Office space washington DC
Office space in Washington DC has witnessed several successive quarters of robust activity. The year 2007 has witnessed a lull with regards to district office market. In the year 2006, the office market had seen over 8, 00,000 square feet of net absorption in each quarter. In the first quarter of 2007, only 76,000 square feet of absorption was witnessed. The vacancy of office spaces in Washington DC, witnessed a steady rise of 0.1 % up from 7.1% of the previous year. A substantial rise in rate was witnessed with regards to signed leases, rental rates and proposals not only for existing blocks of space, but also for the newly purchased class A buildings along with Class B structures. This mainly happened due to extensive time residents, charging higher rates keeping the market momentum into consideration. Several pending leases are observed, which indicate a high leasing velocity in months to come.
Miscellaneous:
It was observed that the East End had posted the most net absorption. This was the result of midsized expansions and the release of largely preleased Carroll Square. This led to the absorption of 2, 05,000 square feet of absorption. This caused the vacancy in the East End submarket to decrease from 8 to 7.6 percent, a total of 0.4 %. A negative net absorption was witnessed in the Central Business District wherein, the law firm Dewey Ballantine relocated to the East End. This region, too, witnessed an increase in vacancy from 6.7 to 6.8 %. Negative net absorptions were also witnessed in Capitol Hill region, the west end Georgetown region along with the southwest and southeast region. The extent of negative net absorption varied from 20,000 to 50,000 square feet.
The West End witnessed a largest submarket vacancy, from where the law firm WilmerHale moved to their new headquarters, located in Pennsylvania Avenue in CBD. The most attention seeking story of the first quarter was the rising rental rates in most downtown buildings and surging by as much as 15% in specific locations. At the time of the end of the first quarter, the rental quotes for Class A wavered between $ 40 to upper levels of $ 50 per square foot. Class B structures quoted rates of somewhere between $ 30 and $ 40. An increase was witnessed in the building costs for tenants throughout 2006 and into the first quarter of 2007. Tenant improvements provided by landlords, witnessed a surge to $ 25 for second Class B structures to $ 75 for newly built space.
Brief Outlook:
If the demand for rental office homes wanes significantly for the rest of the year, then surge witnessed in the first quarter is likely to level out and would bring stability in rental quotes. With rising rental rates in East and CBD, tenants unable to renew at significantly higher rates may move to south east or southwest markets. It was also found that the net job growth would decrease from 6500 to 5300, which finalizes a decrease of 1200 jobs. If these downward projections are in let go condition, then downward projections would hint at further decrease in net office market absorptions and would settle at a lower end.
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