I recently had four hours to myself in Washington DC. As a former resident I knew how to press this "freedom" into a pleasant jaunt. I started with burritos from Pedro & Vinnys in Arlington, Virginia. See photo. Back to them later.
Making a wrong turn I ended up at the Pentagon. Nice people. They set me on the right road. Love what they do for us every day.
I then made a mad dash into the District, waved at the monuments of Lincoln and Washington on my way to parking at Union Station (first two hours are free then it's $10 an hour; feast and famine).
A recent article in the WSJ commented about investors presently flocking to 24-hour cities like Washington DC. They pointed to the fact that foreign investors were more likely to invest in New York over Nashville. The premise was primary cities provide more liquidity than secondary cities.
This is true and Washington DC is a perfect example; the place is teaming with activity and job creation. Our Multifamily brethren here get nervous when occupancy rates dip below ninety-six percent. And this is what makes for greater liquidity: a high level of volume in every respect.
Big, 24-hour city markets have more people, more transactions, more opportunities to sell when things slow down as buyers leave the biggest markets last.
I walked from Union Station to the U.S. Postal Service Museum. Either you like this kind of stuff or not. I stayed for an hour. It suits me. I purchased some stamps with Lincoln and Washington depicted.
From Union Station you can see the reconstruction of the U.S. Capitol building in process. I've never seen so much scaffolding in one place! As I crossed the street I counted the Taxi's lined up for customers coming out of Union Station. I stopped counting at thirty-four. Constant movement, commerce in motion.
Back at Union Station I find the nearest chic tea and biscuit eatery and purchase, what else, tea and biscuits. A lady two tables over is espousing about her travel plans to Brussels next week to close the Siemens deal. Do I need to know the details? Does Siemens want me to know? No, so I move tables. It's 4:00 so there are still tables.
Every single ten seconds ten people were buzzing past my table to catch a commuter train, Metro or Amtrak. The flow never stopped. This is the pace of a 24-hour city that is buzzing with jobs, entertainment, construction, deals (good and not-so-good) with activity that counts towards serious GDP.
Please look again at the photo of Pedro and Vinny's. The parking lot where this building sits has a chain pharmacy. See those apartment buildings? On the main level is a full size grocery store.
The population density represented around Pedro and Vinny's is north of 13,000 people within one half mile of this restaurant.
Consider the population within walking distance to this restaurant. The Penrose neighborhood of Arlington VA has a population of over 5,000 people with median rents of $1,400. A high population density, walkable city equals high traffic counts for this restaurant.
For dinner I'm on my way to Bethesda from downtown DC (how hard can it be?). I meet my friend, he worries we will be late for our reservation. I say "hey, it's a Monday so no big deal". We jump in my car at 4:30... eleven miles and one hour later we arrive at Woodmont Grill. We get there and there a table for us, but just one. The place is packed at 5:30. Another example of the 24-hour city in motion. Mmmm: Prime Rib!
It's five a.m. the next morning and I roll out of bed for an 8:30 flight. I'm only 20 miles from the airport but it's likely a one hour commute if I leave soon. Total commute time was one hour, five minutes.
The three Washington DC airports service twenty million passengers a year- each. This level of traffic creates...jobs, densely populated housing and high rental values that outstrip most other American cities.
The demand is real and the necessity for new housing is ongoing. Yes, there is occasional concern about over building, however, market forces correct discrepancies with changes in future development and by price manipulation that we often refer to as concessions.
No one in the business I spoke with on this stay was talking about concessions. They didn't need them to rent product. Price versus location versus amenities. In this market people are very clear about where they will live. Of my three good friends that I had the pleasure of seeing, two of the three lived within five miles of their birthplace. Washington is much more parochial that most people think.
On the road at 5:30 a.m. I attempt to gently slide onto the freeway being passed by trucks, vans and cars going SEVENTY-FIVE MILES AND HOUR. Apparently, I'm a tourist after all. Time to head home where the morning rush hour is over in less than twenty minutes.
This post is intended to spark your thinking on the topic. Please add your comments and suggestions. I am always willing to update articles with thoughts, suggestions and new ideas from our loyal readers.
Mr. Wilhoit is the author of two books: How To Read A Rent Roll: A Guide to Understanding Rental Income and Multifamily Insight Vol 1 - How to Acquire Wealth Through Buying the Right Multifamily Assets in the Right Markets.
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