Sadhvi Subramanian
WASHINGTON, DC—This is a time of dynamic change in Mid-Atlantic commercial real estate. Developers are moving forward with ambitious mixed-use projects, e-commerce is impacting both industrial and retail properties, and missteps by co-working companies could weigh down the office sector. In other words, it is a time requiring a careful balance of boldness and prudence, a combination rendered even more important by the uncertainty clouding economic forecasts.
The Amazon Effect
Amazon's decision to locate its second headquarters in National Landing (formerly Crystal City) is emblematic of the changes transforming Mid-Atlantic CRE. The e-commerce giant is among the companies most responsible for the diverging fortunes of industrial and retail properties on a national scale.
With its announcement, however, it has become an intensely influential local presence, one that will add considerable momentum to an already strong multifamily market and counter headwinds in office. Not only is Amazon planning to bring 37,000 employees to its new headquarters, but its decision will have a ripple effect across the region, generating tens of thousands of new jobs over the next decade from Northern Virginia to the Baltimore suburbs. Virginia Tech's announcement that it will create a $1 billion innovation campus is the most significant expression yet of this follow-on effect, but more are sure to come.
Multifamily Focuses on Scale, Amenities, and Transportation
Without a doubt, Mid-Atlantic multifamily is doing extremely well. Low vacancies, substantial rent growth, and rising home prices have combined with many of the factors shaping Amazon's decision — solid employment growth, attractive demographics, and a flourishing economy — to push multifamily investment to record or near-record levels.
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