Baltimore Pulls Ahead of Neighboring D.C. for Apartment Performance
While apartment market fundamentals in Baltimore and neighboring Washington, D.C. very often come in at similar levels, there are times when performances diverge. That primarily reflects that Baltimore is almost always a limited-supply market, whereas metro Washington pretty frequently sees construction heat up to notable volumes that can slow rent growth.
Since D.C. currently is in the midst of an especially aggressive building period, it’s not surprising that Baltimore is posting the stronger pricing increases among the two metros. Although Baltimore’s annual jump in effective rents for new leases in calendar 2012 — 2.7% — came in a hair below the national average, that performance was nearly twice the rent increase of 1.4% recorded in Washington, D.C.
Furthermore, because top-of-the-market communities in Baltimore are not competing with a slew of new deliveries, those developments are drastically outperforming their D.C. counterparts for rent growth. Rents climbed 2.4% during the past year in Baltimore projects built since 2000, versus the increase of 0.7% seen in that product age niche in D.C. The difference was even greater for 1990s-generation properties with growth at 3.6% in Baltimore and just 0.2% in D.C.
Baltimore now has about 2,800 apartments under construction, all of them scheduled to be finished during 2013. That sum actually will be the metro’s biggest annual delivery volume in the two decades that MPF Research has tracked the local performance. But it still represents only a fairly tame 1.4% inventory growth pace, and the additions will be spread across several different neighborhoods. Thus, the near-term product growth looks absorbable while continuing to sustain rent increases around the mark of 3%.
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