It’s Not a Landlord’s Market, Yet

WASHINGTON, DC-Figures that Studley is preparing to release for Q3 in 
the DC market may puncture some landlords’ dreams of
 gaining equilibrium in the market in the near future. In fact, Studley 
finds, despite some very large and high profile leases inked, the area 
is nowhere close to becoming a landlord’s market yet.

“What the numbers will show is that there is stabilization, David
 Lipson, executive vice president of Studley, tells GlobeSt.com.
 Most of the absorption is coming from the government--not the private
 sector, Lipson says. “Activity is picking up, yes, but not growth,” he
 adds.

In fact, for some deals, the net result is a reduction of space. “A lot of clients that are in the market now are using this
 as an opportunity to get more efficient with their space,” Lipson tells GlobeSt.com. It is understandable why some of the statistics or, perhaps better put,
anecdotal evidence characterizing the market right now might be
 misleading, he notes. Deals such as the SEC’s eye-popping
 900,000-square-foot lease have
 skewed the statistics, changing the vacancy rate for the entire city. “It was the biggest example in the US of pure net absorption.”

Indeed,
 areas where the government tends to locate--NoMa, the southeast and
 southwest parts of the city--are nearing full occupancy. However, there 
hasn’t been similar absorption in the CBD or East End, where the
 private sector tends to locate.

In the coming weeks, Studley is going to report that:

Available space in the
 District for Q3 was 11.9%, a decrease of 2.3 percentage points from
 14.2% in the second quarter, and a decrease of 3.6 percentage point from 15.5% one
 year ago.

For Washington DC, available class A space was 12.5% (2.9 percentage points
 below last quarter and a 5.5% decrease from one year ago).

Northern Virginia: 6.7%;

Northern Virginia class A: 17.9%;

Suburban Maryland: 14.3%;

Suburban Maryland class A: 17.3%;

DC Metro: 14.6%;

DC Metro class A: 15.9%.

It will also report that rents are:

$48.88 per square foot in Washington, DC;

$54.07 per square foot for Washington DC class A;

$28.60 per square foot in Northern Virginia;

$30.65 per square foot for Northern Virginia class A;

$25.70 per square foot in Suburban Maryland;

$27.60 per square foot for Suburban Maryland class A;

$33.77 per square foot in the DC Metro;

$36.57 per square foot for DC Metro class A.