WASHINGTON, DC—Concession packages for trophy office properties in the District have been high in recent years, as the vacancy rate has been elevated. That, though, may be changing, according to a Transwestern report on DC's trophy office market.
In short, the vacancy rate for these properties declining. Right now the direct vacancy rate for the trophy office market is 8.4%. By the end of the year, Transwestern predicts that the direct vacancy rate for trophy properties will clock in at the high-7%.
"As the market tightens, concession packages will reduce, prompting rents to rise around 2.5% to 3% during 2015," the report says.
Here is a deeper dive into the numbers, per the Transwestern report:
- Concession packages in 2014 averaged $94.00 per square foot in TIs and 12.7 months of free rent for a 10-year or greater lease term. For leases signed in 2013, those numbers were $101.00 per square foot in TIs and 10.4 months of free rent.
- The asking rent for trophy space currently averages $67.68 per square foot, full service.
- The effective rent for trophy space averages $54.54 per square foot, full service.
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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.
