A report from commercial real estate firm Studley found that in the first quarter of 2011 strong demand from the government caused a fall in the availability of office space in certain areas of Washington.
In particular, the area dubbed North of Massachusetts Avenue (NOMA) has seen large uptake as well as the southwest area of the capital.
“We’re seeing that tenants with 150,000-plus square-foot requirements considering non-core submarkets have decidedly fewer options to choose from given the recent federal leasing activity, while tenants looking downtown have many more choices” Christian Volney, research manager for Studley’s DC office said.
However, according to the research from Studley demand from the private sector is not increasing anyway. There has been very little change in the availability rate of office space in some areas of the city.
The Central Business District of Washington currently still has a relatively high availability rate of 13.5 per cent. This means that overall Washington’s availability rate has not declined drastically.
And the next few years are not likely to see many private clients needing to lease large office spaces, Studley predicted.
“Of DC’s top 50 law firms, for example, there are only three with leases expiring prior to 2014 that are currently in the market for space,” said Volney.
Studley Executive Vice President Tom Fulcher added: “If government leasing activity slows, the District will need to rely on a broad-based recovery in the private sector to support the commercial real estate market.
“While substantial changes to spending and entitlement programs will be unlikely to affect the market until after the 2012 election, we will experience a bit of a lull in the number of large tenants with lease rollovers in the next several years which could impede rent growth and limit demand for new space.”
Editor’s notes: In Q1 of 2023, the vacancy rate in Washington DC was 16.7% which is considerably higher than the rate of 11.85% at year-end 2019.
In the same period (Q1 2023), the national US national average vacancy rate was 20.2%.
Washington DC’s vacancy rate was predicted to increase as there was 1.34 million square feet of space under construction or redevelopment.
As the market had observed occupiers taking higher quality space yet with a smaller footprint, there was a chance that the vacancy rate could increase significantly.
However, new start developments have reduced due to rising construction costs so it may be blunted somewhat, it was thought.