Montgomery County's weak office market has just met the County's increasingly-weak rental apartment market. An already-approved conversion of an office building at 850 Sligo Avenue into residential apartments hasn't gone forward. Now the property has been put back on the market for $7,250,000.
The buyer will have the right to proceed with the approved development of 80 apartments and 6912 SF of ground floor retail. But after adding another barrage of thousands and thousands of new rental apartments countywide after the "Great Recession," the market has shown weakening demand at the rental price points offered. In contrast to promises of elected officials that more supply would lower rents, rents have remained high, or gone higher.
As a result, many new "luxury" buildings have been left with dozens of vacant units. Rather than "leasing up," they have filled their buildings by taking in airbnb-style hotel guests, college students, and contract housing/corporate "extended stay" hotel residents, none of whom are paying the full-freight rent. The resulting lower profit margin can present a problem, especially for smaller development firms.
"In contrast to promises of elected officials that more supply would lower rents, rents have remained high, or gone higher."
ReplyDeleteWhich buildings? Mine has 1brs avail for $1600 which was the price of my original lease in 2016 (I now pay $1850). Plus new residents get a month free. Prices are definitely noticeable lower, as far as I've seen.
There are exceptions to every trend. There is also the effect of the pandemic as many landlords are now facing tenants who can't pay their rent anymore.
DeleteI really hope instead of apartments they build condos here. The Octave is about to have a 9 story building blocking everyone on the 2nd ave side and the Elan is overpriced for having no onsite amenities. We need more options. Another Octave like building with similar amenities and price points for 1br/2br units would be great.
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