WASHINGTON, DC—The District has been winning office tenants lately at the expense of the Maryland and Virginia suburbs, according to JLL. Over the past two years, some 300,000 square feet of leases have been signed in the District as a result of tenants from Maryland and Virginia migrating into the city. More to the point, a similar number of such deals are currently in the works right now.
There are more than 300,000 square feet of active requirements in the downtown Washington market right now that are potential relocations from Virginia, according to Doug Mueller, SVP at JLL.
While such numbers might have been rounding errors in the halcyon days of the early aughts, the current reality is that the overall region is still experiencing negative absorption.
These tenants represent more than just the traditional rivalry jurisdictions typically have with one another for business: they also highlight the District's rather successful – but still nascent – efforts to remake itself as a high-tech and creative industry enclave.
"The migration of suburban tenants into the District and robust expansion activity among start-ups and high-technology companies helped fill a gap in an otherwise tepid demand environment during the third quarter," says Scott Homa, SVP of Research at JLL. "Creative industries such as digital media, software engineering, advertising and consumer technology represent a relatively small portion of the Metro DC tenant base, but incremental growth – primarily concentrated downtown – helped offset contractions within the region's core industries of legal services and government contracting."
To be sure, these entrepreneurial start ups are not the only entities moving into the District's borders. Associations and professional services firms can also be counted among the migrating companies, Mueller says.
A total of 21,200 private-sector office jobs have been added to the Metro DC economy since the start of the year, JLL reports, pushing total private-sector office-using employment in the city at its highest point in history.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
