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WASHINGTON, DC METRO-The conditions for holding onto vacant, but leased space appear to be just right in the Washington, DC metropolitan office market. With vacancy rates hovering in the 9.2% range during the first quarter (up from 8.4% in the previous quarter), space is available, but there is not an exceptionally large opportunity to be picky about it. However, the increase in shadow space, space that is leased, but unoccupied and not on the market, is giving office hunters with specific demands greater choices. Real estate services firm USI Mid-Atlantic has given GlobeSt.com its take on how shadow space is proving to be a win-win situation for both building tenants under lease and potential occupants.

“With shadow space, tenants and aspiring tenants create opportunity, as opposed to taking the path of least resistance–marketing,” USI senior VP Dan Gonzalez tells GlobeSt.com. For the broker, tapping into shadow space involves doing a lot of research. One fertile area for research is government contract listings. “If Company X had a large contract but just lost it to another bidder, that company is going to have excess space,” Gonzalez explains. “This situation provides a way for a broker to go to company X and create an opportunity for new government contractor client Company Y to move into readymade space. For Company Y, crating an opportunity for office space is less expensive than going to a dormant facility.”

Shadow space is not only an effective option for those looking to downsize or increase their office space, it works for tenants in the market for higher quality digs. “When you have a market like this one you often see tenants trading up from class B space to class A space, but there is a limited supply of those class A buildings,” he says. “Here, shadow space allows a space-seeker to create an opportunity to satisfy its goals.”

There are no numbers on the current percentage of available shadow space since it is not technically on the market. However, the existence of this space leaves current vacancies on the market longer; it keeps them in a holding pattern. The option of turning to shadow space will not remain so simple. As the market tightens, shadow space will decrease.

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