A Break for Tenants
washingtonpost.com
A Break for Tenants
Rental Boom Over in N.Va; End Seems Near in D.C., Md.
By Daniela Deane
Washington Post Staff Writer
Saturday, June 23, 2001; Page E01
Charles E. Smith Residential Realty, Northern Virginia's largest landlord, is giving two round-trip tickets to Paris to renters who sign leases at the new StoneRidge development in Loudoun County. Lerner Management is offering a rent-free month to new tenants at the Remington apartments in Dulles.
Those and other specials -- 50 percent off rent on select apartments, no application fee with a certain ad -- are appearing in apartment rental sections in local newspapers and handouts. That's a dramatic change after years of no such concessions by landlords.
The super-hot rental market of the past few years is starting to show signs of cooling, particularly in Northern Virginia, say analysts, landlords and renters. Northern Virginia has been hit first and hardest, they say, because it is the center of recent job layoffs and the area most built up by developers during the boom.
Although rents are still expected to rise in Northern Virginia this year, the rate of increase is expected to be much slower than in recent years. And landlords in Northern Virginia are already offering concessions and even reducing rents in some cases where there is a lot of competition for tenants.
The rental market in the District and Montgomery County is healthier for landlords, and worse for renters, although it also is showing the first signs of a slowdown.
"The past few months look like the top of the market from a landlord's perspective and the bottom of the market from a tenant's perspective," said Greg Leisch, chief executive of Delta Associates, a research firm that tracks about a third of the rentals in the Washington metropolitan area. "We predict a gradually improving situation for tenants and a worsening one for landlords."
Tenants are already seeing the change.
"When we were first looking last November, there was nothing, no matter what your price range was," said Bob Desheine, who moved to the area with his fiancee last year. "We're wishing now that we had held off a bit, because there's a lot more to rent these days."
Desheine had wanted to live on Capitol Hill but settled on close-in south Arlington when he couldn't find what he was looking for. "I'm still getting the daily e-mail from a couple of agencies on the Hill," he said. "In December, there might have been four or five apartments to look at. Now there's more like 20 or 30."
Julie Smith, president of Bozzuto Management, a big local landlord and property manager that controls about 7,500 units, said "several new properties have opened up [in Northern Virginia] within the past 18 months, and many of those have not yet reached full occupancy. Job growth has slowed. The supply of the rental units has caught up with demand, especially in Fairfax and Loudoun counties."
Smith said Bozzuto was advertising for renters for the first time in about three years. She said the company has lowered rents on a few apartments in Northern Virginia since January, reacting to what else was being offered nearby at the time.
Smith predicted, however, that rents in Northern Virginia will still increase 4 percent to 8 percent this year. "But that's not much compared to the several years of double-digit rent growth we've seen."
Other landlords tell the same story.
"The rental market is returning to a more normal situation," said John Kurtz, senior vice president at Charles E. Smith. "Like any large market, there are strong spots and less-strong spots." Kurtz said that in general, closer-in locations are still doing well, while outside-the-Beltway landlords are having a tougher time.
Leisch of Delta Associates said the Reston/Herndon/Dulles area has been the hardest-hit in the rental slowdown, and, in particular, new buildings there that have yet to reach full occupancy.
"In downtown Bethesda, you're not going to find any concessions on the part of landlords yet, unless there's something wrong with the unit, like it overlooks the cooling units of the building," he said.
Even in close-in Arlington, there are a few more vacancies this year than there were last, said JoAnn Cubbage, housing director for the county. The county's vacancy rate has increased only slightly, however: six-tenths of a percentage point to 1.4 percent, still far below the 3 percent to 5 percent considered normal. "Some garden apartments in Arlington, which tend to be less expensive, still have waiting lists," she said.
"A bucket of cold water" was thrown on the rental market in April, Leisch said. "The market got spooked. That's when concessions were introduced, rents went flat and vacancies ticked up." He said rental activity picked back up in June, however, although not at last year's levels.
Leisch's comments echo what agents and brokers have said about the home-sales market in the Washington area: It slowed noticeably in early spring, but activity seems to be picking up again, although not to last year's record levels.
Deliveries of new rental buildings in the entire metropolitan area during the first quarter of 2001 were at their highest level in 12 years, with more than 8,400 new units entering the market, according to Delta's research. Most of the construction has been in Northern Virginia.
Bozzuto's Smith said the rental market in the District and in Montgomery County was still strong, registering continued rent increases and stable occupancy rates. She said Prince George's County and Anne Arundel County rental markets were also still strong.
"We haven't seen much softening in Maryland and the District," said Mindy Friedman, senior portfolio director at AvalonBay Communities Inc. "We're still building in D.C. and Maryland, and that's a good sign."
So far, overbuilding in the city hasn't become a problem, although the number of new apartments available in the District contrasts sharply with that of a few years ago, when there was no new apartment construction.
Now, in Northwest D.C., almost 500 new apartment rentals are available at just two complexes within blocks of each other, Charles E. Smith's Alban Towers and LCOR's Henry Adams House, something unheard of a few years ago. Other apartments are also in the works.
Renters say the market has eased a bit, even in the District.
Cheryl Bell, who recently moved to the District from Connecticut, said several buildings she looked at had vacancies when she visited for an apartment-hunting weekend. She said she could have had any of the four apartments on her short list of favorites.
The landlord at one of them, in Adams-Morgan, told her he was willing to offer her something extra to rent his apartment to her.
"He was going to give me a week and a half for free," said Bell. "But I decided not to take it after all."
Bell picked an apartment in the Van Ness neighborhood of Northwest. She saw it on a Friday and thought about over the weekend.
"I got to think about it for two full days," she said. "There was no competition for it." |
