Market Reports

D.C. Region Sees More Development as Tenants Seek Efficient, Amenity-Rich Office Space

by John Nelson January 8, 2018

On the surface, the Washington, D.C., metropolitan office market has shown little change over the past five years. But dig a little deeper, and some interesting trends emerge. Metro D.C.’s office market totaled 377 million square feet as of the third quarter of 2017 and recorded a vacancy rate of just under 15 percent — inclusive of sublease space — and cumulative net absorption of 600,000 square feet year-to-date. The market has demonstrated little change in major market indicators over the last five years. Notably, three of the last five years (2012 to 2016) recorded negative absorption on a regionwide basis — averaging 82,000 square feet annually. Overall vacancy levels have thus far been held in check in part due to vacant buildings being removed from inventory for renovation and retrofitting or for conversion from office to other uses such as schools and residential. Nevertheless, core submarkets and micro-markets are benefitting from occupancy growth and rental rate increases, with tenants demonstrating a decided preference for amenity-rich areas. Tenant Preferences Regionally, the office segment is characterized by flight to quality and tenant-leaning leasing conditions. Tenants continue to favor efficient space design. They’re relying more heavily on building amenities such as conference …

January 8, 2018

District of Columbia Market Reports Multifamily Southeast Southeast Market Reports

Rent Growth, Leasing Activity to Remain Robust in D.C.’s Apartment Market

by John Nelson February 13, 2017

There are many things to be optimistic about in metropolitan Washington, D.C.’s multifamily market. Here are some facts to consider: — The D.C. metro multifamily vacancy averages 3.4 percent compared to the national average of 4.5 percent. — The D.C. region has seen $3.174 billion in multifamily sales activity year-to-date with an average cap rate of 5.2 percent. — Private investors are leading multifamily sales activity in the D.C. metro region and responsible for 64 percent of the deal flow. — Multifamily investment sales are up by 4.5 percent compared to the first half of 2015. — An influx of new workers to fill the 92,500 new jobs added in the last year has heightened demand for multifamily units despite an abundance of new supply. With a low unemployment rate of just 4.1 percent and job growth far exceeding the national average, and at its highest point since December 2000, the Nation’s Capital is humming with activity. Last year, D.C.’s multifamily market saw staggering amounts of new construction deliver with net absorption levels that surpassed all expectations. Many of the young workers are interested in an urban live-work-play environment ripe with amenities and relish the opportunity to decrease commute times …

February 13, 2017

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

In the Nation’s Capital, Retail Always Follows Where New Residential Rises

by John Nelson February 6, 2017

The building height restriction — enacted in Washington, D.C. to preserve picturesque views of the United States Capitol Building and the Washington Monument — helps provide clear and exceedingly stunning views of the multitude of construction cranes that currently dot the vertical landscape of the District of Columbia. The majority of these yellow-steeled economic generators are being used to develop new residential and mixed-use projects, ranging from the NoMa district to the southeast Waterfront area and weaving through the neighboring suburbs, including Loudoun, Va., and Bethesda, Md. And, where new residential goes, supporting retail always follows, including the trendiest grocery store chains and hottest fast-casual and dine-in restaurant concepts. In addition, the area’s ever-expanding transportation network that provides a daily lifeline to D.C. and suburban workers is also paving the way for new retail opportunities as our Nation’s Capital continues to retain its reputation as among the most prolific retail locations in the country. Downtown Core Residential-only or mixed-use projects currently underway in the District are too numerous to mention, but here is a glimpse into the frenetic activity as there appears to be a bottomless appetite for new housing, particularly among Millennials. MRP Realty is developing the 1,600-unit Rhode …

February 6, 2017

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

Demand is Outpacing Supply in Metropolitan D.C.’s Industrial Market

by John Nelson January 30, 2017

The Washington, D.C., metropolitan industrial market, spreading from Frederick County, Maryland to the north, Prince William County, Virginia to the south and as far west as Loudoun County, Virginia is ideally situated between I-95 and I-81 — major transportation corridors that allow shipments to easily reach much of the country. The industrial market has improved more quickly than other sectors and fairly dramatically to the point where much of the region can be described as land-constrained and under-supplied. Certain industrial sub-segments, such as data centers, have impacted the availability of warehouse and distribution space in key locations for optimal supply chain design. As of the third quarter of 2016, the area’s industrial market totaled 190 million square feet (inclusive of flex space), divided almost equally between the markets of Suburban Maryland (90.6 million square feet) and Northern Virginia (90.2 million square feet). The District of Columbia comprised 9.2 million square feet, and 1.5 million square feet was under construction region-wide. Approximately 4.2 million square feet has been absorbed year-to-date, and vacancy was 7.9 percent — a 250-basis point decrease from 10.4 percent reported as recently as year-end 2013. In comparison, the office market has ranged from 14 to 14.9 percent …

January 30, 2017

District of Columbia Market Reports Multifamily Southeast Southeast Market Reports

D.C. Multifamily Market Absorbing Massive Amount of New Supply

by John Nelson February 29, 2016

Over the last year, metropolitan Washington, D.C.’s multifamily market has seen staggering amounts of new construction deliver, with net absorption levels that have surpassed all expectations. This is likely a result of similarly unexpected rates of job growth in the area and the remarkable resiliency of the metro D.C. economy as a whole. Among the major metropolitan markets around the country, metro D.C. — with the sense of permanence lent by the presence of the federal government — has historically been the most stable year to year, making it one of the safest bets for investors. Yet, given the massive amount of supply in the pipeline in recent years, the multifamily market has suffered a degree of hesitancy from investors fearing supply would outpace demand. However, this trend has reversed in the last 12 months, during which a record-setting 13,800 Class A multifamily units were absorbed. That figure jumps to 16,484 with Class B product in the mix. For all investment-grade apartments, stabilized vacancy has dropped 50 basis points to 3.7 percent. Class B units in particular have experienced excellent rent growth, rising 3 percent annually, while Class A maintains a growth rate of between 1 and 2 percent. Although …

February 29, 2016

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

Leasing Demand Supports D.C. Industrial Market’s Measured New Construction

by John Nelson February 22, 2016

New industrial demand in the Washington, D.C., metropolitan region has come not only from its strong service economy, but also a rapidly growing consumer goods supply chain, e-commerce distribution seeking speed of delivery, data centers and even government contractors. Both occupiers and investors seek modern, state-of-the-art building design and features. The Washington metro industrial market (185 million square feet inclusive of flex space) was well into the single digits with a sub-9 percent vacancy rate as of the third quarter of 2015. New construction has returned with 2.7 million square feet poised for delivery. The overall market is fairly balanced between suburban Maryland and Northern Virginia comprising 88.3 million square feet and 87.3 million square feet, respectively. The remaining 9.3 million square feet is located in the District of Columbia. Vacancy has been on a downward trajectory for the region as a whole. The current 8.8 percent rate represents a drop of 100 basis points compared with the third quarter of 2014. The largest industrial market is found in Prince George’s County, Md., and totals 52 million square feet of industrial and flex space. Prince George’s County also anchors the south end of the Baltimore-Washington I-95 Corridor. If the adjacent …

February 22, 2016

District of Columbia Market Reports Southeast Southeast Market Reports

New Restaurants, Hip Neighborhoods Suggest D.C. Has Found its Retail Identity

by John Nelson December 5, 2014

There was a time when retail in the District of Columbia was tired and unimaginative, but today things are changing. Today, D.C. competes with some of this country’s greatest retail cities. No longer do “food by the pound” cafes dominate fast casual lunch options, or tired steak houses fill the nights. A young generation of award winning chefs — the likes of Mike Isabella, Cedric Maupillier and Aaron Silverman — are driving a new culinary scene, which in turn is helping to boost retail growth across our city. Silverman’s Rose’s Luxury across from the Marine Barracks on Capitol Hill was just named 2014 best new restaurant in the country by Bon Appetit. With a population of less than 700,000, D.C. is still a relatively small city, but it doesn’t act like it. It is the focus of the nation’s — and the world’s — political eye. It is also blessed with a stable economy and the recent influx of a younger generation who seek to put their stamp on it. We are no longer just a government town. International corporations like Hilton, Marriott, Choice, and Host Hotels have chosen this market for their headquarters. Discovery and Travel channels have staked …

December 5, 2014

District of Columbia Market Reports Southeast Market Reports

Federal Leasing Has to Navigate Recent Government Gridlock

by admin December 2, 2013

The government shutdown impacted local economies and real estate dynamics in many U.S. markets, but none moreso than the Washington, D.C., region. With anywhere from a quarter to over a third of metro D.C.’s privately owned office leasing tied to the federal government, the inability of the federal government to engage in long-term real estate planning has serious implications for the office sector. Non-federal tenants in the region are impacted as well in that a significant portion of the region’s occupiers are reliant, at least in part, on government contracts and spending. In fiscal 2012 alone, more than $72.6 billion of federal contracting dollars were procured in Washington, D.C., and its suburbs. Possible repercussions in the contracting arena from the shutdown and continued budgetary uncertainty from the federal sector could include contract cancellations, delays in payments and scope reductions. With ongoing questions about government funding and spending, these companies, like the government itself, cannot plan for the future and make decisions in areas that affect their businesses such as staffing, office and facility needs and support infrastructure. The inevitable uncertainty due to the current stop-gap fiscal environment creates questions about where funding for fit out, technology and equipment will come …

December 2, 2013

District of Columbia Market Reports Southeast Market Reports

Subcontracting Capacity, Code Changes Affect Apartment Market

by admin November 25, 2013

The tide is changing for subcontracting in the Washington, D.C., multifamily market. In the past year, while much of the country has been in recovery, Washington construction managers experienced a white-hot market in wood-frame, market-rate apartments. Along with multiple building opportunities, there was an abundance of qualified subcontractors offering extremely competitive pricing. Currently, new properties continue to be developed, but reductions in the subcontracting pool and changes in building codes are creating a climate of increased pressure for construction managers. Subcontractor Capacity Recently, our industry has seen unprecedented subcontractor failures, workforce leaving the area and some company owners leaving the business altogether because they are not willing to risk their livelihoods anymore. Profits and cash flow were just too tight. At the same time, more than 20,000 units will be added to the D.C. market during the next two years. Affordable and tax credit markets have come back strong as well, and rent increases in the new ground-up apartments have created a booming submarket in Class B renovations. For example, Snell Construction Corp. of Arlington, Va., is repositioning two major properties: Southern Towers, a 2,500-unit, 1960s era high-rise community in Alexandria, and Monticello Gardens, with 794 apartments in Falls Church, …

November 25, 2013

District of Columbia Market Reports Southeast Market Reports

Federal Leasing Has to Navigate Recent Government Gridlock

by admin November 11, 2013

November 11, 2013

Newer Posts

Older Posts