Washington, D.C., Multifamily Investment Forecast
Swift Recovery and Widespread Demand Warrant Elevated Development
Local economic pillars support historically strong fundamentals. Washington, D.C., registered a limited rise in unemployment during the pandemic that allowed the metro to quickly move into recovery. Supported by its sizable professional and business services and government sectors, roughly 100,000 jobs were regained last year, elevating apartment demand to record levels. As a result, vacancy contracted to 3.3 percent despite completions reaching a two-decade high. Suburban rentals in Virginia and Maryland were highly sought after during the initial months of the health crisis due to their affordability relative to the central business district. However, leasing activity returned in force inside the District as restrictions for dining and entertainment venues loosened and in-person classes resumed at universities. Barring any setbacks from COVID-19 variants, demand across the region will likely be sustained as access to high-paying positions continues to draw residents to the metro. Heightened renter interest has bolstered the market's construction pipeline, with over 30,000 units underway at the onset of 2022. This will likely place upward pressure on availability in the near term, resulting in a small uptick in vacancy. Still, the rate will remain 120 basis points below the 10-year-trailing average.