Regional Economy Ended 2018 on a High Note, Bolstering Strong Multifamily Market
Note: The following is an excerpt from the Newmark Knight Frank 4Q 2018 Washington Metro Area Economy and Multifamily report released in mid-January 2019 and sponsored by the George Mason Center for Real Estate Entrepreneurship. To read the entire report, click HERE.)
The Washington metro area economy sustained its pace of growth through the fourth quarter while multifamily metrics remained strong. For the 12 months ending in November, the region added 54,100 jobs, up from the 2017 annual average of 50,900 jobs and higher than the metro area’s 20-year average growth of 43,300 jobs per annum. Regional economic indicators remain sturdy but show some potential for near-term deceleration. Job growth is likely to continue at or near the current pace of growth through 2019.
Apartment absorption dipped during the fourth quarter of 2018, as the region absorbed negative 1,335 multifamily units. This is due at least in part to a sharp drop in deliveries during the quarter. Fourth quarter absorption declined from the previous year, when the region absorbed 1,409 units during the fourth quarter of 2017. The region’s 2018 absorption totaled 10,843 units, still a strong showing but down from the 12,341 units absorbed in 2017. Still, the region’s occupancy rate registered 95.5%, up 50 basis points from one year ago. At the end of the fourth quarter, 27,822 units were under construction; 1,985 units delivered in the region during the fourth quarter. An additional 7,363 units are planned and likely to deliver within the next three years, bringing the region’s development pipeline to 35,185 units.
Region-wide, rents increased 3.1% over the past 12 months, with growth during this period strongest in Suburban Maryland at 3.2%; the District of Columbia and Northern Virginia experienced average rent growth of 3.1%. The region’s five-year average effective rent growth is 2.3%. The rent growth in the market is remarkably strong considering the level of overall economic uncertainty; the consensus of economists is that there will be a national recession in the next two years. Nine submarkets across the Washington metro area saw 12-month rent growth exceeding 4.0%. The submarkets that saw the highest rent gains include: Frederick County at 6.5%, North Arlington at 6.0%, and Fredericksburg/Stafford at 5.3%.
Trackback from your site.