Q2 2012 Suburban Virginia, Virginia Apartment Submarket Trends

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Q2 2012 Suburban Virginia, Virginia Apartment Submarket Trends

Overview. There are two basic subdivisions to the Northern Virginia apartment market—the urbanized close-in areas of Arlington and Alexandria and the suburban markets outside the Beltway, chiefly Loudoun, Prince William, and western Fairfax counties (Tysons Corner, an urbanized area in central Fairfax County, is an exception). High-rise development is typical in the close-in submarkets while lower-rise, multi-building complexes are more common in areas farther from the core.

Close-in/Arlington: Rosslyn-Ballston

  • Reis reports average asking and effective rents of $1,901 and $1,864 per month for 16,477 units in Rosslyn/Ballston in the second quarter of 2012. These rates are up 1.1% and 1.4%, respectively, for the quarter after first quarter losses. The year-over-year increases are 3.0% and 3.8%. Vacancy, at 3.8%, is down 20 basis points for the quarter and down 90 year-over-year.
  • Reis forecasts no change in the vacancy rate for year-end 2012, with asking rents to increase by 2.5% and effective rents to rise by 2.9% over the year.
  • The Gaslight Square condominium project, with 117 units, is under construction in Rosslyn/Ballston.
  • Dominion Heights, another condominium project, is under construction in this submarket, with 53 units.

Close-in/Arlington: Pentagon-Crystal City

  • Reis tracks a number of submarkets in the close-in neighboring cities of Arlington and Alexandria. Among the most important is Pentagon City-Crystal City in Arlington.
  • No new projects completed in Reis’ 9,841-unit Pentagon City submarket in 2011. None are planned to complete in 2012. The second quarter vacancy rate is reported at 3.9%, down from 4.2% the quarter earlier and down 60 basis points year-over-year.
  • Net absorption for 2011 totaled 138 units, but first quarter 2012 saw negative 39 units. For the second quarter of 2012, absorption was positive at a low 29 units.
  • Reis reports average asking and effective rents of $2,211 (the highest among the major submarkets) and $2,186 per month, in Pentagon City-Crystal City. These rates are up 4.4% and 5.2%, respectively, year-over-year and 1.7% and 2.0% over the quarter.
  • Reis forecasts vacancy to fall to 3.1% in 2012. Average asking and effective rents are both forecast to increase by 6.7% in 2012.

Close-in/Southeast Fairfax County

  • With southeastern Fairfax County expecting to reap substantial benefits from Defense Base Closure and Realignment Commission (BRAC)-related job relocations to Fort Belvoir, apartment development was active in the Southeast Fairfax County submarket in Alexandria in 2011. Reis reports 219 apartments units completed in this 15,588-unit submarket in 2011. There have been no completions so far in 2012, but 509 units are due to complete construction by year-end.
  • Vacancy decreased by 50 basis points over the quarter to 2.8 %. The rate is forecast to finish 2012 at 3.1%. The rate is down 170 basis points year-over-year.
  • Second quarter average asking and effective rents were $1,477 and $1,445 per month, up 1.1% and 2.0% year-over-year. The respective gains were 0.2% and 0.5% for the quarter.
  • Vacancy is forecast to close 2012 at 3.1%. Solid gains of 3.8% asking and 4.4% effective are forecast for 2012.

Close-in Other Alexandria

  • Submarkets in Alexandria as tracked by Reis include Old Town, a popular waterfront upscale redevelopment area in recent years, NE Alexandria/Glebe Road and parts of Falls Church-Annandale.
  • Construction had been quiet in the 5,169-unit Old Town submarket, as no new units delivered in 2011. Net absorption was a scant 25 units in the second quarter of 2012.
  • The Madison, with 334 units, is under construction at 800 N. Henry Street in the Old Town Submarket. Also under construction here are the 299-unit American Trucking Apartments and the 344-unit Post Carlyle Block O. Completion dates are at present uncertain.
  • Second quarter average asking and effective rents were $1,669 and $1,566 per month, up 1.5% and 1.8% for the period, and up 1.4% and 2.4% year-over-year.
  • Reis forecasts 206 units to complete in Old Town in 2012, with 239 units of net absorption. Average asking and effective rents are forecast to rise by 1.9% and 2.3%, respectively.

Tysons Corner-Vienna; Fairfax City

  • Vacancy finished the second quarter at 5.4% in 12,261-unit Tysons Corner/Fairfax City submarket, the highest rate among the major submarkets. The rate is down 20 basis points for the quarter and down 80 year-over-year.
  • Reis reports 242 units completed in Tysons Corner/Fairfax City in 2011, met with 170 units of net absorption. Reis reports the August 2012 completion of the 354-unit Avalon Park Crest
  • At $1,666 and $1,577 per month, mean asking and effective rents were up 1.1% and 1.4% for the quarter and 4.6% and 5.3% over 12 months.
  • Average asking and effective rents are forecast to increase 5.2% and 6.0%, respectively, making this submarket one to watch as 2012 progresses.

Western Fairfax County/Reston-Herndon

  • Development in Reis’ 21,582-unit Western Fairfax County submarket slowed in the recent period. The submarket includes the Highway 28/Dulles South corridor, a major growth region and a focus of high-tech business park development over the years.
  • Alliance Residential’s 300-unit Broadstone at Laurel Highlands, with 281 market-rate units, completed in June 2012. Second quarter vacancy is 2.9%, up 60 basis points for the quarter but down 10 year-over-year.
  • At $1,517 and $1,460 per month, second quarter average asking and effective rents were up 1.1% and 1.2% for the period, and were up 3.3% and 4.1% since the second quarter of 2011.
  • Reis expects net absorption to reach 257 units in 2012, with new construction just ahead at 281 units Average asking and effective rents are forecast to rise by 4.1% and 5.8%, respectively.

Loudoun County

  • Loudoun County, with its large stock of developable land, has become one of the region’s more dynamic areas for development in recent years. Growth in biotechnology, anchored by Howard Hughes Medical Institute (HHMI) in Ashburn, has become a significant contributor to the county’s economic growth and its potential for attracting bioscience business.
  • This 7,805-unit submarket saw no completions in 2011 and none so far in 2012. None are expected for the rest of the year. The Fairfield at Ryan’s Corner, with 496 units, is under construction. Vacancy here is 4.6% in the second quarter, down 10 basis points from the prior quarter and down 120 over 12 months.
  • Average asking and effective rents for the second quarter were $1,480 and $1,416 per month, up 1.2% and 1.4% from the previous quarter, respectively. Asking and effective rents are up 2.1% and 2.8% year-over-year
  • Net absorption will continue at a modest pace, and asking and effective rents are forecast to increase by 3.2% and 4.0% in 2012.