The influx of millennials that made D.C. a hipster haven is coming to an end
For much of America, it was a long, slow crawl out of the Great Recession. Five years ago, auto and steel plants had shut their doors. Investments had collapsed. Foreclosures and unemployment were spiking. Yet in D.C., it was boom times. From 2010 to 2011, the District gained more than 1,300 residents a month, most of them young and well educated. With a new mayor, a new president and an $800 bil-- national recovery act, the city and local developers had rolled out bike lanes, dog parks, apartment buildings and dozens of restaurants and sidewalk cafes.
College graduates poured into neighborhoods that had suffered from disinvestment: Shaw, Columbia Heights, NoMa and H Street NE. For a few years, this sleepy government town was brimming with reinvention.
Now it seems the District’s millennial boom is grinding to a halt.
Census data released last month indicates that the District’s incredible growth in young adults, ages 25 to 34, has stalled. After adding 10,430 people in that age bracket from 2010 to 2011, the District added a net of just 2,662 of them from 2013 to 2014 (the data run midyear to midyear).
Nearby counties, including Arlington, Montgomery and Fairfax, have become even less attractive. Each lost more millennials than they added from 2013 to 2014.
The drop-off seemed unthinkable two years ago, when the Dislion trict was the No. 1 destination in the country for millennials. At the time, Forbes magazine ranked the District, longed derided as buttoned-up and plodding, as the coolest city in America.
“During that period, among the large metropolitan areas, we had the fastest-growing millennial population in the country,” said Greg Leisch, senior managing director of market research at Newmark Grubb Knight Frank, a commercial real estate advisory
firm. “And the reason for it was, all of sudden, we were a hip place.”
“We were growing so fast in those years, we were envied by every other metropolitan area,” said Paul Des-Jardin, director of community planning and services for the Metropolitan Washington Council of Governments.
The influx in young professionals, who are often light users of public services, helped the District roar out of the recession while other areas were still picking up the pieces.
Real estate companies broke ground on 4,400 new units in the second half of 2010, morethan five times what they’d begun in the same span the year before.
As white-collar — and usually white — workers flooded in, the effects were economic, social and cultural. Many of the new buildings featured micro-units and rooftop pools. Restaurateurs pitched gourmet doughnuts, small plates, $14 cocktails and “artisanal” versions of seemingly everything, from ice to toast to dog food.
The arrival felt like an invasion to some. As owners of new restaurants near U Street co-opted names from African American history for their high-priced eateries, Stephen A. Crockett Jr. wrote on TheRoot.com that “there is a certain cultural vulturalism, an African American historical ‘swagger jacking,’ going on on U Street.”
Overall, the District is still gaining population and was up 1.5 percent in 2013-14, to 658,893 residents. (In 2010, the population was 601,723.) And there is some good news on the job front; while the District has been losing federal jobs, it added private-sector jobs in each of the last four years, for a total gain of 54,500. The region added 62,000 jobs in the 12 months that ended in April, well above average.
But some of the companies and industry leaders who enjoyed the boom are now expecting slower or flat economics in the coming year or two.
One of the most aggressive apartment builders in recent years, MRP Realty, surprised industry insiders and its own executives when it leased nearly its en- new 400-unit NoMa building, Elevation at Washington Gateway, in less than a year.
“To say we were surprised would be an understatement when we hit 95 percent [leased] in 11 months,” said Robert J. Murphy, MRP managing principal.
Thecompany is leasing twoother projects in the area, in Potomac Yard and Huntington, and Murphy said units are being snapped up quickly there as well.
But he said that with building now outpacing demographics in some neighborhoods, his company has begun underwriting future to expect no rent growth beyond what units are getting today. MRP has also begun investing in cities where millennials are no warriving more quickly, such as Philadelphia.
“After 2016, things will slow down a bit,” Murphy said.
The District added more than 200 restaurants in 2014 alone, a pace that is also likely to wane, said Kathy E. Hollinger, president and chief executive of the Restaurant Association of Metropolitan Washington.
She said some restaurant owners are now more focused on maktire ing sure their companies are sustainable.
“In the last two years, we’ve probably seen 300-some new restaurants in D.C. alone. Which is a lot,” Hollinger said. “You’re also looking at 14th Street and other places being fully developed. Still, I do not think we have reached our saturation point, and I think ’15 is going to be just shy of what opened in ’14. So I think maybe in ’16 things will flatten out a little bit.”
There are differing views on why the boom in young arrivals has waned. One is the cuts to federal jobs and spending. The District lost 11,800 public-sector jobs in the past four years, according to its chief financial officer. In just a three-year period from 2010 to 2012, Virginia experienced $9.8 billion in defense cuts, which means fewer jobs for people who might live and shop in the District.
When the District added jobs, they were often positions suited for fresh-out-of-college arrivals, in hotels, retail, restaurants or apartment buildings. “We were adding jobs in hospitality,” Des Jardin said. “We weren’t adding the management, consulting, the engineers, IT — what we pride ourselves on having.”
But the newest data shows that despite the slowdown in millenni-projects al arrivals, older workers — those between 35 and 44 — are finding more opportunities in the bread-and-butter industries that have made up the area’s economy historically. That age group has grown at least 3 percent in each of the past four years in the District, a much more steady trajectory than for millennial growth.
“The kind of jobs that we are growing are not necessarily filled by millennials — they are professional, business services,” Leisch said.
Slightly older workers are also now renting the new apartments. At MRP’s Elevation building, there are 135 renters ages 30 to 39, 120 who are 25 to 29, and 55 who are 21 to 24, according to a survey the company issued.
Looking at the census numbers, D.C. Planning Director Eric Shaw said he was “excited by the fact that people are remaining here.”
“We need to have a wide range of housing choices. So it’s not just the micro-units,” he said. “People are deciding to remain here for longer as they find a partner, add a dog, start a family. They are finding the neighborhood where they want to be.”
“The kind of jobs that we are growing are not necessarily filled by millennials — they are professional, business services.”
Greg Leisch, senior managing director of market research at Newmark Grubb Knight Frank, on how the economic scene in the District is changing,
Above from left, Kunnada Pankong, KanokonMongkhonkitthaworn, ThawipornWeerasetsiri and Yunyong Loylip at Oki Bowl DC, which opened last fall on the edge of the Dupont Circle area. Below, NPR’s headquarters in NoMa, an area that benefited from millennial influx.