DC Leads in Pipeline Development Survey

WASHINGTON, DC-The DC real estate community can get comfort from the area’s position in one alternative measure of industry-related activity. The Environmental Data Resources ScoreKeeper State of the Market Report finds that DC posted significant growth in the number of environmental site assessments in Q3–amid a general 17% decline across the United States in general.

Phase I environmental site assessments are a standard pre-closing activity for many commercial real estate transactions, EDR notes–thus its data can be considered a leading indicator of the general health of the real estate market. The caveat to this derivation is that Phase I environmental site assessments are also conducted for foreclosures. To examine DC, therefore, two factors come into play:

• The report finds that Phase I ESA activity in DC measured a 46% growth rate this past quarter–the highest of all US cities;
• The DC area has not seen that many foreclosures yet.

Together, this information favors the notion that the number of site assessments in Q3 are an indicator of opportunistic investing. “This activity is not so much due to foreclosures in DC as it is interest from foreign investors and private equity shops positioning themselves on a market like DC,” Dianne Crocker, senior economist and managing director of EDR’s Market Research Group, tells GlobeSt.com. “Other metros like San Francisco or Boston benefit from job growth and good coastal location that are viewed as strong long term investment prospects.”

The Northeast was the only region to register positive quarter on quarter performance at 11%. Regionally, the slump in Phase I ESA volume was steepest in the Western region, which experienced a 25% decline in activity. Q4 is not shaping up to be any better. In October–a month seen as a bellwether for activity for the rest of the year–preliminary ScoreKeeper results registered a 21% decline, which means the market could be in for a rough close to 2008, Crocker says.