Condos — both new construction and conversions — are the current multifamily trend in the D.C. area, according to Drew White, director of The Apartment Group of Cushman and Wakefield. “The high cost of housing in the region combined with low interest rates has rental residents considering the option of buying,” he says.

Further fueling the condo trend, developers and owners are being approached by converters offering higher purchase prices than conventional sales offers from other owner-operators.

This number of apartment properties being converted to condos helps the apartment market, too. White explains, “Conversions dilute the supply of rental units within a submarket, making rental conditions healthier. The sales scenario to a converter is especially appealing to some of the large owners/developers who may own several projects within the same area.”

Crescent Heights has completed two conversions around McLean and Tysons Corner, Virginia. According to White, the conversions have been immensely successful — selling out in record time while greatly strengthening that rental submarket by removing more than 1,000 rental units from the market.

The major employment centers are attracting the jobs and creating the demand for housing. However, White expects the multifamily development pipeline to decrease because supply has outpaced demand. “There are more units in the pipeline for the District than there are ‘A’ quality units currently in existence,” White says.

Apartment developers are concentrating on urban infill, high-density projects, close to mass transit, retail and jobs. Developers are looking for rent-by-choice residents who like this “convenience” lifestyle and can afford higher rents.

Suburban projects — typically four-story garden apartments — outside the beltway are also prominent right now.

As for apartments, the rental rate for new product in D.C. averages $2.25 per square foot.


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