- The Washington Times - Thursday, November 13, 2003

When it comes to rating the strength of apartment markets, Keith Misner knows what’s good.

And he loves Washington, D.C.

Mr. Misner was recently chosen to head the Apartment Group, a subsidiary of Cushman and Wakefield, one of the nation’s largest real estate services firms. He will be based in the District and oversee a team of 25 brokers helping to buy and sell apartment buildings, and plans to use the Washington area as a guide.

“The Washington, D.C., market has not been experiencing many of the same problems the rest of the country has,” Mr. Misner said. Those problems include high vacancies, depressed rent prices and low returns for investors who own the buildings.

In the past year, apartment sales in the Washington area totaled more than $2.2 billion, Cushman and Wakefield said.

Across the country, with mortgage interest rates at near-record lows, many people have chosen to buy homes rather than rent, and this has left many landlords struggling to fill apartments. But Mr. Misner insists that in the District this is only a problem in high-end luxury buildings, where rents are often larger than the average mortgage payment.

“That’s where most of the problems are,” he said.

Mr. Misner said the next level of apartments, known as Class B, doesn’t have the same kind of occupancy problems. In Washington, where a young, transient population is eager to fill midpriced apartments, most Class B buildings are more than 98 percent full. Indeed, market statistics from Delta Associates, which provides data to Cushman and Wakefield, show that the vacancy rate for top-quality apartments in the Washington area is 2.4 percent, compared with 2.1 percent for Class B space.

Much of the stability for the D.C. apartment market can be attributed to the federal government, Mr. Misner said. The government has helped steady the job market, which in turn has kept rents stable. In fact, Delta Associates said, rents have increased about 1.4 percent so far this year.

Moreover, housing prices in the Washington area are so high that even with low interest rates, “there is a big disparity between what you can pay in a down payment and mortgage and what you pay for rent,” Mr. Misner said.

The Washington area is also stable because of constraints on building new projects, particularly in the District, where there is limited space, and in suburban Maryland, where construction projects face more resident opposition, Mr. Misner said.

Despite all of this, most landlords are hoping for a full-blown economic recovery because it takes longer to lease a new apartment building when the economy is slow. Delta Associates reported that new apartment projects are leasing about 15 units per month so far this year, compared with 28 units per month in 2000.

In other news

• Clark Construction Group Inc. of Bethesda and Smoot Construction of Falls Church began work on an $80 million cancer research facility at Johns Hopkins University in East Baltimore.

• A 90,000-square-foot lease by financial services firm ULLICO pushed Silver Spring’s office-vacancy rate below 10 percent, the Downtown Silver Spring Alliance announced.

Property Lines runs Fridays. Tim Lemke can be reached at [email protected] or 202/636-4836.


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