DC Office Market to Lead Nation in Performance
Although fundamentals in the Washington, D.C., office market will continue to slip in 2010, public and private space demand will moderate the decline, according to the 2010 National Office Report by real estate investment services firm Marcus & Millichap. Indeed, expanding federal government operations will result in a considerable amount of new office leases this year, while the pending expansions of Northrop Grumman and Microsoft will support private sector leasing activity.
"Supported by ongoing price declines, office deal flow is expected to tick higher in Maryland and northern Virginia this year," says David Feldman, regional manager of Marcus & Millichap's Washington, D.C. office.
Following are some of the most significant aspects of the Washington, D.C. Office Research Report:
- After 15,250 jobs were eliminated in 2009, local payrolls will expand by 35,000 positions, or 1.2 percent, this year. Office using employers will add 10,600 hires, marking growth of 1.1 percent.
- Builders will deliver 3.3 million square feet of office space in 2010, compared with 5.5 million square feet last year.
- Continued development activity and still-soft space demand will underpin a 40 basis point rise in vacancy this year to 13.7 percent. Vacancy surged 170 basis points in 2009.
- Asking rents will push 0.3 percent higher to $36.54 per square foot in 2010, though effective rents will decline 0.5 percent to $30.44 per square foot.
Also included in the report is the firm's annual National Office Index (NOPI), a snapshot analysis that ranks 44 markets based on a series of 12-month forward-looking supply and demand indicators.
Washington, D.C., held onto the No.1 slot in this year's National Office Index (NOPI) and Philadelphia maintained its position at No. 2 based on modest supply growth and a moderating decline in revenue. Los Angeles, No. 3, rose two places on minimal completions and the country's second-lowest vacancy rate. Robust employment growth kept Houston at No. 4 and Boston, in spite of one of the nation's lowest anticipated vacancy rates, dropped two places to No. 5 on the possibility of steep rent and revenue declines.
For a copy of Marcus & Millichap's National Office Report and the complete NOPI rankings, visit www.MarcusMillichap.com.