Over the next few months, we’ll be profiling the top markets where Fundrise investments are located.
First we’ll look at Washington, DC, the market we first started in and one that we believe that will fare well in the coming years.
Historically, real estate trends in the District of Columbia have been tied to activity within the federal government and the firms that do business with it.
Additionally, DC’s private sector has seen tremendous growth as of late. According to Marcus & Millichap, more than 32,000 jobs have been added to DC’s private sector in 2014, which in turn has led to major population growth.
This employment boost is expected to drop vacancy rates by 10 basis points, to five percent. Simultaneously, multifamily rents have increased by roughly 2.5 percent, now at an average of $1,570 per month.
This uptick in fundamentals is occurring despite increased construction in the multifamily sector. Marcus & Millichap reports that inventory in the DC market will increase 3.4 percent in 2014 with the construction of 19,000 new apartment units.
DC’s retail sector is also performing extremely well. Jobs within the industry are close to pre-recession levels—there are now 269,000 people employed by retail outlets in Washington, compared to 270,000 in 2007.
Increased household incomes of residents in the area indicate further retail development (and jobs) to come. This year, average household incomes are projected to hit above $115,000, compared to roughly $73,000 nationwide.
Delta Associates reports more than 3.2 million square feet of retail currently under development in the Washington Metro area, indicating that retailers anticipate additional job, population, and income growth. The majority of development is focused on grocery-anchored shopping centers, as well as pad sites home to quick-service restaurants.
Given the success of its retail and multifamily sectors, many commercial real estate investors are looking to tap into the DC market.
DC has been a core market for Fundrise since 2010. To date, over 800 investors have invested more than $7M in 12 projects in DC.
Source: Greg Knapp, Flickr