Investors Steering Clear Of Maryland Suburbs Due To Regulatory Concerns

Montgomery and Prince George’s counties together house more than 2 million residents — far greater than the population of neighboring Washington, D.C. — but these suburbs are falling behind the rest of the region in building new multifamily housing. 

Beyond the macroeconomic headwinds slowing construction and the local disruptions to the D.C. region this year, these counties are struggling to add new housing due to regulations that have scared away investors, several real estate executives said last week at Bisnow’s Multifamily Annual Conference East. 

“Maryland is actually the most constrained place we operate in America today,” AvalonBay Communities Chief Investment Officer Matt Birenbaum said on stage at the Bethesda North Marriott Hotel & Conference Center.

After he uttered those words, a heavy silence fell over the ballroom. 

“Wow,” the panel's moderator, Bernstein Management Corp. Chief Operating Officer Rebecca Snyder, finally said. The room broke out in laughter. 

Several multifamily investors at the event said regulations in Montgomery County and Prince George’s County pose a near-impossible prospect for attracting capital and executing business plans for new development. 

Between October 2024 and August 2025, Montgomery County permitted 54 multifamily units — those in buildings with five or more dwellings — and Prince George’s permitted 233, according to census data compiled by Montgomery County Planning. 

Meanwhile, Fairfax County permitted 2,022 units during that time, while the District permitted 1,764 and Arlington permitted 1,508. 

Rental housing economist Jay Parsons presented data showing Montgomery County’s drop-off in multifamily housing construction in a LinkedIn post last week in which he blamed one factor: rent control. 

Both Maryland counties instituted rent stabilization laws that went into effect last year — capping rent increases at the rate of inflation plus 3%, up to a maximum increase of 6%. Prince George’s came after a yearlong trial run in 2023. 

Prince George’s County properties are exempt from the law if they were built after 2000, and Montgomery County properties are exempt if they are less than 23 years old.

“Montgomery County instituted — in their infinite wisdom — a rolling exemption,” Southern Management Cos. President Gabrielle Duvall said. “So anybody who was building a new product cannot have any guarantee of being exempted.”

These regulatory measures make it harder for them to attract capital to those areas and make it more difficult to build, developers said. 

“Prince George's and Montgomery have the propensity to have a lot of regulations, rent control, things of that nature, and irrespective of your ethical or personal opinions on them, those are impediments to new construction and new development,” Bozzuto Group President and CEO Toby Bozzuto said. 

He said the firm's equity partners, who are mostly operating out of New York and Chicago, are steering clear of the region.

In addition to rent control, broker Adam Stein pointed to differences in Maryland's rules for affordable developers using the Low Income Housing Tax Credit program that make it harder to build there than in other states. Stein, a managing partner at BridgeWater Real Estate Brokerage who represents developers looking for sites in the D.C. area, said many are shying away from the Maryland suburbs. 

“They make it very hard for affordable developers to build affordable housing compared to Virginia,” he told Bisnow this week. “Every single one of my developers who work in multiple states all prefer Virginia over Maryland because of these regulatory issues. It’s astonishing.”

Stonebridge principal Doug Firstenberg said Montgomery County has been pushing policies that “destroy the market” for apartment development. 

“My home county, we have done everything humanly possible to make sure we don't start any apartment projects for the rest of my lifetime,” he said.

The District also has rent control, and landlords have faced other issues like high rent delinquencies that have been straining their finances. Plus, the city has faced economic disruptions caused by federal cuts and the longest-ever government shutdown. 

But Firstenberg said the D.C. government has addressed its challenges with new policies, including office-to-residential conversion incentives. His firm received the tax abatement for its project with The Bernstein Cos. to demolish a 300K SF office property at 1990 K St. NW to make way for a 435-unit apartment building with ground-floor retail. 

And he lauded D.C.'s Rental Act, which rolls back the city’s Tenant Opportunity To Purchase Act and clears hurdles to evicting nonpaying tenants. The D.C. Council passed the legislation in September. Mayor Muriel Bowser signed it last month, and it is projected to become law in January. 

“On the public policy front, the District is miles ahead of my home county and what Prince George's has done,” Firstenberg said. “They have instituted several policies, incentives that worked in helping us capitalize a project they're trying to attack the rent collection issue. So I think the District is trying to distinguish itself.”

But the consensus among developers is that investors are still generally wary of the region as a whole. 

“As a capital provider now, and for all capital providers, you're not limited to the sandbox of the DMV. We are in a very much changing dynamic here, and lots of cities across the country have a big sign that says 'open for business,'” EJF Capital Head of Real Estate Development Asheel Shah said.

“And our sign is not that high. It's pretty low right now.”

Jon Banister contributed reporting.