Washington DC May 2022 Key Take Aways
Chris LeBarton and Nicholas Mills – CoStar Group
• Amazon stopping their acquisitions and projected plans for warehousing will have impacts on the market in DC, the contours of which are yet to be defined.
• Analysts show offices across the country are 55-60% filled. However, at a JBG Smith investor day, a comparative analysis was done with the JLL analysis increasing concerns about D.C. office market vacancies.
• Patience is running out on the loan side. In the 80s and 90s, the government put pressure on the financial institutions to set aside their assets. We are not seeing this pressure now, and perhaps this is encouraging people to go long?
Derek Ford – Washington DC Economic Development Partnership
• General concern about coffee shops. For 6 weeks, they reimbursed coffee shops every Monday. Buffet / community kitchen pre-made places aren’t making it. There is some growth in the fast food and retail chains. DC has provided a lot of funding for restaurants.
• AETNA and CVS are investing into residential tax credits. (see more here)
• NOMA and surrounding neighborhoods are doing very well.
• OFFICE TO HOUSING – (Willco will be doing the first major office to housing project with the Peace Corp… lessons: You have to own the building completely to really make it work. No debt on the project. Aside from costs, the technical aspects of the architecture, engineering, and mechanical are very intense).
Brian Perry – Health-Pro Realty Group
• 3.8 change to 5.3 for lending on a development project. This isn’t deterring healthcare clients.
Brian Ball – NAI KLNB
• The Washington Post coverage of the Boeing move is a bit misstated. If the corporation does come, then there will be camp followers. (Not empirical assessment but a sense of the general trend)
• Good activity in offices with low vacancy change. Leasing is bumping along with huge transaction concessions. Largest rental abatement is 2 years (1.5 month / year of lease is about the normal abatement ratio)
• $50 has exploded to $80-90 per foot on renovation construction. There is no such thing as contract pricing, not with such high demand so look to securitize any construction.
Charlotte Troup Leighton – Chicago Title
• Within the Fidelity family, so you can co insure and reinsure. Depending on the deal size, there may be requirements of co- or reinsurance. This structure is therefore capable of servicing that potential contract item. The biggest challenge is getting work products out especially with court houses being closed during pandemic.
• Title abstractors are becoming scarce and delivering titles is a very long process, with the rural market very difficult to service.
• Order your title early. You can always roll the title commitment invoice into the closing. This can otherwise hold up the 30-day study period commitment.
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