"Metro Washington certainly ranks among the nation's stellar apartment market performers right now," says Greg Willett, M/PF's director of research products. "Considering the improvements in both occupancy and rents, the revenues earned for apartment investors show more upturn recently in greater Washington than just about anywhere else across the country."

The high occupancy and rent growth rates are the result of a "favorable relationship between supply and demand during the past year," according to M/PF officials. Figures show that net demand was registered for some 3,100 apartments during the first quarter of this year, bringing annual net leasing for the 12 months ending in March to 8,240 apartments. That compares to new property completions of 1,758 units during the first quarter and 7,079 during the previous 12 months.

According to the survey, developers are responding to the tight market, with more than 12,000 new units in the construction pipeline at the end of March. "Increased construction activity in urban neighborhoods is a trend seen nationwide, and no market illustrates that pattern better than metro Washington," says Willett. "Ongoing building activity in the region's urban core--the District, North and South Arlington County neighborhoods, and the Alexandria area--now reaches around 5,500 units." Just outside the metro area, in Loudon County, VA, some 2,000 apartments are under construction.