WASHINGTON, DC–There is 1.1 million square feet of trophy office construction in the District's pipeline that will deliver by the end of 2017. That does not bode well for DC's vacancy rate but should offer some upside for Northern Virginia, especially should defense-related federal agencies get the funding expected in this current budget round, according to Doug Ressler, director of Business Intelligence at Yardi-Matrix.
All of this — from a a dramatic slowdown in both leasing and building in the District to signs of economic improvement in Northern Virginia — will occur in the next 12 months, he tells GlobeSt.com.
To explain his thinking, some facts are in order.
The 1.1 million square feet delivering this year are dispersed in just 3 buildings and one of the projects — Rockrose & Spitzer's Class A plus 815,000-square-foot Alexander Court on 2001 K St., NW — is among the largest in the nation's pipeline. (The other two are Eastbanc's 700 Penn and The Hoffman Co.'s The Wharf – 800 Maine).
As they deliver the vacancy rate, currently around 15-16% will likely increase. That is already fairly high for the DC area and a significant source of concern when you consider the area's employment situation, he says.
“Most employment gains in the country are coming from the South and Southeast, such as Dallas and Atlanta,” he says. “We just are not seeing robust job growth that can support the DC office market right now.” In the last year, from July 2016 to July 2017, DC employment has risen by 1.9%, he says.
The upshot of this situation will be a dramatic slowdown in leasing and development in the District.
Northern Virginia, however, will see some growth due to federal spending.
Indeed this week the Senate has passed the annual National Defense Authorization Act at a whopping $692 billion. The House passed its version earlier this summer and now a committee will be formed to iron out the differences in the respective bills.
WASHINGTON, DC–There is 1.1 million square feet of trophy office construction in the District's pipeline that will deliver by the end of 2017. That does not bode well for DC's vacancy rate but should offer some upside for Northern
All of this — from a a dramatic slowdown in both leasing and building in the District to signs of economic improvement in Northern
To explain his thinking, some facts are in order.
The 1.1 million square feet delivering this year are dispersed in just 3 buildings and one of the projects — Rockrose & Spitzer's Class A plus 815,000-square-foot Alexander Court on 2001 K St., NW — is among the largest in the nation's pipeline. (The other two are Eastbanc's 700 Penn and The Hoffman Co.'s The Wharf – 800 Maine).
As they deliver the vacancy rate, currently around 15-16% will likely increase. That is already fairly high for the DC area and a significant source of concern when you consider the area's employment situation, he says.
“Most employment gains in the country are coming from the South and Southeast, such as Dallas and Atlanta,” he says. “We just are not seeing robust job growth that can support the DC office market right now.” In the last year, from July 2016 to July 2017, DC employment has risen by 1.9%, he says.
The upshot of this situation will be a dramatic slowdown in leasing and development in the District.
Northern
Indeed this week the Senate has passed the annual National Defense Authorization Act at a whopping $692 billion. The House passed its version earlier this summer and now a committee will be formed to iron out the differences in the respective bills.
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