Under the DOGE Layoff Storm, What Changes Do Washington D.C. Apartment Owners Face?

In many U.S. apartment markets, places like Phoenix or Las Vegas often experience boom-and-bust cycles tied to supply and job growth, yet the Washington, D.C. metro area has consistently been a safe haven for apartment owners. The federal government and contracting industry provide stable employment, convincing multifamily executives that strong underlying demand exists in the city and its surrounding areas even when new supply is high.

However, times are changing. Since Inauguration Day, the new Trump administration and the Department of Government Efficiency (DOGE), led by Elon Musk, have punctured the sense of security that D.C. residents and landlords have long enjoyed. According to CNN, at least 101,022 federal workers have been fired nationwide. President Donald Trump has indicated that thousands more will face layoffs, with many targeting employees in the Washington area. These terminations have primarily targeted probationary employees with one to two years of service and fewer protections, and related lawsuits are now pending in court.

Although apartment industry leaders and REIT executives said on recent fourth-quarter earnings calls that they have not yet seen significant impacts from DOGE layoffs on their portfolios, they are concerned about the ripple effects of the cuts. Still, some take comfort in the fact that the Washington area's economy has diversified over the past few decades, and many remaining federal employees are returning to the office.

Impact remains uncertain

As of December 2024, the Washington, D.C. metro area had 300,000 federal government jobs, according to the Federal Reserve Bank of St. Louis and the U.S. Bureau of Labor Statistics. Many of these positions could be at risk.

"Based on available information, we believe there could be 100,000 federal government positions at risk in the region," said TJ Parker, senior vice president of research at Bell Partners, an apartment owner and operator based in Greensboro, North Carolina. "It's too early to quantify the full impact on multifamily, and we are closely monitoring labor changes and their effects."

At the start of the year, many companies still viewed the Washington metro area as a top market. The region was Equity Residential's best-performing market, with revenue growth of 4.2% in the fourth quarter of 2024, and the company held high expectations for 2025, projecting 97% occupancy, Chief Operating Officer Michael Manelis said on the company's fourth-quarter earnings call in February.

"The uncertainty is what impact the new administration and its focus on cost cutting and federal employees returning to the office will have on the local job market," Manelis said.

Other companies are also in a wait-and-see mode. Greystar, headquartered in Charleston, South Carolina—the largest multifamily owner, manager, and developer in the U.S.—said through a spokesperson to Multifamily Dive that it is too early to determine what impact, if any, the layoffs might have.

Concerns spread

Similar to its peers, CAPREIT, an apartment owner based in Bethesda, Maryland, has not yet seen significant effects from federal layoffs, but the company remains vigilant about potential consequences.

"Given the scale and scope of the layoffs initiated by Musk/Trump over the past few weeks, CAPREIT is concerned about the short-term impact on apartment occupancy in the Washington metro area," CEO Andrew Kadish told Multifamily Dive.

However, Bell's Parker noted that permanent layoffs could push up market-rate apartment rents due to an increase in short-term rentals. In the long run, this could prompt people to move to lower-cost areas, reducing housing demand around the capital.

"Combined with the current slowdown in private-sector hiring, laid-off government workers may find it difficult to secure new jobs in the region," Parker said. "Any population outflow would benefit other markets."

Manelis said EQR has not yet seen layoffs affect its lease renewals in Washington, D.C., but he acknowledged concerns. "I think everyone is still a bit nervous," he said.

Beyond simple layoffs, Kadish also sees other risks to his portfolio from federal spending cuts, including DOGE's push to sell or terminate leases on buildings occupied by federal agencies.

"Another DOGE measure that could affect CAPREIT's affordable housing portfolio is the termination of federal building leases, which would significantly impact the clerical and cleaning staff in those buildings," he said.

Intertwined crosscurrents

While the Trump administration cuts federal positions, it is also requiring employees to return to the office. EQR executives speculate that these on-site work policies could ultimately offset the impact of the layoffs.

"Those who are remote are not currently our tenants, [and they] may soon become new tenants, and our portfolio has almost no vacant space," CEO Mark Parrell said on EQR's fourth-quarter earnings call.

Keith Oden, vice chairman of the executive board at Camden, believes that the federal return-to-office policy could boost the Houston-based REIT's properties within Washington, D.C., which has been a weak spot in its capital region portfolio.

"It's quite possible that as people have to go back to actual offices—most of which are in Washington, D.C.—they may have more reason to move back to or near the District," Oden said on the REIT's fourth-quarter earnings call.

Overall, Oden sees "a lot of intertwined crosscurrents" in the capital. "I think no matter who asks them to do what, you probably can never go broke betting that federal employees won't actually change jobs," he said.

Market diversification provides a buffer

On Elme Communities' fourth-quarter earnings call in February, the Bethesda, Maryland-based REIT's President and CEO Paul McDermott was optimistic, noting that Washington, D.C. was the best-performing market in 2024 and continued that trend into 2025.

"Net inventory ratios remain low, and high housing costs create sustained demand for value-oriented rental options," McDermott said. "The region is poised to continue thriving, offering a highly skilled workforce, advanced technology infrastructure, an entrepreneurial spirit, and unparalleled global connectivity."

McDermott pointed to market diversification, noting that over the past 12 months, industries other than the federal government contributed nearly 97% of job growth.

"I think technology has really taken over now, and we still see tremendous growth, especially in Northern Virginia, where most of our residential portfolio in the DMV area is located," McDermott said.

Parrell also believes the capital's economic diversification provides some buffer against DOGE layoffs. "[The D.C. area] has other employers," he said. "And by the way, there are a lot of defense industry-related jobs that may not be subject to the same personnel constraints."

Uncertainty in the transaction market

Despite the layoffs, Kadish said CAPREIT—a family-owned Washington, D.C. company—believes the market will continue to attract institutional investors due to its career opportunities in healthcare, academia, and government, as well as the lack of affordable housing.

"These layoffs will not change CAPREIT's long-term view of the Washington, D.C. region," he said.

Camden, which had long sought to reduce its exposure to Washington, D.C. properties even before Trump won a second term, also sees strong investor demand for apartments in the region.

"Washington, D.C. is a good transaction market," Camden CEO Ric Campo said on a recent fourth-quarter earnings call. "Depending on the property, [cap rates] are in the mid-to-high 4% range, so there is still considerable demand."

However, recent uncertainty could be a hurdle. In February, Elme Communities announced it had "initiated a formal review of strategic alternatives," which could include a sale. In a research note shared with Multifamily Dive, JPMorgan Managing Director Anthony Paolone pointed out that federal cuts could be an obstacle.

"What has recently given us some pause is the Trump administration and its efforts to reform government/DOGE," Paolone wrote. "This could create uncertainty in demand and pricing power, causing some natural buyers to pause."

For now, apartment operators, owners, and potential buyers in Washington, D.C. may simply need to wait for clearer skies. "We just need to see how things develop over the next few months," EQR's Manelis said.

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