Leasing continues to expand at The Elm apartment tower at 4710 Elm Street in Bethesda. Tours are now available for units up to the 16th floor. Current rent pricing is as follows: Studios starting at $1,880, 1-bedrooms starting at $2,338, 2-bedrooms starting at $3,303, and townhomes starting at $5380. The property will continue to be surrounded by construction even after the 7272 Wisconsin project is completed, as work continues on the Purple Line station and new south entrance to the Bethesda Metro station at the site.
Those rents seem steep to me. I was wondering why a couple recently rented a 2-bedroom condo unit down the hall from me when they could have rented a brand new apartment at the Elm. Now I know the answer -- the condo unit down the hall is much cheaper. I've asked several times where all the people willing and able to rent all the apartments becoming available in Bethesda are going to come from, but with rents at these levels, I find the question even more puzzling. By all indications, the glut of apartments in Bethesda will only continue to grow.
ReplyDelete1:52: That's why so many of these new apartments are filled with airbnb hotel guests, students, contract housing, etc. instead of renters paying full freight. This particular building had a substantial number of units officially converted into hotel rooms at the last minute with County approval - so they were actually open about it in this case. Other new buildings are just doing it on the down low.
ReplyDelete@Dyer: The Elm also cut units. The county did not have to approve the hotel conversion, and it could have extracted other concessions when it did so. This is why we have an affordable housing shortage.
ReplyDelete5:54, it's not a hotel. A certain number of units are approved as short term rentals. The units fill a need, command premium rents, and add zero burden to local schools. It's a really dumb thing to complain about.
DeleteRobert: Anonymous at 1:52 yesterday again. Thanks for the explanation, but I still don't understand how this business model is commercially viable and sustainable, and why developers continue to build, or get permission to build, high rise apartment towers. What exactly is 'contract housing' - where do the tenants come from and who is paying the bill? Don't these kinds of less desirable fly by night tenants further discourage full-freight renters from renting apartments, and encourage them to rent in buildings that restrict renting to one-year leases, resulting in a vicious circle? That's the rule in my condo building, precisely for this reason. It just seems like an untenable situation to me.
ReplyDelete"This particular building had a substantial number of units officially converted into hotel rooms at the last minute with County approval"
ReplyDeleteYour article doesn't say anything about this, only "Studios starting at $1,880, 1-bedrooms starting at $2,338, 2-bedrooms starting at $3,303, and townhomes starting at $5380." How many of the units in The Elm are actually "hotel rooms"?
"So many of these new apartments are filled with airbnb hotel guests, students, contract housing, etc. instead of renters paying full freight."
You've made this claim before - do you have any statistics that you can cite here? And I'm interested specifically in "students" - are there any local universities that lease blocks rental units in Bethesda? Or is it simply individual college students leasing individual units, in which case they of course would "pay full freight". Or rather, their parents would.
Not agreeing with your claim about AirBNB, but I thought you liked them? Haven't you claimed previously that Mean Old MoCo is oppressing them?
5:29: The hotel units weren't mentioned because they are not relevant to the apartments available for lease; it's not clear how many hotel units are even completed yet.
ReplyDeleteSpecific information about who is leasing units (universities, corporations, individuals, etc.) is not publicly available under federal law. For that reason, of course there are no statistics, and these facts stay under the radar in discussions of planning in Montgomery County as a result.
However, I've met many people who live in the new/newer buildings. Some indeed paid full rent and had the means to do so. But others were corporate employees using the units as the equivalent of an extended-stay hotel. Some were graduate students.
The airbnb use finally came to light because some "guests" did us the favor of posting reviews of their stays online. #Oops. I never said it was bad or good, but that it's yet another indication that there is weak market demand for $2200+ 1 bedrooms in Bethesda.
8:12: We'd have to know exactly the amounts that companies, universities and hotel guests are paying to fully decipher the profit picture. The market is answering the profitability question for us, however. Even after the first several buildings post-recession had to turn to these alternative methods to fill up, a barrage of even more new rental housing developments is being planned and constructed nonetheless.
Anonymous at 1:52 again: I'm not persuaded that the barrage of more new rental housing developments being planned and constructed is an unambiguous sign of future profitability. Real estate tends to be a 'boom and bust' business, and I'd be willing to bet that this boom will end in a big bang bust as well. When nearly all the existing apartment buildings in the neighborhood, both the old ones that have been here for decades and the newer ones built in the past 5+ hears, have signs posted advertising multiple apartments available for lease, the market is signaling that there is a significant glut of rentals. I am no expert on real estate tax law, but I do know the federal tax system is favorable to real estate developers, and allows them to deduct all expenses and offset otherwise taxable income with losses (real and paper) from real estate investments for which rental income is not sufficient to cover expenses. The tax shelter component must be one of the things driving this boom.
ReplyDeleteRobert Dyer @ 6:48 AM -
ReplyDeleteOK, I read your comment twice. To me, it boils down to,
"I met some people on the street. They were students and contract employees. I inferred from this that these anecdotal people did not have the ability to pay market rents for their apartments. I also inferred that even if a third party - e.g. parents or employers - were providing assistance with the rent, that somehow means that their units are not being leased at market rents. From these anecdotes as well as the AirBnB users, I greatly generalized from this and made the assumption that most residents of the new apartments are not paying market rents. And from this I somehow concluded that the County and all its residents are losing money on these developments."
Also, "it's not my fault that I don't have the data to back up this claim, it's the County's fault."
9:06: I didn't "meet some people on the street." They are verified residents of the new buildings. The County and its residents are losing money on these developments, as our ongoing structural budget deficit proves, but the developers aren't.
ReplyDeleteI also clearly said the data on tenants is kept private by the federal government, not the County.
"The County and its residents are losing money on these developments, as our ongoing structural budget deficit proves"
ReplyDeleteNope. You've proven nothing.
10:27: I've proven everything. If residential development, and the resulting population growth, generated a positive cash flow for Montgomery County government, we would be flush with surplus funds. We're not.
ReplyDeleteIn fact, despite massive overdevelopment this century, the County budget is in the red every year, and will be as far the projections go out in the future.
Those are hard numbers, whereas you have no numbers.
"I didn't 'meet some people on the street.' They are verified residents of the new buildings."
ReplyDeleteI'm not saying that none of them were residents of the new buildings, regardless of where or how you met them. I'm simply pointing out that you made unwarranted assumptions about them individually, and have made generalizations based on what appears to be an extremely small sample size.
That's not how budgets work, Robert. If you run a surplus or a deficit that doesn't mean the budget grew or declined; it means your revenue projection was off one way or another. And blaming a deficit or a surplus on these new builds, specifically, also doesn't add up. 1. you've provided no evidence showing a correlation and 2. every jurisdiction yearns for billion dollar trophy projects like this. Do you think all jurisdictions are in the business of hurting their own budgets?
ReplyDelete12:00: No, only incompetent ones like Montgomery County.
ReplyDeleteI know how the budget works (unlike our Councilmembers over the last 20 years). In fact, these councilmembers gave us a rosy projection of revenue they said would be generated by all the new development they were approving. Instead, revenue is DECLINING, while the expenses generated by these "new builds" have gone through the roof. Budgets are really quite simple: To balance them, revenue must meet or exceed expenditures.
If the "new builds" were the cash cow we were promised, we would be flush with cash right now.
We're not.
Game. Set. Match.
Have you been to Loudoun, Fairfax and Arlington? Each one of them has several trophy projects like this - and massive job growth that blew MoCo out of the water over the last decade. Literally no one in the region is envious of Montgomery County in 2021.
The Council was totally humiliated in the Amazon HQ2 race. They blew it spectacularly and true to incompetent form. Amazon HQ2 is a real "billion dollar trophy project" with revenues going through the roof for Arlington County as a result.
I'm not sure where the notion came from that all these buildings are empty, but that is certainly not the case. Banks and other investors aren't going to loan developers tens of millions for developers to build empty buildings that become distressed assets. Of course COVID has driven vacancy up, but Bethesda had one of the tightest markets in the entire region before.
ReplyDeleteMany apartments keep leasing banners up because they're literally always leasing due to churn. Remember a stabilized property is never 100% occupied.
The problem with the Elm, Edge II, 8001 Woodmont and Maizon is that theyre bringing a ton of units to market at basically the exact same time, hence the unit reduction at 8001 and short-term rentals at the Elm.
Long-term the demand is there and these will be profitable properties.
In fact, with all the new office space and employees coming to downtown I would argue that the market is under-supplied.
There is also a lot of talk about wealthier households leaving DC in the post-pandemic world and settling in "urban-lite" places in the suburbs like Bethesda Rockville and Reston. NIH is also set for a HUGE expansion that youll hear more about in the next year.
The county really struck out missing amazon hq2. The number of people they're hiring is amazing. These are jobs - good jobs. Selecting the White Flint Mall site never gave us a chance to compete. Amazon could have propelled downtown silver spring or Bethesda.
ReplyDelete