the economy...2 includes unleased units at projects in lease -up. projected stabilized vacancy % at...

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


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


-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


CLASS A APARTMENT ABSORPTIONWashington Metro Area | 2006 - 2019

Annual Average ~ 9,000

UN

ITS


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


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%


ANNUAL EFFECTIVE RENT GROWTHClass A Apartments | Washington Metro Area | 2006 - 2019

2.8%


PROJECTS CURRENTLY UNDER CONSTRUCTIONDistrict of Columbia

In Lease-up

Not Yet Leasing


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


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.


36-MONTH APARTMENT DEVELOPMENT PIPELINE*Washington Metro Area | 2006 - 2019

APARTMENTS UNDER CONSTRUCTION IN OPPORTUNITY ZONESWashington Metro Area | Third Quarter 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


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


PROJECTED DELIVERIESWashington Metro Area | 2019 - 2021

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


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


-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


-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


2.0 – 2.9

1.0 – 1.9

Less than 1.0

2.0 – 2.9

3.0 – 3.9


YEARS OF SUPPLYHigh-Rise Class A Submarkets | Washington Metro Area

1.0 – 1.9

Less than 1.0

2.0 – 2.9


YEARS OF SUPPLYClass A Submarkets | Baltimore Metro Area

3.0 – 3.9

TAKEAWAYSWashington/Baltimore Area Apartment Market


• 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


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


8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

UN

ITS

Average From 2008 - 2012 = 11,280




8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

UN

ITS

Average Since 2013 =15,352




-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


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


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


MONTHS OF NEW CONDOMINIUM SUPPLYWashington Metro Area | 2006 - 2019

*as of Third Quarter 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.


DEMAND AND SUPPLY PROJECTIONSWashington Metro Area Condominiums | 36 Months Ending September 2022

THE WASHINGTON AREA CONDOMINIUM MARKET

TAKEAWAYS

TAKEAWAYSWashington Area Condominium Market


• 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

the economy...2 includes unleased units at projects in lease -up. projected stabilized vacancy % at...

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