Southwest Rental Market Update

In Delta Associates’ recently-released First Quarter 2015 Mid-Atlantic Class A Apartment Report, it shows that rents in the Capitol Hill/Riverfront submarket (which includes Southwest) increased by 3.2% over the past 12 months, while rents in the city as a whole decreased by 1.3% as a slew of new projects entered the market. Stabilized vacancy in the area, which only includes projects that have reached stabilization (or 95% occupied), is at 3.6% - the lowest rate among submarkets in the District. 

Lex at Waterfront Station, which began leasing units in December, was about 20% leased as of March with a lease-up pace of 13 units per month. Sky House East, Lex’s sister building across 4th Street, reached stabilization in a year at a monthly lease-up pace of 18 units. The other newer project in Southwest, Camden South Capitol, reached stabilization 16 months after leasing began, or a 15-unit monthly lease-up pace. 

However, there are several projects under construction and planned for the neighborhood. There are four apartment projects under construction, including three at The Wharf and one at Waterfront Station, totaling 811 units. Two other apartment buildings are planned that may deliver over the next 36 months, including the St. Matthews site at Delaware Avenue and M Street and an addition to Capitol Park Tower at 4th and G streets for a total of 471 units. 

On the Class B apartment front, Delta’s First Quarter 2015 Washington Metropolitan Area Class B Apartment Report indicates that rents in the Southwest submarket are down 3.3% from a year ago, but over the past 5 years, rents have increased on average by 2.8% per year. Similar to the Class A market, vacancy is low – it is 3.5% in Southwest compared to the city-wide average of 4.4%.

Revised PUD for The View at Waterfront

Back in late December, Mill Creek Residential Trust, the new owner of The View at Waterfront apartments at 6th and M streets, submitted a revised Planned Unit Development (PUD) application for construction of two new residential buildings on the parking lots fronting M and K streets. A PUD was approved several years ago when Fairfield Residential owned the property, but several changes have been made since then. Generally, Mill Creek has reduced the scope of the project. In the previously approved PUD, a total of 324 new units were planned, but the proposed changes reduce the number to about 260 units. Additionally, the height has been reduced from 112 feet to 85 feet. The Floor Area Ratio (FAR) has been reduced to 3.4 from 4.39 and the lot occupancy is proposed to be 42% compared to the previously approved 51%. Parking has been reduced significantly from 569 total spaces for all four buildings to 290 spaces in three levels of below-grade parking; however only 175 spaces are required under zoning. 

The look of the proposed buildings has also changed since Fairfield retained Esocoff & Associates to design the previously-approved project. SK&I Architecture has designed the new buildings with a grey and white color palette that resembles neighboring Lex at Waterfront Station. The PUD application describes the design of the new buildings: 

Each new building is comprised of two volumes. The first is a taller, lighter box that is supported by a tall recessed ground floor with exposed columns along the primary streets and corners; the second is a more subdued, lower mass that meets the ground plane and also is pulled back and tapered from the corners between the proposed and existing buildings along the street edge. 

Current SK&I Architecture design.

Esocoff & Associates design.

The north tower will have seven stories, including a mezzanine on the top floor and the south tower will have six stories, including mezzanines on the ground and top floors. A two-story retail space is still planned for the new south tower at the corner of 6th and M streets facing Arena Stage, but has been reduced from 8,900 SF to 5,200 SF. One thing that hasn’t changed is the amount of space set aside for affordable units. There will still be 6,500 SF of affordable housing evenly distributed on floors 2-5 of both new buildings, in addition to the 9,500 SF of affordable housing that currently exists in the I.M. Pei buildings. 

Each of the new towers will have amenity spaces within the buildings, as well as “vest pocket parks” between the proposed and existing buildings designed by Land Design. The “vest pocket parks” will contain amenities that can be used year round throughout the day and night. Some of the planned amenities include lawn panels, flexible seating, grilling areas, outdoor fireplaces, and water elements, each designed in “rooms” with heavy landscaping. The south tower will have a two-level lobby and amenity space, as well as loft units with mezzanines while the north tower will have a two-level lobby and amenity space. 

The developers will go before ANC 6D later this year to seek their support before meeting with the Zoning Commission. If approved, Mill Creek would like to start construction in 2016.

Renderings courtesy of SK&I Architecture, Esocoff & Associates, and Land Design

A Peek Inside Lex at Waterfront Station

Lex at Waterfront Station (formerly known as Sky House West) was purchased by Bernstein Management and started leasing units last month. Over the past three years, three new apartment buildings have opened in Southwest, bringing more than 800 units online. Camden South Capitol opened in the spring of 2013; Sky House East began leasing in early 2014; and Lex at Waterfront Station is the newest apartment project. Rents range from $1,600 for a studio to $3,480 for a large 2BR unit. Below are some photos of the exterior and interior amenity spaces on the first floor of Lex. 

There is an extensive outdoor amenity space with a fireplace, BBQ grills, benches, and green space.

The club room contains a large screen TV and several seating areas.

The club room also contains a pool table and kitchen. Near the lounge is the mail room.

The lobby has several seating areas in nooks, but also has open areas. RD Jones designed the interior spaces in the building.