The partial government shutdown that started right around Christmas and extended through almost all of January undoubtedly put a squeeze on the metro DC real estate market.
We took a look at absorption rates – the pace at which the market is absorbing” the available inventory – in January and compared those to rate the previous January, and there is an inescapable conclusion: the market was slower.
In general, absorption rates were 3% – 5% less in January 2019 than January of 2018. There are always exceptions of course, as markets behave differently, but we even saw a slowing in those areas closest to Amazon’s new HQ2 location. In November and December of last year, we saw rates of 70% and 80% in Crystal City and the north end of Alexandria. In January, those rates dropped to around 50%. That’s still a very strong number, but three things combined to bring those rates down: a slight cooling from the initial reaction to Amazon’s news; the lack of available inventory since so much got snapped up in November and December, and the government shutdown.
We’re not worried about the long-term impact of the shutdown, but it’s going to take a while for the market to return to more normal levels of absorption rates. Of course, that assumes we won’t have another shutdown – and that remains to be seen as this writing!
For reference, below you’ll find how we segment the market based on absorption rates. And if you want to know more about up-to-date market conditions in your neighborhood, we hope you’ll give us a call.