WASHINGTON, DC–One advantage to working in the District is that the view can be phenomenal. There are numerous monuments, the Mall, the White House and the Capitol, a beautiful riverfront that has only recently been built up for office and mixed-used properties, plus lush parkland twisting throughout the city It would seem obvious that offices that provide such views would be able to command higher rents and in some cases that is open-and-shut true.

“View space always comes at a premium — it usually dictates an element of prestige or differentiation,” John Sikaitis, JLL's senior vice president and director of Office Research and Local Markets Research for the Americas, tells GlobeSt.com. “It points to an element of prestige or differentiation.”

He gives as an example a class B office on Capitol Hill with a view of the Capitol. According to Sikaitis that class B building will have a 16% rent premium to the broader city's B office market.

But there are all sorts of “views” in the District as noted above, some of which offer higher rent premiums than others, as a recent JLL study on view space in the DC area shows.

Then there is this: the study's findings hints at an issue that accompanies any study: are these views the cause of the rent premiums? Or is something else at play? In other words, does correlation equal causation?

The Study's Findings

This is what JLL found.

Rents for offices with monument views have seen rent growth more than 3 times higher than non-view space since 2014, with a year-over-year rent growth average of 4.8%. Non-view rents have grown by 1.5%. This trend will likely continue as policy debate with the new administration will drive demand from lobbying and government affairs seeking proximity to the US Capitol, JLL says.
Water view space has seen exponential growth since 2010, largely due to the Wharf attracting high-profile core tenants and seeing rents exceeding the $70 per square foot mark, and a resurgence in leasing at Washington Harbour in Georgetown.
Buildings overlooking parks have seen minimal rent growth in recent years largely due to an abundance of second-generation space hitting the market in areas such as McPherson Square and Franklin Square, placing a ceiling on rents. If the redevelopment of Franklin Square pushes forward, a shift upward in rents in the coming years is likely, JLL concludes.

Correlation And Causation

Tenants want these distinct views for very different reasons, Sikaitis says. Lobbyists covet views of The Capitol and White House because of the prestige factor. True, location also matters — being a quick dash from the Capitol as a bill is being marked up is very convenient — but does not matter as much as that sweeping view of the Capitol in this particular world (that is what taxis and Uber are for).

A water view, at least in the District, has become a unique offering — it has only been in the last decade that projects along the Potomac have come to life. But that water view also comes with place-making and a huge array of amenities. In the case of the Wharf, it can be hard to tease out what is truly driving rental rates — the water, the entertainment and restaurant options or the walkability of the complex?

A view of say, Rock Creek Park, according to JLL's study, does not appear to be highly-valued by office tenants. However, it is not the view that is the problem, Sikaitis says, but the 1970s era buildings that are typically located along the parks. As newer options become available, tenants are moving on.

Causation Or Not?

So the answer to whether correlation implies causation for view space and rent premiums is — it depends on the view.

A monument view is a case of correlation equals causation, Sikaitis says.

The stats on the water view premium only partially suggest causation. But, Sikaitis says, there is some element of it and it is increasing as a water view is also coming to be seen as a power play of sorts, similar to having a view of the Capitol.

And lastly, the park premium, or lack thereof, is not correlation equals causation — but it does have the potential to be if these buildings were to be upgraded, Sikaitis says.

Instant Insights /

Q: By How Much Does A View Increase Rent? A: Maybe It's Not The View Increasing Rent.

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