WASHINGTON, DC-The federal government, all signs show, is scaling back on its space needs as the budget situation worsens. Another activity, however--procurement of defense, healthcare, finance, commerce and IT services--appears to be stable. For that, the DC-area real estate community can be thankful. Cassidy Turley estimates that federal procurement--that is, these private sector contracts--could generate demand for up to 4.7 million square feet of office space in the region by 2014.

So far this spending appears to be remaining relatively stable despite the current focus on cost cutting, Jeffrey Kottmeier, VP and director of research with Cassidy Turley, tells GlobeSt.com. History is also on the region’s side: spending almost invariably increases with each passing year. In 2009 almost $97 billion was spent, representing over 26% of the DC region’s real gross regional product. He adds, however, that none of this is carved in stone. “There is no guarantee that this trend will continue but now the signs suggest that it will.”

Clearly the government’s budget-oriented mindset is translating into scaled-back space requirements, Scott Homa, research manager for Jones Lang LaSalle, tells GlobeSt.com. “What we have been seeing lately is GSA requirements are getting delayed or canceled.“

Part of the problem is that the region has gotten used to the federal government’s growth of the last 24 months, “a large portion of which was unsustainable,” Homa adds. “And now that has stalled.” Homa predicts that the growth experienced in federal space requirements in 2010, will not be replicated this year.