Occupancy and Rent Change at Recent Lows in DC

After maintaining mostly stable performances throughout much of 2019, Washington, DC has seen apartment market fundamentals deteriorate more recently. Although Washington, DC recorded mild occupancy improvement of 10 basis points between January and February 2021, the resulting rate – at 94.5% – was among the lowest the market has recorded in seven years and was also one of the weakest readings among the nation’s 50 largest apartment markets. With occupancy softening, apartment operators in Washington, DC cut effective asking rents by 5.7% in the year-ending February, also one of the worst nationwide. Price declines in DC have not been this severe in at least two decades. The recent pullbacks in occupancy and rent positioning were the result of weakening demand due to the COVID-19 pandemic, and an ongoing new supply wave. However, the market struggled to generate much rent appreciation even prior to the pandemic. In the five years ending March 2020, Washington, DC averaged annual rent growth of less than 2% even while occupancy averaged at a stable 95.4% during that period.