4/13/21 Washington, DC Mastermind Meeting

Washington DC April 2021 Key Take Aways

• Migration trends from U-Haul show people are moving to small but emerging growth markets in areas with nice climates where there is a lower cost of living. (Sam Sherwood, Newmark)
• REIT returns show there is a huge demand for data centers, a boost for self-storage and industrial and losses in areas from healthcare to retail and hospitality. (Sam Sherwood, Newmark)
• Industrial sales volume has held steady, multi-family has been cut by about a third, retail in half, office nearly in half and hotels nearly non-existent. (Sam Sherwood, Newmark)
• Only sector showing major movement in cap rates is multi-family. Multi-family per unit average price is declining, which reinforces the decline in cap rates. (Sam Sherwood, Newmark)
• Washington, DC is close to national average as far as job losses, but has the highest percentage of office-using employment out of major cities. Expected to be back to pre-pandemic office employment by the end of the year. The city also experienced large losses in hospitality. (Sam Sherwood, Newmark)
• Federal spending in the private sector has been rising. Healthcare dollars have been going to Maryland and tech and defense dollars going to Northern Virginia. (Sam Sherwood, Newmark)
• Washington DC area leads large cities in vaccine acceptance. (Sam Sherwood, Newmark)
• Sublease availability is better in DC than in peer cities. A lot of it is a “soft” availability, where the tenant is happy to let someone take it but it has not been put up on the market. (Sam Sherwood, Newmark)
• Rents in DC are down 9% over the course of a year, which effectively is erasing around 5 years of growth. Less in the suburbs. Groundbreakings continue to move forward. Going forward the supply and demand pipelines seem well balanced. (Sam Sherwood, Newmark)
• Residential inventory is extremely low, causing a lot of urgency with buyers and driving prices up, especially in certain areas that were desirable even before the pandemic. (Mark Wiltshire, Kensington Vanguard National Land Services.
• Activity is starting to pick up again, especially in the areas of healthcare and education. (Andy Bauer, Federal Reserve Bank of Richmond)
• Tenants looking for space have increased in the last month, possibly due to more people receiving vaccines. (Brian Ball, NAI KLNB) More activity is being seen in the office market. (Marc Tasker, NAI KLNB)
• Lots of industries are facing supply shortages, supply chain issues and shipping problems that are making it difficult to keep up with demand, but consumer markets are competitive due to price transparency and prices are not expected to rise and inflation is expected to remain at around 2%. Supply chain issues are expected to be temporary. (Andy Bauer, Federal Reserve Bank of Richmond)
• Construction of Rivana at Innovation Station is expected to commence in the first quarter of 2022 and will include a retail village, Class-A office space, residential units, a hotel and an arts venue. (Kevin Welch, Loudon County)
• Mayor announced a program called STAY (Stronger Together by Assisting You) with approximately $350 million dollars to assist renters with an income of up to $79,600 for a family of four. It does not include workforce housing. (Derek Ford, Washington DC Economic Partnership)
• The mayor is trying to bring people back downtown, attempting to get people into the offices at least a few days a week so that surrounding businesses can start to rebuild. (Derek Ford, Washington DC Economic Partnership)
• Restaurants are having trouble getting employees due to covid concerns, large unemployment benefits and people who moved out of the area during the initial shutdown. (Derek Ford, Washington DC Economic Partnership)
• Zoning laws have changed in some areas to allow for more data centers. (Marc Tasker, NAI KLNB) A new undersea cable has also been laid recently. (Sam Sherwood, Newmark)