DC Commercial Markets Leads Nation

WASHINGTON, DC-The area’s commercial real estate market is performing better than most, Lawrence Yun, senior economist with the National Association of Realtors, tells GlobeSt.com. The NAR just published its latest outlook, reporting that, overall, fundamentals are improving with tightening vacancies. “The DC area’s vacancy rates are lower than the national average and rent growth is anticipated to be somewhat stronger than the national average,” he says, “in large part due to the fact that the DC region created more jobs in the past five years than any other metro market.”

In the office sector, the latest vacancy rate in Q1 was 8.9% here. NAR anticipates a decline to 8.4% by year end. For multifamily, the vacancy rate is 2.9%, which is very tight for the area. “One reason is that the strong run up in residential home prices here has been such that many people cannot afford to buy a home anymore,” Yun says. Vacancy rates in rentals are anticipated to decline by 2.7% by year end in the DC area, while rents are projected to rise by 4.7%.

Rising energy costs and rising interest rates, though, may temper these projections, Yun adds. These factors have the potential to limit growth throughout most major markets in the US, including the DC area. “We already anticipate that the economy will be subpar over the next couple of quarters but if energy prices continue to rise and interest rates get out of hand then our projections could be more pessimistic.”