Office Supply Dampens Leasing

WASHINGTON, DC-Some six to seven million sf of new office supply will be entering the greater DC Metropolitan area in 2008, which will cause vacancy rates to rise modestly over the next few quarters, according to the latest Office Research Report released by Marcus & Millichap Real Estate Investment Services. In addition to the supply in the pipeline that is scheduled to deliver in 2008, some 8.5 million sf of office supply delivered in 2007 and 6.4 million sf in 2006.

All of this new supply in the aggregate, Yitzie Sommer, senior manager for research services, national office and industrial properties group tells GlobeSt.com, will have the inevitable impact: a decline in leasing activity. “The truth is, we haven’t seen a tremendous decline in leasing activity–in Q3, for instance, it was down by a little bit. But when you are adding in more properties to the market, the net absorption number will look worse.” It will take several quarters to work through the supply, he adds, despite the strong presence of the federal government in the market.