WASHINGTON, DC—Maybe DC-area residents are dreading the upcoming presidential election. What local wouldn't? There's more traffic, more (much more) advertising and unsolicited phone calls and friends and neighbors that work for the federal government become stressed out and grouchy by the uncertainty and work crunch.
But the local CRE community is looking forward to the 2016 presidential elections for the most fundamental of reasons. History, courtesy JLL research, shows that demand for office space will pick up significantly, driving up rental rates.
The candidates themselves will need space but that is not the main driver. Rather, the rush to pass legislation at the end of presidential terms and the resulting increase in special interest and lobbying is what really pushes leasing demand.
It has been that way since 1984, the first year that the DC metro office market recorded more net absorption and leasing velocity in an election year than a non-election year, according to JLL.
It found that the average spike in office demand during an election year has averaged around 19.7%, or 5.7 million square feet of growth. The compares to 4.8 million square feet of growth in a non-election year.
There was one exception: The 2012 election when the market contracted, but that was largely the result of BRAC and sequestration.
See the chart on the next page.
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