DC Metro

First Quarter

2014
Multifamily Snapshot
www.cassidyturley.com
Economic Indicators
DC METRO MULTIFAMILY
Market Tracker
Vacancy
4.2% *Arrows = Current Qtr Trend
Net Absorption
2,344 Units
Completions
3,565 Units
Asking Rent
$1,531
The Washington D.C. metropolitan area multifamily market continued to perform well in the rst quarter
of 2014. The region absorbed a staggering 2,344 units in the rst quarter already more than a third of
the total units absorbed during 2013 which was a near-record year. Suburban Maryland led the region
with 1,269 units absorbed. In a sign that new construction continues to be in high demand, the three
Suburban Maryland submarkets that delivered new units Kensington/Wheaton/NE Montgomery,
Rockville, and Silver Spring also saw the highest absorption totals. For example, Rockville delivered a
record 814 units in the rst quarter, but absorbed 439 units. After absorbing only 56 units in the fourth
quarter of 2013, Northern Virginia experienced signicant growth and absorbed 726 units, led by Western
Fairfax County, Rosslyn/Ballston, and Old Town. The District of Columbia also posted a healthy absorption
total of 349 units. Anacostia/Northeast DC led the District of Columbias submarkets with 226 units
absorbed.
As had been anticipated, deliveries in the rst quarter of 2014 were at an all-time high of 3,565 units. The
markets continued health is evident in that only four of the regions 26 submarkets posted very modest
negative absorption during the rst quarter, and none of those submarkets delivered new units over the
same period. Thus, any negative gains were not the result of oversupply. Asking rental rates averaged
$1,531 in the rst quarter, a 0.9% increase from year-end 2013. With the exception of a slight dip in the
fourth quarter of 2013, rents have been increasing steadily for the past two years at an average rate of
0.6% per quarter.
Despite strong absorption numbers, vacancy rates rose across the metro area. The regions overall
vacancy rate ticked up 0.3 percentage points to 4.2%. Interestingly, vacancy in each jurisdiction
increased by about the same amount: District of Columbia vacancy rose 0.3 percentage points to 5.1%,
Northern Virginias rate was up 0.3 percentage points to 4.0%, and Suburban Maryland vacancy rose 0.4
percentage points to 3.8%. The upticks in vacancy are almost wholly attributed to the astounding amount
of new units coming online, but since the deliveries are still in lease-up stage this is not all that alarming.
What may be worrisome is that there are many more deliveries to come, so it remains to be seen if
oversupply will cause a drag on the market through the remainder of 2014. However, it is indeed a good
sign that the market has, for the most part, kept pace with deliveries thus far.
Multifamily investment sales activity registered $737.9 million for the rst quarter of 2014. Suburban
Maryland led the region in sales activity in the rst quarter with $359.5 million in sales volume; it was also
home to the highest priced sales transaction year to date. The 864-unit Cider Mill apartments in
Gaithersburg traded from Home Properties to a joint venture between Donaldson Group and Angelo
Gordon for $110 million or $127,315 per unit. Northern Virginia was second in total sales volume with
$262.8 million while the District of Columbia had an uncharacteristically quiet rst quarter with only three
transactions totaling $113.4 million in volume.
Outlook
Its nearly impossible to go anywhere in the Washington DC Metro region without seeing a crane.
Nearly 14,000 multifamily units are projected to come online in the region by year-end.
In the wake of the new product coming online, vacancy will surely rise, but perhaps not as signicantly
as some have feared. There has been much concern about overbuilding in the regions multifamily
market, but the areas strong population growth continues. Additionally, there is likely some pent-up
demand from millennials who have recently joined the workforce but are still living with parents. As
the economy continues to improve, many of them will move out on their own.
While average asking rents have been climbing steadily for the past two years, the onslaught of new
product will intensify competition and may cause rents to atten out and even decrease slightly into
2015.
Market Overview
Absorption, Completions & Vacancy
1Q 2014 1Q 2013
Employment 3.085 M 3.078 M
Population 5.934 M 5.875 M
Median Income $88,233 $88,233
MF Permits Issued 20,238 6,548
MF Starts 14,169 10,151
Asking Rents
Source: Cassidy Turley, REIS
Source: Cassidy Turley, REIS
0%
1%
2%
3%
4%
5%
6%
7%
0
2,000
4,000
6,000
8,000
10,000
2008 2009 2010 2011 2012 2013 Q1 2014
V
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New Deliveries Net Absorption Vacancy Rate
$1,200
$1,250
$1,300
$1,350
$1,400
$1,450
$1,500
$1,550
$1,600
$1,650
2008 2009 2010 2011 2012 2013 Q1 2014
P
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DC NoVA Suburban MD
www.cassidyturley.com
Bethany Schneider
Research Analyst


2101 L Street, NW
Suite 700
Washington, DC 20037
Tel: 202.463.2100
Fax: 202.223.2989
Bethany.Schneider@cassidyturley.com
The information contained within this report is
gathered from multiple sources considered to be
reliable. The information may contain errors or
omissions and is presented without any warranty
or representations as to its accuracy.
Copyright 2014 Cassidy Turley.
All rights reserved.
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider with more than 4,000 professionals in more than 60 ofces nationwide. With
headquarters in Washington, DC, the company represents a wide range of clientsfrom small businesses to Fortune 500 companies, from local
non-prots to major institutions. The rm completed transactions valued at $25.8 billion in 2013, manages approximately 400 million square feet
on behalf of institutional, corporate and private clients and supports more than 24,000 domestic corporate services locations. Cassidy Turley serves
owners, investors and tenants with a full spectrum of integrated commercial real estate servicesincluding capital markets, tenant representation,
corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances
its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65
international markets. Please visit www.cassidyturley.com for more information about Cassidy Turley.
Where Are People Moving To?
Net Migration in Major Markets in 2013
Multifamily Transaction Voume and $/Unit
YTD, Major Metros
Apartment Absorption
DC Metro
DC Metro Renter Population
Change in Renter Population by Age 2005 vs. 2012
-26,270
-7,520
-4,980
6,050
12,740
17,030
19,510
25,070
28,020
31,230
31,400
34,970
40,280
40,450
40,910
51,240
80,920
-40,000 -20,000 0 20,000 40,000 60,000 80,000 100,000
Chicago
Detroit
Philadelphia
Los Angeles
Minneapolis
Las Vegas
New York
Boston
Atlanta
Austin
Denver
Seattle
San Francisco
Phoenix
Washington, DC
Dallas
Houston
$3.2
$1.4
$1.2
$1.1
$0.8
$0.7
$0.7
$0.6
$0.5
$0.5 $0.4
$0.1
$50
$70
$90
$110
$130
$150
$170
$190
$210
$230
$250
$0
$1
$1
$2
$2
$3
$3
$4
NYC
Metro
LA
Metro
Atlanta Dallas Houston DC
Metro
Denver Chicago SF
Metro
Seattle Phoenix Boston
T
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S
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V
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B
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7,088
4,113
2,567
9,373
5,911
7,143
6,522
2,344
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2007 2008 2009 2010 2011 2012 2013 2014
YTD
N
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b
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r

o
f

U
n
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s
-26%
28%
27%
16%
21%
70%
26%
-13%
31%
-40%
-20%
0%
20%
40%
60%
80%
0
50,000
100,000
150,000
200,000
250,000
18-24 Years
Old
25-34 Years
Old
35-44 Years
Old
45-54 Years
Old
55-59 Years
Old
60-64 Years
Old
65-74 Years
Old
75-84 Years
Old
85+ Years
Old
2005 2007 2012 Percentage Change 2005-2012
At 4.9%, the DC Metro area boasts one of the lowest unemployment
rates in the nation, signicantly lower than the national rate of 6.3%.
Additionally, the region boasts the highest median household income in the
nation at $88,000. These factors make the area a particularly attractive
place to live, as evidenced by the nearly 41,000 people who moved to the
region in 2013.
After nishing 2013 third in the nation among major metros with $8.0
billion in sales volume, which was driven by the $4.3 billion Archstone
disposition, the DC Metro returned to typical quarterly transaction volume
in the rst quarter of 2014.
After the rst quarter, 2014 is on pace to surpass the all-time absorption
high reached in 2010.
The renter population continues to grow among nearly all age cohorts.
Key Sales Transactions 1Q 2014
PROPERTY UNITS SELLER/BUYER PRICE PRICE/UNIT
Cider Mill- 18205 Lost Knife Circle, Gaithersburg, MD 864 Home Properties/ Donaldson Group JV Angelo Gordon $110,000,000 $127,315
The Point at Pentagon City- 1201 S Eads Street, Arlington, VA 348 Carlyle Group JV Bainbridge Companies/ Pantzer Properties $101,100,000 $290,517
Point at River Ridge- 20300 River Ridge Terrace, Ashburn, VA 467 Dune Real Estate Partners/ Klingbeil Capital Management $89,500,000 $191,649
Yale West- 443 New York Avenue, NW, Washington, DC 216 IBG Parnters JV Greeneld Partners/ WRIT $73,000,000 $337,963
Ridgewood II- 4209 Ridge Top Road, Fairfax, VA 191 Whiteco Industries/ GID $58,200,000 $304,712
* Cassidy Turley Transaction
Source: REIS Source: US Census Bureau
Source: Moodys Analytics Source: Cassidy Turley, Real Capital Analytics
D.C. accounts for 4% of total
U.S. apartment sales volume Q1
2014