Old Town/Potomac Yard Multi-Family Submarket Q1 2019
Amazon’s new home in Crystal City is expected to be a huge boon for this neighboring submarket. Because of the historical Old Town and the transforming Potomac Yard, the submarket offers potential Amazon employees with the best of both worlds: a small town, suburban escape and a fast-paced, metro-accessible urban community.
Potomac Yard is in northern Alexandria and included in the National Landing naming proposal. It is also the site of the future Metro station. The new station faced numerous delays, but Metro expects the station to open by late 2021 or early 2022. When complete, the project could potentially spur up to 13 million SF of new development.
The Old Town neighborhood, on the other hand, has an older, smaller inventory, but still benefits from its two Metro stations and the town’s historic fabric, which attracts both Millennials and empty nesters. Both neighborhoods benefit from strong demand, which has helped compress vacancies after expanding because of new supply.
Alexandria/I-395 Multi-Family Submarket Q1 2019
Amazon’s new headquarters in neighboring Crystal City and the looming construction pipeline could begin to change this historically affordable submarket. Indicators across almost every key performance metric were green at the end of last year. Most exceptional was 3.6% year-over-year rent growth in 2018. Occupancies and rents are continually boosted by the submarkets affordability and accessibility, which is contributing to significant investment activity this cycle.
Investors filled the void with the absence of development. From 2010–18, Alexandria/I-395 was the most active submarket, as more than $3.7 billion changed hands. This represents about 9% of all Washington D.C. investments and is about 30% higher than Outlying Fairfax County, which recorded about $2.5 billion in sales volume in that same time. Thanks to blockbuster deals, which included the Lincoln at Old Town and The Arbors on Duke, sales volume cleared almost $700 million in 2018, leading all D.C. metro submarkets.
Potentially because of low asking rents, developers overlooked this submarket for most of the cycle. Since 2010, less than 1,500 units delivered, significantly lower than neighboring Crystal City/Pentagon City, which delivered more than 900 units in Q2 2016 alone. But over the past three years, rent growth averaged about 2.7%, prompting developers to take a second look. Four projects are set to add about 4% to the current inventory, one of the highest percentages outside of D.C. proper.