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THE ECONOMY
THE NATIONAL ECONOMY
Source: Delta Associates; October 2019.
AMAZON HQ2How Will it Impact the Washington Metro Area?
Source: Amazon, Delta Associates, October 2019.
PAYROLL JOB GROWTHSelected Large Metro Areas | 12 Months Ending August 2019
PAY
RO
LL J
OB
S (
TH
OU
SA
ND
S)
0
20
40
60
80
100
120
140
NY DFW Hou LA Basin Phx Atl Bos Was Den
33.6
Source: Bureau of Labor Statistics, Delta Associates; October 2019.
0%
1%
2%
3%
4%
5%
6%
Bos Den SF Bay Was DFW S Fla Atl NY Hou Chi LA Phx
July 2018 July 2019
National Rate
4.1%4.0%
YoY Basis Point ∆
UNEMPLOYMENT RATE *Selected Large Metro Areas | July 2018 vs. July 2019
*Not seasonally adjusted.
+50-10-10-50-40-50-40-30-200-50-70
Source: Bureau of Labor Statistics, Delta Associates; October 2019.
PROJECTED JOB GROWTHWashington Metro Area | 2000 - 2021
PAY
RO
LL J
OB
S (
TH
OU
SA
ND
S)
-60
-40
-20
0
20
40
60
80
100
120
140
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
District Sub. MD No. Virginia
20-Year Annual Average = 41,400/Year 3-Year Projected Average = 27,800/Year
Source: Bureau of Labor Statistics, George Mason University Center for Regional Analysis, Delta Associates; October 2019.
J O B C H A N G E
PAYROLL JOB GROWTHWashington Metro Area | 12 Months Ending August 2019
Source: Bureau of Labor Statistics, Delta Associates; October 2019.
-10,000 -6,000 -2,000 2,000 6,000 10,000 14,000 18,000
Retail Trade
Financial Activities
Information
Wholesale Trade
Manufacturing
Federal Government
Transportation/Utilities
State and Local Government
Construction/Mining
Other Services
Education/Health
Professional/Business Services
Leisure/Hospitality
43,700
-10,100
J O B C H A N G E
PAYROLL JOB GROWTHWashington Metro Area | 12 Months Ending August 2019
Source: Bureau of Labor Statistics, Delta Associates; October 2019.
-10,000 -6,000 -2,000 2,000 6,000 10,000 14,000 18,000
Retail Trade
Financial Activities
Information
Wholesale Trade
Manufacturing
Federal Government
Transportation/Utilities
State and Local Government
Construction/Mining
Other Services
Education/Health
Professional/Business Services
Leisure/Hospitality
43,700
-10,100
J O B C H A N G E
PAYROLL JOB GROWTHWashington Metro Area | 12 Months Ending August 2019
Source: Bureau of Labor Statistics, Delta Associates; October 2019.
-10,000 -6,000 -2,000 2,000 6,000 10,000 14,000 18,000
Retail Trade
Financial Activities
Information
Wholesale Trade
Manufacturing
Federal Government
Transportation/Utilities
State and Local Government
Construction/Mining
Other Services
Education/Health
Professional/Business Services
Leisure/Hospitality
43,700
-10,100
THE WASHINGTON METRO AREA APARTMENT MARKET
0
500
1,000
1,500
2,000
2,500
3,000
NY LA Basin Chi SF Bay DFW Hou Wash So FL Bos Atl
565UN
ITS
(TH
OU
SAN
DS)
LARGEST APARTMENT MARKETSSelected Metro Areas | 2017
Source: U.S. Census Bureau, Delta Associates; October 2019.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
06 07 08 09 10 11 12 13 14 15 16 17 18 19* 20 21 22
MA
RK
ET
-RA
TE
UN
ITS
*12 months ending September 2019.
Long-Term Average = 7,334
Average Since 2014 = 10,502
Source: Delta Associates; October 2019.
CLASS A APARTMENT ABSORPTIONWashington Metro Area | 2006 - 2019
Annual Average ~ 9,000
UN
ITS
Source: Delta Associates; October 2019.
0
200
400
600
800
1,000
1,200
1,400The District No VA Sub MD
CLASS A APARTMENT ABSORPTIONTop 10 Submarkets in Washington Metro Area | 12 Months Ending September 2019
ABSORPTION PACEClass A Projects in Initial Lease-Up | Washington Metro Area
15
25
35
45
55
65
75
85
0
2
4
6
8
10
12
14
16
18
20
9/12 9/13 9/14 9/15 9/16 9/17 9/18 9/19
Absorption Pace Number of Projects
NU
MB
ER
OF
PR
OJE
CT
S
IN A
CT
IVE
LE
AS
E U
P
Source: Delta Associates; October 2019.
UN
ITS
PE
R P
RO
JEC
T P
ER
MO
NT
H
0%
1%
2%
3%
4%
5%
6%
LA Balt Phi NY Phx Wash Atl Chi DFW Hou
VA
CA
NC
Y R
AT
E (
ALL
CLA
SS
ES
)STABILIZED APARTMENT VACANCY RATESMajor Apartment Markets | Second Quarter 2019
National Vacancy Rate = 4.7%
Source: REIS, Delta Associates; October 2019.
4.8%
-4%
-2%
0%
2%
4%
6%
8%
10%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
Long-Term Average Rent Growth = 3.9%
*12 months ending September 2019.
ANNUAL EFFECTIVE RENT GROWTHClass A Apartments | Washington Metro Area | 2006 - 2019
2.8%
Source: Delta Associates; October 2019.
PROJECTS CURRENTLY UNDER CONSTRUCTIONDistrict of Columbia
In Lease-up
Not Yet Leasing
Source: Delta Associates; October 2019.
APARTMENT DELIVERIESWashington Metro Area | 2016 - 2019
0
1,000
2,000
3,000
4,000
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
The District Sub MD No VA
Class A Quarterly Absorption = 2,480
CLA
SS
A
MA
RK
ET
-RA
TE
UN
ITS
2017 2018 20192016
Source: Delta Associates; October 2019.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
MA
RK
ET
-RA
TE
UN
ITS
*Market-Rate Units Planned and Under Construction After Attrition.**As of Third Quarter.
Source: Delta Associates; October 2019.
36-MONTH APARTMENT DEVELOPMENT PIPELINE*Washington Metro Area | 2006 - 2019
APARTMENTS UNDER CONSTRUCTION IN OPPORTUNITY ZONESWashington Metro Area | Third Quarter 2019
Source: Delta Associates; October 2019.
MA
RK
ET
-RA
TE
UN
ITS
0
500
1,000
1,500
2,000
2,500
District of Columbia Prince George's Montgomery Prince William
SHARE OF APARTMENTS U/C IN OPPORTUNITY ZONESWashington Metro Area
Source: Delta Associates; October 2019.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Prince George's Prince William District of Columbia Montgomery
Non-Opportunity Zone Opportunity Zone
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
The District Sub MD No VA
CLA
SS
A
MA
RK
ET
-RA
TE
UN
ITS
Class A Projected Quarterly Absorption
= 2,250
2019 2020 2021
Source: Delta Associates; October 2019.
PROJECTED DELIVERIESWashington Metro Area | 2019 - 2021
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Source: Delta Associates; October 2019.
36-MONTH APARTMENT DEVELOPMENT PIPELINE*Top 10 Submarkets in Washington Metro Area | Third Quarter 2019
The District No VA Sub MD
CLA
SS
A
MA
RK
ET
-RA
TE
UN
ITS
*Market-Rate Units Planned and Under Construction After Attrition.
0
2
4
6
8
10
12
14
16
18
No VA Sub MD The District
Net Absorption:9,000/Year = 27,000
DEMAND
SUPPLY
Planned and maydeliver by 9/22: 4,475 units1
Under construction: 34,276 units2
Total = 38,751 units1 Probable supply after projected attrition.2 Includes unleased units at projects in lease-up.4.5% 4.1% 5.0%
Projected Stabilized Vacancy % at September 20224.5% Metro-Wide
MAR
KET-
RATE
UN
ITS
(THO
USA
NDS
)DEMAND AND SUPPLY PROJECTIONSWashington Metro Area Class A Apartments | 36 Months Ending September 2022
Source: Delta Associates; October 2019.
-4%
-2%
0%
2%
4%
6%
8%
10%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020 2021 2022
ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTHWashington Metro Area | 2006 - 2022
Long-Term Average = 3.9%
* Annual rent growth at Second Quarter 2019 is 2.8%.Source: Delta Associates; October 2019.
THE BALTIMORE METROAREA APARTMENT MARKET
2,398
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020 -2022
MA
RK
ET
-RA
TE
UN
ITS
10-Year Average = 2,103
Annual Average ~ 2,067
CLASS A APARTMENT ABSORPTIONBaltimore Metro Area | 2010 - 2022
Source: Delta Associates; October 2019. *12 months ending September 2019.
EFFECTIVE RENT AND VACANCY RATEClass A Apartments | Baltimore Metro Area | 2001 - 2019
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
0%
1%
2%
3%
4%
5%
6%
7%
Average Effective Base Rent Stabilized Vacancy
STA
BIL
IZE
D V
AC
AN
CY
RA
TE
AV
ER
AG
E E
FF
EC
TIV
E B
AS
E R
EN
T
3 . 8 % / Y E A RL O N G - T E R M R E N T G R O W T H
* As of Third Quarter.Source: Delta Associates; October 2019.
**As of Third Quarter.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
36-MONTH APARTMENT DEVELOPMENT PIPELINE*Baltimore Metro Area | 2006 - 2019
MA
RK
ET
-RA
TE
UN
ITS
*Market-Rate Units Planned and Under Construction After Attrition.Source: Delta Associates; October 2019.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
So Sub No Sub Balt City
Net Absorption:2,067/Year = 6,200
DEMAND
SUPPLY
Planned and maydeliver by 9/22: 882 units1
Under construction: 6,809 units2
Total = 7,691 units1 Probable supply after projected attrition.2 Includes unleased units at projects in lease-up.2.9% 3.5% 4.4%
Projected Stabilized Vacancy % at September 20223.6% Metro-Wide
MAR
KET-
RATE
UN
ITS
DEMAND AND SUPPLY PROJECTIONSBaltimore Metro Area Class A Apartments | 36 Months Ending September 2022
Source: Delta Associates; October 2019.
-2%
-1%
0%
1%
2%
3%
4%
5%
6%Long-Term Average = 3.8%
ANNUAL CLASS A APARTMENT EFFECTIVE RENT GROWTHBaltimore Metro Area | 2006 - 2022
Source: Delta Associates; October 2019. * Annual rent growth at Third Quarter 2019 is 2.6%.
THE WASHINGTON/BALTIMORE AREA CAPITAL MARKETS
$0
$2
$4
$6
$8
$10
$12
$14
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
LA DFW Chi Was Bal
BIL
LIO
NS
APARTMENT INVESTMENT SALESSelected Metro Areas | 2010 - 2019
*Sales through September annualized.Source: Real Capital Analytics, Delta Associates; October 2019.
0%
2%
4%
6%
8%
10%
12%
14%
16%
Phx Aus Den Atl Bos Hou Was DFW Chi
6.2%
NCREIF RETURN INDEX FOR INVESTMENT-GRADE APARTMENTSSelected Metro Areas | 12 Months Ending June 2019
Source: NCREIF, Delta Associates; October 2019.
National Average = 6.1%
Source: Delta Associates Market Maker Survey; October 2019.
CLASS A HIGH-RISE APARTMENT CAP RATESWashington Metro Area | 2008 - 2018
6.44% 6.61%
5.29%4.94% 5.06% 5.11% 4.92% 4.75% 4.80% 4.88% 4.99%
0%
1%
2%
3%
4%
5%
6%
7%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
THE WASHINGTON/BALTIMORE AREA APARTMENT MARKET
TAKEAWAYS
YEARS OF SUPPLYLow-Rise Class A Submarkets | Washington Metro Area
1.0 – 1.9
Less than 1.0
Source: Delta Associates; October 2019.
2.0 – 2.9
1.0 – 1.9
Less than 1.0
2.0 – 2.9
3.0 – 3.9
Source: Delta Associates; October 2019.
YEARS OF SUPPLYHigh-Rise Class A Submarkets | Washington Metro Area
1.0 – 1.9
Less than 1.0
2.0 – 2.9
Source: Delta Associates; October 2019.
YEARS OF SUPPLYClass A Submarkets | Baltimore Metro Area
3.0 – 3.9
TAKEAWAYSWashington/Baltimore Area Apartment Market
Source: Delta Associates; October 2019.
• ABOVE-AVERAGE ABSORPTION TO CONTINUE, BUT DECREASE IN VELOCITY
• RENT GROWTH EXPECTED TO STRENGTHEN
• DEVELOPMENT IN OPPORTUNITY ZONES TO INCREASE
THE WASHINGTON METRO AREA CONDOMINIUM MARKET
0
100
200
300
400
500
600
700
NY Chi So FL LA Basin Bos Wash SF Bay Sea Tampa Bay Den
127UN
ITS
(TH
OU
SAN
DS)
LARGEST CONDOMINIUM MARKETSSelected Metro Areas | 2017
Source: U.S. Census Bureau, Delta Associates; October 2019.
CONDOMINIUM SALES ACTIVITYWashington Metro Area | 12 Months Ending September 2019 Compared to Prior Year
Source: Delta Associates; October 2019.
Down 26% - 50%
Down 1% - 25%
Up 0% - 25%Up 26% - 50%
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
UN
ITS
Average From 2004 - 2007 = 17,612
Source: MRIS, Delta Associates; October 2019.
ANNUAL CONDOMINIUM RESALESWashington Metro Area | 2004 - 2019
*12 months ending September 2019.
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
UN
ITS
Average From 2008 - 2012 = 11,280
Source: MRIS, Delta Associates; October 2019.
ANNUAL CONDOMINIUM RESALESWashington Metro Area | 2004 - 2019
*12 months ending September 2019.
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
UN
ITS
Average Since 2013 =15,352
Source: MRIS, Delta Associates; October 2019.
ANNUAL CONDOMINIUM RESALESWashington Metro Area | 2004 - 2019
*12 months ending September 2019.
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020
1.5%1.1%
Source: Delta Associates; October 2019. *12 months ending September 2019.
EFFECTIVE NEW CONDOMINIUM SALES PRICE CHANGEWashington Metro Area | 2006 - 2020
$1,194
$1,009
$909
$730 $711$674
$577
$257 $239
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Upper NW DC Central DC Arl/Alex Cap East DC Mideast DC Ffx/FC Mont Pr. George's Lou/PrWm
Source: Delta Associates; October 2019.
NEW CONDOMINIUM AVERAGE PRICE PER SFWashington Metro Area | Third Quarter 2019
$2,559
$1,268 1,194 $1,127 $1,060 $1,009 $984 $966
$730 $711 $707
$405
$0
$300
$600
$900
$1,200
$1,500
$1,800
$2,100
$2,400
$2,700
$3,000
Manhattan SanFrancisco
Upper NWDC
Seattle L.A. Central DC Brooklyn Queens Capitol EastDC
Mideast DC San Diego BaltimoreCity
*Third Quarter 2019 except for New York City Submarkets which are as of Second Quarter 2019.Source: The Mark Company, Miller Samuel Inc., Delta Associates, October 2019.
NEW CONDOMINIUM AVERAGE PRICE PER SFSelected Downtown Areas in the U.S. | Third Quarter 2019*
4.7%
-10%
-5%
0%
5%
10%
15%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
* 12 months ending August 2019.Source: MRIS, Delta Associates; October 2019.
RESALE CONDOMINIUM SALES PRICE CHANGEWashington Metro Area | 2006 - 2019
MA
RK
ET
-RA
TE
UN
ITS
Note: Number of units are for September of each year.
UNSOLD NEW CONDOMINIUM UNITS ACTIVELY MARKETING OR UNDER CONSTRUCTIONWashington Metro Area | 2006 - 2019
Source: Delta Associates; October 2019.
0
4,000
8,000
12,000
16,000
20,000
24,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
3,588
13.6
0
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020
Source: Delta Associates; October 2019.
MONTHS OF NEW CONDOMINIUM SUPPLYWashington Metro Area | 2006 - 2019
*as of Third Quarter 2019.
Source: Delta Associates; October 2019.
MONTHS OF NEW CONDOMINIUM SUPPLY BY SUBMARKETWashington Metro Area | Third Quarter 2019
0
500
1,000
1,500
2,000
2,500
3,000
The District No VA Sub MD
Net Sales:1,975/Year = 5,925 units
D E M A N D
SUPPLY
Planned and MayBegin Marketing by 9/22: 1,673 units1
Under Construction and/or Marketing: 3,588 units2
Total = 5,261 units
MA
RK
ET
-RA
TE
UN
ITS
1 Probable supply after projected attrition.2 Includes unleased units at projects in lease-up.
Source: Delta Associates; October 2019.
DEMAND AND SUPPLY PROJECTIONSWashington Metro Area Condominiums | 36 Months Ending September 2022
THE WASHINGTON AREA CONDOMINIUM MARKET
TAKEAWAYS
TAKEAWAYSWashington Area Condominium Market
Source: Delta Associates; October 2018.
• S A L E S E X P E C T E D T O I N C R E A S E I N 2 0 2 0
• P R I C E I N C R E A S E I S T O R E M A I N M U T E D
• A V A I L A B L E I N V E N T O R Y I N C R E A S I N G B U T S T I L L S U P P LY C O N S T R A I N E D
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