District of Columbia

U.S. Economy Adds 145,000 Jobs in December, Falls Short of Consensus Forecast

by Alex Tostado January 10, 2020

WASHINGTON, D.C. — The U.S. economy added 145,000 jobs in December 2019, according to the Bureau of Labor Statistics (BLS), falling short of expectations. Economists surveyed by The Wall Street Journal had forecast an increase of 165,000 jobs. The unemployment rate remained unchanged at 3.5 percent. The BLS also revised both October and November job totals downward based on more complete data. The number of new jobs added in October was adjusted slightly downward to 152,000 from 156,000, while the figure for November decreased by 10,000 to 256,000. Following the revisions, job gains have averaged 184,000 over the past three months. Notable December job gains occurred in three sectors: retail trade, leisure and hospitality, and healthcare. More specifically, the retail trade sector added 41,000 jobs, the leisure and hospitality sector gained 40,000 jobs and the healthcare sector added 28,000 jobs. Employment in the leisure and hospitality industry grew by 388,000 in 2019, up from 359,000 in 2018. Meanwhile, the healthcare sector added 399,000 jobs in 2019, compared with an increase of 350,000 jobs in 2018. Conversely, mining employment declined by 8,000 in December. For all of 2019, employment in mining declined by 24,000, after rising by 63,000 in 2018. In December, average …

January 10, 2020

Investment Demand Leveling off for D.C. Office Sector as Leasing Stays Lackluster

by Alex Tostado January 6, 2020

The office market in metropolitan Washington, D.C., is currently differentiated between a vigorous investment sales market and anemic leasing fundamentals. According to data from CoStar Group and Cushman & Wakefield, office investment sales have averaged $8.4 billion annually from 2014 to 2018 versus $5.5 billion annually from 2008 to 2013. Investment sales in the District have been dominated by Class A and trophy assets with little leasing risk, while demand is buoyed by foreign capital sources. In Northern Virginia, sales have trended toward core-plus and value-add investments led by domestic buyers seeking additional yield. Investors are more comfortable with leasing risk in Northern Virginia due to its robust job growth, a trend likely to continue given the jurisdiction’s comparative advantages in cloud computing, cybersecurity and internet infrastructure. Amazon’s selection of Crystal City for HQ2 and Amazon Web Services’ large block leasing in the Dulles Toll Road corridor are emblematic of these larger regional trends. However, there are signs that investment demand may have peaked for the current cycle. This year’s sales volume is the weakest in several years despite an influx of closings in September to beat Washington, D.C.’s increase to the transfer and recordation taxes from 2.9 percent to …

January 6, 2020

District of Columbia Market Reports Multifamily Southeast Southeast Market Reports

D.C. a Hotspot for Multifamily Investors, Lenders as Absorption Ticks Up

by Alex Tostado December 30, 2019

Driven by increasing high-paying jobs, billions of dollars in public and private investment and healthy population growth, the Washington, D.C., metro area boasts a dynamic multifamily market with rebounding rent growth and stabilizing occupancy rates. Washington, D.C., gained 20,500 jobs in June and another 13,000 jobs in July, according to the District of Columbia Department of Employment Services. Additionally, D.C.’s population topped 700,000 for the first time since 1975. The Washington metropolitan area’s total population has climbed to more than 6 million, and more households mean more demand for apartments. These strong fundamentals have led to increased rent growth in the apartment sector. D.C.’s average net asking rate is $1,990 — up 1.7 percent, making it the sixth-fastest rent growth in the United States, according to Reis. The net asking rate increased for 10 consecutive quarters. Between now and year-end 2020, asking rents are expected to climb 2.5 percent and 3.6 percent by year-end 2021, Reis notes. The District’s apartment occupancy rate is currently 94 percent. In nearby suburban Maryland, rents rose 1.2 percent, and in Northern Virginia, 1.4 percent. Demand, supply in balance Although there was concern over an influx of new construction, multifamily product has been well-absorbed. The …

December 30, 2019

Acquisitions District of Columbia Office Southeast

Skanska Sells Office Building in D.C. to Polinger Development for $163M

by Alex Tostado December 24, 2019

WASHINGTON, D.C. — The U.S. affiliate of Swedish construction and development company Skanska AB has sold the 99M office building in Washington, D.C., to Chevy Chase, Md.-based Polinger Development Co. for $163 million. The transfer of the property is expected to close in the first quarter of 2020. Located at 99 M St. SE in D.C.’s Navy Yard neighborhood, the 11-story office building spans 234,000 square feet and is LEED Gold-certified. Built in 2018, 99M is 87 percent leased to tenants including PYXERA Global, an international trade and development nonprofit organization, and GiveCampus, a digital fundraising and volunteer management platform for educational institutions. In addition to ground floor retail, the building offers a rooftop terrace, fitness facility and a secured bike room.

December 24, 2019

Acquisitions District of Columbia Office Southeast

WashREIT Completes $129.5M Sale of 1776 G Street Office Building in D.C. to World Bank

by Alex Tostado December 23, 2019

WASHINGTON, D.C. — Washington Real Estate Investment Trust (WashREIT) has sold 1776 G St. for $129.5 million to World Bank Group, an international financial institution that makes loans to developing nations. According to LoopNet Inc., the office building was built in 1979, spans 266,000 square feet and is located one block from the White House. World Bank’s headquarters is located at 1818 H St. NW, which is kitty-corner to 1776 G St. World Bank has operated out of 1776 G St. for over 30 years and is currently the building’s sole office tenant.

December 23, 2019

District of Columbia Industrial Market Reports Southeast Southeast Market Reports

Historic Level of Demand Meets Low Availability in Metro D.C. Industrial Market

by Alex Tostado December 23, 2019

As online shopping and a stack of newly delivered boxes by the door have become common in many American households, the behind-the-scenes institutional supports that make these habits possible have transformed the country’s real estate markets. The booming demand for data centers and last-mile staging for e-commerce is driving steady interest in industrial spaces, which shows no sign of waning. Since 2009, the industrial market has experienced 767 percent growth across the United States, surpassing retail to become the third ranked commercial real estate product type by sales volume. This sustained demand is outpacing limited availability, compressing capitalization rates to historic lows. In the metro Washington, D.C., area, there are a number of unique factors that contribute to this trend. High urban property values in the District itself have led to the conversion of a significant percentage of available warehouse space to other uses over the last decade, pushing industrial development into neighboring areas of Northern Virginia and Prince George’s County, Maryland. Many of the sites most easily suited for industrial purposes have already been developed, leaving higher barriers to entry and very few new options. As commercial businesses and government agencies adopt increasingly sophisticated technologies — like cloud computing, …

December 23, 2019

Development District of Columbia Leasing Activity Retail Southeast

Whole Foods Signs 40,000 SF Retail Lease for The Parks at Walter Reed in D.C.

by Alex Tostado December 16, 2019

WASHINGTON, D.C. — Whole Foods Market has signed a 40,000-square-foot retail lease to anchor the Hartley apartment building within The Parks at Walter Reed in northwest Washington, D.C. The Parks is a 3.1 million-square-foot mixed-use development from the partnership of Hines, Urban Atlantic and Triden Development. The Hartley will be the third new construction at the site, alongside two currently underway projects: The Brooks condominiums and the Vale apartments, featuring 18,000 square feet of retail. The Hartley features 323 rental units, including 32 affordable units, and 58,000 square feet of retail space. The apartment building will be part of the project’s Town Center, which will include 100,000 square feet of dining, shopping, and entertainment fronting Georgia Avenue. Construction on The Hartley is expected to begin in early 2020 with completion of the project set for early 2022. Torti Gallas + Partners is the architect for The Hartley, with interior design by Hickok Cole Lifestyle and landscape design by Oehme van Sweden. Retail broker CBRE + Streetsense will lease The Parks. The campus already contains a firehouse and schools, as well as housing for seniors and veterans.

December 16, 2019

District of Columbia Southeast

U.S. Economy Added 266,000 Jobs in November, Beating Expectations by a Wide Margin

by Alex Tostado December 6, 2019

WASHINGTON, D.C. — The U.S. economy generated 266,000 jobs in November and the unemployment rate fell 10 basis points to 3.5 percent, matching a 50-year low, the Bureau of Labor Statistics (BLS) reported this morning. The latest figures breezed past expectations. Economists surveyed by The Wall Street Journal had forecast a gain of 187,000 new jobs in November and a 3.6 percent unemployment rate. What’s more, the change in total nonfarm payroll employment for September was revised upward by 13,000, and the change for October was revised upward by 28,000. With these revisions, employment gains in September and October combined were 41,000 more than previously reported. The healthy job creation numbers show the resiliency of the U.S. economy in the face of a global slowdown, according to economists. Among the employment highlights for November: Manufacturing employment rose by 54,000, following a decline of 43,000 in the prior month. Within manufacturing, employment in motor vehicles and parts was up by 41,000 in November, reflecting the return of workers who were on strike in October. The healthcare sector added 45,000 jobs, including gains in ambulatory health care services (+34,000) as well as hospitals (+10,000). Employers in healthcare have added 414,000 jobs over …

December 6, 2019

Development District of Columbia Office Southeast Top Stories

Foulger-Pratt, USAA Break Ground on 25-Story Spec Office Project in Tysons, Virginia

by Taylor Williams December 2, 2019

TYSONS, VA. — A partnership between locally based developer Foulger-Pratt and USAA Real Estate has broken ground on Tysons Central, a 25-story speculative office project located within the Tysons Corner submarket of Northern Virginia. Tysons Central will span 383,628 square feet. Approximately 91 percent of the space will be dedicated to office use, with the remainder for retail and restaurant use. The building will feature 9-foot ceilings and column-free floors that support floor plates ranging in size from 26,000 to 29,000 square feet. Amenities will include a penthouse and fitness center on the top floor, as well as elevated terraces on the upper portion of the building. Gensler designed the project, which will be located just steps away from the Greensboro Metro Station. “As competition for talent intensifies, companies have increasingly selected highly connected and amenitized locations that appeal to an educated urban workforce,” says Cameron Pratt, CEO of Foulger-Pratt. “With only a handful of large blocks available in Tysons, we believe the market will respond strongly to the project’s world-class design, modern efficiencies and unrivaled walkability to transit, local residential and destination retail.” Avison Young has been tapped to lease the building, completion of which is scheduled for 2021. …

December 2, 2019

Acquisitions District of Columbia Office Southeast

NKF Arranges $209.1M Sale of McPherson Building in Downtown D.C.

by Alex Tostado November 12, 2019

WASHINGTON, D.C. — Newmark Knight Frank (NKF) has arranged the $209.1 million sale of the McPherson Building, a 12-story, 255,968-square-foot office building in downtown Washington, D.C. The property is located at 901 15th St. NW, one block from The White House and The Treasury Building. McPherson Building was 97 percent leased at the time of sale to tenants including Booz Allen Hamilton, New York Life Insurance Co. and law firm Davis Polk & Wardwell LLP. Forrester Construction recently completed a $30 million renovation to the building’s lobby, fitness center, elevators, common areas and restrooms. James Cassidy and Jud Ryan of NKF represented the undisclosed seller in the transaction. Northwestern Mutual acquired the building.

November 12, 2019

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