Yet it was that slowdown in the sales market--specifically, condominiums--that put significant pressure on the region last year as shadow rentals pushed supply up, while a weaker economy and moderating job growth impacted demand. The good news this year is that the supply pipeline, which peaked in the fourth quarter of 2007, is declining and landlords are increasingly able to bump up rents, despite vacancies. For the fourth quarter in a row, annualized absorption of class A units tops 5,000, and, importantly, the presence of the shadow market is being felt less as absorption and rent figures are showing strength or both class A and B product.

As of the third quarter, the stabilized vacancy rate for the DC metro area came in at 3%, up a mere 10 basis points from the prior year, and half the national rate of 6%. Overall rent growth remained modest--2.9% since September 2007, below the long-term annual average of 4.5%--but class A rents saw 1.1% growth over the past year, compared to an 80-basis-point decline in the third quarter of 2007.

Absorption figures showed improvement as well, with 7,583 class A and B units leased in the third quarter. For the first time ever, DC-area class A absorption--6,872 units--came in first in the US. And while the take-up rate at new projects declined to 15% a month, that's a considerable figure given the fact that the number of projects with units on the market has grown by more than half over the past year. Those absorption figures could be up due to an uptick in landlord concessions, which now account for 4.3% of face rent, from 3.6% of face rent in Q3 2007. Concessions have been rising since the beginning of 2007, point out Delta researchers.