When the pandemic began, the real estate industry was gripped with anxiety about the emptying out of American cities. But in D.C., at least one part of the apartment market is making a comeback.

According to a new report from commercial real estate advisory firm Delta Associates, relatively low rents and high demand in D.C. have led to a recent frenzy in upscale apartment leasing.

Leasing of new, high-end apartments — or “Class A” units, in industry speak — has been shooting up in D.C. over the last several months, according to the firm. It’s added up to a record year for luxury apartment rentals, despite a major slowdown in leasing during the height of the pandemic in 2020. Leasing is also high among older, less fancy apartments, known as “Class B.” Apartment vacancies have dropped throughout the Washington region as a result.

Demand for upscale apartments “has been on a tear in recent months,” the report says. “These metrics point to a market that is in recovery mode after an unprecedented year.”

In D.C., leasing was especially enthusiastic in the Capitol Hill/Riverfront/Southwest area, where there’s been a recent surge in new, high-end apartment construction. In suburban Maryland, Germantown’s low-rise apartment market fared the best, and high-rise buildings in Rosslyn/Ballston saw the most new leases during the quarter.

But all this fresh demand also means that rents aren’t dropping as quickly as they did during the pandemic. Landlords slashed rents to lure new residents as interest in apartments in D.C. sunk during the health crisis. Today, those price cuts are slowly fading away.

“Concessions are now pulling back a bit across the metro area as demand has soared in recent months,” the report says.

But don’t expect prices to spiral out of control in the coming months, at least not in D.C., because the D.C. Council recently passed a law banning rent increases until the end of 2021. Officials in Montgomery County are also considering extending a law implemented during the pandemic that would cap rent hikes for one year after Maryland’s state of emergency ends.

In D.C., the average effective rent (defined as actual rent minus concessions) for a new luxury apartment was $2,375 in the most recent quarter. That’s down from 2016, when it was $2,604. Across the metro region, the average is now $2,076, a slight decrease over this time last year. Rents are predictably lower within the region’s older Class B apartments, where average effective rents dropped slightly over the year, to $1,676 from $1,708.

In a bit of bad news for local governments that have pledged to significantly bump up housing supply by 2030, apartment construction slowed down during the worst months of the pandemic, the report notes. Building is starting to pick back up, with nearly 15,000 units expected to enter the D.C.-area market by June 2022 — a 27% increase over the previous 12 months.

But there are still many areas across the region that are considered “supply-constrained,” meaning they have less new housing than people are expected to want, according to Delta Associates. The farther-out Northern Virginia suburbs and some close-in Maryland suburbs are particularly low on new housing.

“This suggests development opportunities exist in submarkets throughout the metro area post-pandemic,” the report says.

That could be catnip for developers looking to break into D.C.’s suburbs. Despite the current rental boom in the city, data from the U.S. Postal Service shows that thousands of city residents swapped their D.C. addresses for locations in Maryland and Virginia during the pandemic — and many of those relocations may be permanent.