Rents for Class A apartments in Annapolis experienced the largest increase in the Baltimore metro market, where absorption rates continue at a record pace.
The state capital submarket experienced a 6 percent increase in rents, which went up in the overall Baltimore metro market by 1.3 percent year-to-date, according to a report by Delta Associates on the recently-ended third quarter.
“Rents have been rising for the past year in the Baltimore metro area, and part of the reason for that has been strong absorption …, said William Rich, multifamily practice director at Delta Associates. “The number of units absorbed has been at a record pace over the past year in the Baltimore metro area.”
The average effective monthly rent in the market is $1,626 and the growth is being primarily driven in the suburbs: In addition to the increase in Annapolis, the north and northwest portions of Baltimore County experienced a 4 percent growth. The boost in average rent would have been higher, but the Howard County/Columbia submarket posted a negative rent growth of 4.2 percent. Baltimore’s rents also increased by 0.9 percent overall, with the Fells Point/Inner Harbor submarket rising .3 percent while downtown rents went up by 1.3 percent.
The performance of the Class A apartment market is in part being driven by short supply, but even with more projects in the pipeline improved rents and vacancy rates in the market are expected to continue because the anticipated demand is expected to absorb the area’s 36-month supply.
“We’re projecting that the vacancy rate will be lower in three years than it is today. But there will be, in the short term, an increase due to the large amount of units that are delivering,” Rich said. “But the good news is that so far the absorption of units has been above average.”
The suburban Maryland market around Washington, D.C., is breaking typical trends by outperforming Northern Virginia. Rents in suburban Maryland bumped up 1.2 percent while Northern Virginia saw rents fall by .1 percent. Suburban Maryland also saw its annual change in absorption rate in the third quarter shoot up 56 percent compared to Northern Virginia’s increase of 15 percent.
“There’s been more job growth in suburban Maryland than there has been in Northern Virginia for the past year,” Rich said. “Typically it’s the reverse, and suburban Maryland has been outperforming other portions of the metro area.”