Traditionally, this would be welcome news for the District. Downtown, for instance, has been space-constrained for several years as most firms wish to locate there. A few years ago, a number of buildings on K Street began vertical expansions to meet the then-frustrated demand for new space. Also, some of these buildings coming online--700 Sixth St. to name just one--will be hitting new green development benchmarks for the city. Akridge's 300,000-square foot building just cited, for example, will be among the first buildings designed to LEED Platinum standards. It will also have one of the largest green roofs in the District.
The timing, though, could not be worse for this new wave of delivery. Of this space, only 27% has been pre-leased--a far cry from the minimum 50% usually seen in the market. "This is a substantial pipeline that is coinciding with a pervasive fall-off in demand," JLL's research manager Scott Homa tells GlobeSt.com. "By the end of Q2 it will become very evident that our vacancies are heading into the double digits." Right now, the vacancy rate for the District is 8.3%--higher than it historically is and close enough to the 10% ceiling to make many developers nervous. "Every developer's optimism is being tested right now," Homa continues. "There is an enhanced sense of urgency in getting deals done," from increased concessions to falling face rents.
Buildings delivering this quarter--including renovations and expansions--include 300 New Jersey Ave., NW; 1801 K St., NW (11th and 12th floors); 1775 Pennsylvania Ave., NW; 1999 K St., NW; 1200 19th St., NW; 1155 F St., NW; 700 6th St., NW; 55 M St., SE; and 1100 1st St., NE.
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