WASHINGTON, DC–Tech companies in DC are maturing — in 2017 alone, growth from tech companies such as Facebook, FiscalNote and Rally Health, and new entrants such as Yelp, have generated more than 160,000 square feet of occupancy gains at trophy / class A buildings, according to JLL.
The good news? Companies such as these are more than willing to enter the $60 per square foot range as opposed to staying in $45 per square foot, brick-and-timber space in the class B/C product range, Carl Caputo, senior research analyst with JLL, tells GlobeSt.com.
The bad news? There is not much space in DC that is truly creative, at least beyond blocks of 20,000 square feet.
This particular story line, though, has a happy ending: With right branding or image, commodity A buildings — a category that is particularly challenged right now — are able to attract many of these tenants, even though would prefer creative space. “A lot of demand from tech companies was concentrated in class B product a few years ago but now that tech is becoming more mature, it is helping drive and backfill some of that former law firm space,” Caputo says.
There is increasing demand for large blocks of creative space, though. “We are seeing some developers rethink proposed projects and redesign to be a little more creative to cater to the growing tech industry as well as other industries that would like to occupy and work out of more open collaborative space.”
Most of the demographic growth within the District is situated in the northeast, southwest and southeast quadrants and 67% of all proposed creative product is within those quadrants, JLL notes. Thus it concludes that the city could see a shift back to creative ground-up developments over the next 36 to 48 months.
WASHINGTON, DC–Tech companies in DC are maturing — in 2017 alone, growth from tech companies such as Facebook, FiscalNote and Rally Health, and new entrants such as Yelp, have generated more than 160,000 square feet of occupancy gains at trophy / class A buildings, according to JLL.
The good news? Companies such as these are more than willing to enter the $60 per square foot range as opposed to staying in $45 per square foot, brick-and-timber space in the class B/C product range, Carl Caputo, senior research analyst with JLL, tells GlobeSt.com.
The bad news? There is not much space in DC that is truly creative, at least beyond blocks of 20,000 square feet.
This particular story line, though, has a happy ending: With right branding or image, commodity A buildings — a category that is particularly challenged right now — are able to attract many of these tenants, even though would prefer creative space. “A lot of demand from tech companies was concentrated in class B product a few years ago but now that tech is becoming more mature, it is helping drive and backfill some of that former law firm space,” Caputo says.
There is increasing demand for large blocks of creative space, though. “We are seeing some developers rethink proposed projects and redesign to be a little more creative to cater to the growing tech industry as well as other industries that would like to occupy and work out of more open collaborative space.”
Most of the demographic growth within the District is situated in the northeast, southwest and southeast quadrants and 67% of all proposed creative product is within those quadrants, JLL notes. Thus it concludes that the city could see a shift back to creative ground-up developments over the next 36 to 48 months.
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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.
