In Q1 the Washington office market recorded a vacancy rate of 9.4%. This compared with 8.9% in Q4 2006 and 8.9% 12 months ago.
"It is not that significant of a rise," report author and research director Tonya Ginter tells GlobeSt.com. "As usual, government activity--leasing by government agencies and contractors--is keeping the Washington metro area strong."
The larger-than-usual impact of the government, though, can be most seen in the rents for class B buildings, the favored space for contractors and the government. "We are seeing rents increase for class B buildings, because that is where these agencies typically go," Ginter says.
In DC, in the CBD, class A and class B space, respectively, leased on average at $45.84 and $39.36 per sf. In the East End, those numbers are $47.08 and $39.41 per sf. The cheapest rates in the District were found Uptown at $40.25 and $29.22 per sf.
Few, though, expect to see vacancies creep much higher especially in the high prestige neighborhoods such as the East End. Law firms, in particular, are addicted to the K Street NW addresses. Ginter points to one of the largest transactions during Q1 as an example: Drinker, Biddle & Reath LLP inked a renewal and expansion totaling 93,171 sf in the Southern Railway Building, at 1500 K St. NW in the East End. It renewed roughly 60,000 sf and expanded by 33,000 sf, she says.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
