As the D.C. market attracts a growing flow of institutional capital, it is becoming more difficult for family real estate companies to compete for deals.

The Wills family has operated in D.C. since the mid-1950s, helping launch real estate companies NVR, Van Metre and Wills Cos., but its latest generation is shifting its focus away from the District.

Wills Cos., which once owned over 400 apartments across the District, now has just a dozen units left after selling three multifamily buildings over the last six months. The company, led by principals Tim Wills and Trey Wills, is instead shifting its focus to D.C.'s suburbs and other areas, such as North Carolina and New England, where it sees more opportunity.

"There's so much more room for development and more spreads for development outside of D.C.," Tim Wills said. "D.C. is hypercompetitive and capital wants to be here, so it just suppresses the market."

The company last week sold two buildings totaling 49 apartments in D.C.'s Fort Totten neighborhood. Wesley Housing bought the properties at 5000 and 5040 New Hampshire Ave. NW for $5.5M.

In October, Wills sold a 39-unit building at 5616 13th St. NW for $4.7M. Marcus & Millichap First Vice President Cameron Webb and Senior Associate Jesse Mates brokered the two sales.

Tim Wills said the D.C. real estate market has changed dramatically in his 30 years in the business, and even more in the decades since his father and grandfather founded their businesses. His father in 1980 co-founded NV Homes, now NVR, a Reston-based public company with properties in 14 states. His grandfather in 1955 co-founded Van Metre, now a large regional real estate company.

"It used to be five or 10 families in the District dealing in real estate," Wills said. "Throughout the late '90s into the 2000s, the institutionalization of D.C. as a major market became rampant."

Institutional investors have a lower threshold for returns on developments than family real estate companies, Wills said, making it difficult to compete with them for deals. This has led Wills Cos. to seek opportunities in other areas where it can capture larger returns. It is currently working on three projects in North Carolina, two in Texas, one in Maine, one in New Hampshire and one in Delaware.

"We've broadened our horizons," Wills said. "With technology, we're going to places like North Carolina and being able to develop. That wasn't available 20 years ago."

Marcus & Millichap's Webb said Wills' latest sales also represent a shift he is seeing from multifamily investors looking more at the suburbs than downtown areas.

"There's a theory out there that suburban markets are going to be stronger given the fact that people are going to move out of the city to raise families," Webb said.