WASHINGTON, DC–Total rent rose in Washington, DC rose by 5.6% to $66.67 in 2016 — largely because the highest-caliber properties accounted for the majority of the leasing activity, according to a new report by Savills Studley. Some of the increase in total rent came via higher operating expenses (+6.3%) and real estate taxes (+1.9%).
Net rent increased by 7.1% to $40.59, pushing just below its mark two years ago.
As noted by other analysts, record rents in the DC area have been accompanied by record concessions. Savills Studley estimates that concessions rose to $137.27 per square foot.
The bottom line is that tenant effective rent jumped by 7.3% to $48.74 per square foot and landlord effective rent spiked by 13.1% to $20.27 per square foot.
Some perspective is in order here: landlord effective rents for last year were still 22.3% below the $26.68 peak of 2011.
Indeed, the report ends with this warning:
Compared to most other U.S. office markets, demand in Washington, DC is extremely vulnerable and tentative. The arrival of a new Administration that has promised to disrupt the federal government may create even more impediments to leasing activity.
As if we didn't know.
WASHINGTON, DC–Total rent rose in Washington, DC rose by 5.6% to $66.67 in 2016 — largely because the highest-caliber properties accounted for the majority of the leasing activity, according to a new report by Savills Studley. Some of the increase in total rent came via higher operating expenses (+6.3%) and real estate taxes (+1.9%).
Net rent increased by 7.1% to $40.59, pushing just below its mark two years ago.
As noted by other analysts, record rents in the DC area have been accompanied by record concessions. Savills Studley estimates that concessions rose to $137.27 per square foot.
The bottom line is that tenant effective rent jumped by 7.3% to $48.74 per square foot and landlord effective rent spiked by 13.1% to $20.27 per square foot.
Some perspective is in order here: landlord effective rents for last year were still 22.3% below the $26.68 peak of 2011.
Indeed, the report ends with this warning:
Compared to most other U.S. office markets, demand in Washington, DC is extremely vulnerable and tentative. The arrival of a new Administration that has promised to disrupt the federal government may create even more impediments to leasing activity.
As if we didn't know.
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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.
