Condo Glut Yields Apartment Glut
Ah, gluts just abound these days! Since the beginning of the downturn, D.C. has been known for its condo glut. There were too many units, too few buyers willing to pay the luxury prices. In the New York Times recent real estate magazine, there was even an article chronicling two developers’ decision to rework their condo building into an apartment building, altering the layout, and adding new features to their design to lure renters. Now, what are they going to do? These days, there are too many luxury apartment units. Today’s Washington Business Journal reports the swap:
For at least the next three years, and possibly longer, there will be more supply than demand for high-end apartments in the Washington area.
A glut in luxury units — those with an average effective monthly rent of more than $2,400 in D.C. — is expected to grow as new projects are completed, including those that were originally planned as condominiums but switched to rental properties as the market cooled.
In the District alone, the supply of Class A apartment buildings increased 25 percent in just two years, according to commercial real estate research company Delta Associates.
“That number jumps out at you in the District,” said Grant Montgomery, director of Delta’s apartment practice. Virtually all the new construction in the District is Class A.
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