Healthcare Boosts Boston, Philly, While Sequester Hits DC Area

WASHINGTON, DC—Almost all sectors of the commercial real estate market in Washington, DC were watching events unfold with equal parts dread and resignation in February. Would Congress really hack away $85 billion in indiscriminate budget cuts? The answer, as we all know now, is yes, and probably more trimming is to be expected.

While a muted impact on the overall economy is expected, the DC area will clearly suffer a setback—and that includes almost every real estate asset class. Companies, especially those reliant on government contracts, are holding back on hiring and scaling back their space needs. Federal employees—otherwise known as consumers—will be scaling back their purchases and spending to accommodate furloughs. Industrial will see some fallout as retail supply chains readjust to the lower spending, as will such niche categories as self-storage and possibly even data centers. Perhaps the only sector that will remain unscathed, relatively speaking, is multifamily.