

2. Lots of options. Renters now have “plenty of [buildings] to choose from.” And the options aren’t just greater in number, they’re greater in quality. That’s because, as Montgomery notes, “a lot of the [new properties] built over the last year or two were originally built as condos but instead have come to market as rentals. So you’re getting a significantly higher quality product than you would have gotten 5 years ago—nicer cabinets, nicer appliances, etc.”

To find the best deals, Montgomery suggests checking out areas where a lot of new properties have been built recently. “If you go to a neighborhood, and there are 3 new apartment projects trying to fill up for the very first time, that’s good for you. That situation – where you’ve got buildings competing with each other that have to fill up – is very different from a building that’s completely full and they’re just turning a certain percentage of units.”

Especially “if you’re willing to make the tradeoff between rent and location, you can really get some amazing deals -- like 20% to 30% concessions” – and often you’re not that far away from the much more expensive parts of the city. Which areas in DC fall into this camp? Montgomery suggests looking at DC’s Capital Riverfront, the South Arlington area (along Route 7 and Columbia Pike), and North Bethesda along Rockville Pike.

But if you want to take advantage of low rental prices and landlord giveaways, Montgomery’s research suggests that you should act now. “The spigot’s about to get turned off” in terms of new apartment buildings … “and that will rather quickly change who’s on top of the market. Who has negotiating power will change over the next 36 months quite significantly.”

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Read Part I of our interview with Grant Montgomery, where he discusses the DC apartment market from the landlord’s perspective.

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