DC Office Continues to Absorb New Supply

WASHINGTON, DC-The DC market shows little sign of demand for office space outpacing supply, despite the active development in the Southwest, Southeast and East End submarkets here. Some 4.2 million sf of new product entered the DC market in 2006, according to a report by Jones Lang LaSalle. The company is projecting that the District’s annual net absorption rate for the year will prove to be three million sf–a level not seen since 2000.

“As a general rule 50% or more of new product in DC is absorbed when it is delivered,” says Trip Howell, regional managing director here for JLL. “We believe that pace will continue throughout 2007.” For instance, he notes, three buildings expected to deliver in 2007–1152 15th St., 975 F St. and 505 9th St.–are already substantially preleased.

Besides the strong demand, high construction costs are also having an impact on the availability of supply, he says. “Some tenants in commodity-type products can’t move as easily as they might have in the past because of the high costs to make improvements to the building.”