DC Region Posts Strongest Quarterly Performance Since 2008
The first quarter of 2018 has outperformed the last 22 consecutive quarters, according to Newmark Knight Frank.
WASHINGTON, DC–With more than 1.3 million square feet of absorption across Maryland, DC and Virginia, the Washington DC region has just posted its strongest quarterly performance since 2008, according to Newmark Knight Frank’s Q1 Washington Area Office Market report.
Virginia posted the greatest growth quarter with 865,970 square feet of absorption, suburban Maryland had 320,432 square feet of absorption, followed by the District with 122,277 square feet.
Additionally, the region’s overall vacancy rate declined from one year ago to 15.8%. However, effective rents with tenant improvement allowances remain very generous. NKF’s near-term prediction: Expect continued modest acceleration in demand, but also increased vacancy because of the 8.5 million square feet of office space under construction across the region.
NKF also noted that there is a growing sense among investors that the peak sales volume of the cycle is over — yet core and trophy assets continue to set pricing records in the Washington market, and cap rates continue to surprise most observers, as they remain low in spite of recent interest rate hikes.
The District saw two transactions that topped $1,000/SF during the first quarter: 900 G St.,NW traded for $144 million or $1,278 per square foot and 1440 New York Ave., traded for $250 million or $1,168 per square foot.