Washington DC February 2021 Key Take Aways
• Anne Yancey with Cherry Bekaert kicked off the meeting with an in-depth look at the Employee Retention Credit, providing information on eligible employers, qualifying wages and the changes that occurred from 2020 to 2021.
• Rick Schneider and Larry Kline with Cherry Bekaert followed up with a look at Biden’s Tax Plan and its potential impact on Commercial Real Estate. The main areas of that could be affected are tax rates, business owners, real estate transactions, environmental regulations, residential property and opportunity zones.
• Derek Ford with Washington DC Economic Development Partnership indicated that the DC government has almost completed their budget and the district has $3.1M in “Prosperity Fund” to assist Retail. The minimum request is $25,000 and the fund closes out requests on March 15th. The St. Elizabeth East project is looking for a ‘good’ sports themed restaurant/bar, they will entertain local and/or chains.
• Keith Switzer with INTEC Group is starting to see a small uptick in office activity, seeing some in-person tours and some capital being spent on repositioning of office assets. The multi-family sector has and still is very busy, seeing a ton of new developments as well as renovations. There is a ton of activity in the private school sector, big uptick in renovations and fairly large expansions of campuses in the DC metro area.
• Chris LeBarton with CoStar Group concurs that there is a bit of traction in the office world in DC. Their DC offices have completed 5 floors of renovation, including expanding cubicle sizes and putting in new HVAC system. He believes that it will be ‘fallish’ before we really start to see things pick up, especially in the multi-family market.
• Marc Tasker with NAI KLNB said he has never seen so many people trying to get into the industrial market, “they are coming out of the woodwork.” Dulles continues to be an extremely tight area. The office guys are getting out there and starting to explore and feel that the aggressiveness of this will increase in the 2nd quarter.
• Brian Ball with NAI KLNB stated that there is 162M SF vacancy in private office space in Class A, B & C down 13.7% and this does not include sublet space. Concession market for tenants on a 10-year term, some tenants are getting 18 or at least 10 months free rent. In some cases, landlords are not making money for at least 4 years based on all concessions.
• Harry Dematatis with NAI KLNB says there is pent up demand to get back into the office, he believes that corporate culture has been lacking. The market for sublease space has increased by 40%, this has a big impact on prime or new space coming on the market.
• Kydin Nourazar with NAI KLNB is seeing lots of government leases being released to the market. Agencies are still looking for retail, office and industrial space and he is seeing quite a bit of competition between landlords.
• Joe Tilley with Phillips Realty Capital is seeing more capital than opportunities in the multi-family and industrial sectors. Their pipeline is busy, lenders have gotten more conservative, but, they are finding more private and institutional groups stepping up. Pricing is crazy low, multi-family represents about 60% of their business.
• Caroline Ahern with EB5 Capital has $800M from investors in 70 countries. EB5 has been on multiple extensions and since 2015 they have had very short ‘runways,’ extended now until June 30th, however the international sentiment is much more favorable to Biden vs. Trump with respect to EB5.
• Kevin Welch with Loudoun County Economic Development is seeing a lot of industrial activity. Davis Center is still ‘eating’ up the market. Their skepticism of retail was present pre-pandemic and they are paying close attention to area. They have put some initiatives in place – “Work In Loudoun” for both job seekers and are in the process of launching a “Broker Outreach” newsletter to strengthen their relationships. Closely watching for new stimulus bill and see if they will have any local funding to assist businesses.
• Steve Rozga with Gimbert Capital says it is a great time to borrow money, pricing for mortgages is anywhere from 2.5 to 4.5%. Industrial and multi-family have been very busy, he said that it is has been a story of the “haves and have nots.”
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