Who is going to pay that much to live there?
It’s always one of the first questions in any discussion of downtown Bethesda’s apartment boom.
With 10 apartment projects either approved, under construction or recently completed (and others in the pipeline) there could be an influx of a few thousand residents to the downtown area. Some will pay as much as $2,300 in rent a month for a 623-square-foot studio.
“We wish we had more units because we think the demand is that high,” said Jason Friedman, senior vice president with Associated Estates.
The Ohio-based developer is behind the 7001 Arlington project, home of the aforementioned studio unit that will cost upwards of $27,000 a year to lease.
The five-floor, 140-unit apartment a short walk from Bethesda Row and on the former site of a U.S. Post Office will open for move-ins in March.
“Bethesda Row is one of the best, if not the best, retail hubs of a community in all of Metro D.C.,” Friedman said. “The amount of people and the desire to work and live right there is really second to none.”
Friedman isn’t the only one to cite location (and the retail and restaurant amenities of Bethesda Row) as reasons why apartment demand in Bethesda is so high, even if new units are priced more like D.C.
“That D.C., Maryland line used to be the stopping ground,” said Rick Gersten. “We have more than enough renters calling us about Bethesda. They will go out there and tell us, ‘It’s just as nice as what I saw in NoMa.'”
Gersten founded Urban Igloo, a company that helps renters find new apartments (and a BethesdaNow.com advertiser).
“The quality in Bethesda is only increasing, because the new buildings are more energy-efficient, have more amenities,” Gersten said. “For the same price that they might be able to get into a little older building in D.C., people are seeing they can for that higher quality. They’re willing to pay that price to be in Bethesda.”
The Gallery of Bethesda, a 17-story, 234-unit luxury apartment that opened last year on Auburn Avenue, was about half-leased in its first four months. At Bainbridge Bethesda, which opened in August, the 540-square-foot apartments starting at $2,020 a month were all leased in the first month.
About 40 of the apartment’s 200 units had been leased in that same time.
The average rent for a Class A apartment unit in Bethesda was $2,520 a month in 2014, according to a report from real estate research firm Delta Associates. That number was more expensive than the average Class A rents in places such as Arlington, H Street and the Capitol Riverfront.
Gersten said Bethesda’s increasingly mixed-use look and proximity to Metro, I-270 and Silver Spring has made it a location people want to live in. When the quality of new apartment units are considered, Gersten said some renters tend to disregard the price factor.
“If people can get two out of three, they’re normally happier residents,” Gersten said. “Three out of three — price, quality and location — is the trifecta for them from where they normally refer others.”
Delta also reported average Class A apartment rent was down 3 percent in 2014 compared to 2013 in Bethesda. Class A apartment buildings are typically buildings built after 1991 with full amenity packages.
“Pricing for apartments is a lot like the airline industry,” Gersten said. “There are systems in place to know what people are willing to pay. Even with more units coming online in Bethesda, there is going to be this kind of demand for at least the next five years.”
Friedman said despite the wealth of projects in the works in such a condensed area, there is still a “very limited supply” of apartment units.
The 7001 Arlington project will likely bring Bethesda’s average rent up.
A 685-square-foot one-bedroom starts at $2,605 a month and a 704-square-foot one-bedroom starts at $2,680 a month. A 1,021-square-foot, two-bedroom unit starts at $3,665 a month. The two-bedroom units go up to 1,345 square feet starting at $4,590 a month.
Friedman said the amenities and location make those prices worth it. He expects a mix of young professional and empty nester residents.
Units will have Energy Star appliances, espresso-color kitchen cabinets, tile blacksplash and surface quartz countertops. Residents will have access to a fitness center, grilling area, bocce ball court and outdoor fireplace. There will be a gate that leads to the Capital Crescent Trail, which runs behind the property.
Friedman boasted of just 50-percent “lock coverage,” which he said will mean the 7001 building will have more open and communal space than any other project in the area.
“Compared to what it costs to buy a single-family home or condominium in Bethesda, this is affordable,” Friedman said.