Washington Area Telecom Real Estate Still Hard Hit

WASHINGTON, DC-A recent report by Grubb & Ellis about telecom real estate paints a bleak picture but points to a brighter future. The second quarter telecom real estate report, put out through the firm’s headquarters in Northbrook, IL, stated that telecom vacancy levels dropped nationwide to 38.9% in the second quarter from 44.6% in the first.

Moreover, an additional 5.4 million sf of telecom space is under construction, with only 18.5% of it pre-leased. And substantial amounts of sublease space were returned to market as many companies declared bankruptcy and others downsized and tried to sublease their space to conserve cash.

The Washington market, particularly Northern Virginia, has felt the pain of the telecom downturn acutely. Local Grubb & Ellis research manager Keith Lavey reported that in Loudoun County alone, one of the biggest suburban tech submarkets, there is a vacancy rate of 34.5%. There is 2.2 million sf of space in that county, but 740,195 sf is vacant.