Apartment Development Spree Could Drive Up Rents–or Lead to Overbuilding

By Veronica Grecu, Associate Editor

A recent report from research firm Delta Associates observed that Washington, D.C., has been enjoying an amazing construction spree. According to the report, builders raised 4,400 new units in the District in the second half of 2010, more than five times the total units built in the second half of 2009. As many as another 4,200 units were started in the first quarter of 2011. The new construction could translate into new leases and result in high rents in Washington, D.C., a city with historically low vacancy rates and a promising job market. However, experts are questioning whether or not the District will end up having too many apartments.

Houston-based Camden Property Trust is one of the developers currently building in Washington. In 2007, the company started work on an $88 million development of a 276-unit apartment building on Capitol Street but was forced to freeze the project because of the recession. Chairman & CEO Ric Campo is now confident that the construction can be resumed; the company will start a larger project in Northeast Washington later this year.

Another busy developer active in the area is Jefferson Apartment Group, which is currently building or renovating a large number of apartments in the city’s neighborhoods. According to Jim Butz, the company’s president & managing partner, Jefferson Apartment Group is set to rehab 404 housing units on Rockville Pike, build 206 new units near the Braddock Road Metrorail Station in Alexandria and develop 230 more on 14^th Street, N.W., in the District as part of a large development project called Jefferson 14. According to Butz, the District area can avoid overbuilding if developers keep a close eye on job growth evolution.