IRR-Washington D.C. Mid-Year Viewpoint 2015 Local Market Report - Office
Overall, the DC office market continues to struggle through a slow recovery, with suburban markets hampering the overall supply/demand metrics compared with slowly improving conditions for downtown submarkets. Government cutbacks and slow GSA leasing activity continue to hamper the recovery. Some close-in submarkets have begun to feel decreased tenant demand moving to emerging markets, such as Tysons Corner with the benefit of the newly opened Silver Line.
A huge backlog in GSA leasing bodes well for the overall market with leases for over 100 million SF (half of GSA’s total inventory nationwide) set to expire within the next five years. However, investors are finding it more difficult to predict the timing when the leasing market will significantly improve.
These GSA delays are also delaying private sector leasing decisions as well.Despite the slow leasing/absorption recovery, recent sales topping the $1,000/SF threshold have recently occurred for the first time, with the majority of downtown trophy assets being significantly influenced by foreign investors. Non-trophy assets, however, are lingering and many owners are considering becoming sellers as lease expirations and/or capital events loom.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.