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Montgomery County Daily Asking Rents

• Rental growth has been


strong due to demand for
new product, but the
pandemic has interrupted
rent growth
• Rents tend to experience a
dip in the beginning of the
year due to seasonality
• Rents dropped from $1.92/
SF on 3/10 to $1.90/ SF on
4/19

Data: CoStar, April 19, 2020


Observations for Market Rent Per Unit & Rent Growth

• All unit mixes and classes will see an negative rent


growth starting in Q2 and will last until the end of the
year
• Negative rent growth losses range from -1% to about -
2%
• Studio rent growth losses are the most affected with
about -2% rent growth
• The upside is that rents will recover starting Q1202

Data: CoStar, April 19, 2020


Market Rent Growth Class A - Studio

Data: CoStar, April 19, 2020


Market Rent Growth Class A - 1 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class A - 2 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class A - 3 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class B - Studio

Data: CoStar, April 19, 2020


Market Rent Growth Class 2 - 1 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class B - 2 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class B - 3 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class C – Studio

Data: CoStar, April 19, 2020


Market Rent Growth – Class C – 1 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class C – 2 Bedroom

Data: CoStar, April 19, 2020


Market Rent Growth – Class C – 3 Bedroom

Data: CoStar, April 19, 2020


What Drives Rent Growth?

• Class A
• Vacancy rates were at 4% as of Q1 2020, and could expand by 170-basis points by 2024
• Absorption was already negative in Q1 at-16 and will not rebound until 2022
• Little to no deliveries are not expected for the next two years and will pick up in 2022
• As of now we have pushed back all under construction projects out an additional three months
• Class B
• Vacancy was already elevated at 6% at the close of Q1 2020
• Vacancy rates are projected to rise to almost 7% by 2024
• It will be hard for demand to recover and is expected to be negative up until 2024
• Similar to Class A, no deliveries are expected
• Class C
• Vacancy rates are the lowest out of all classes, but can expand by 220-basis points by Q4 2024
• Absorption has been negative since the beginning of the year and will stay that way until 2024

Data: CoStar, April 19, 2020


Class A – All Unit Mixes

Data: CoStar, April 19, 2020


Class B – All Unit Mixes

Data: CoStar, April 19, 2020


Class C – All Unit Mixes

Data: CoStar, April 19, 2020

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