Washington DC February 2023 Key Take Aways
RETAIL and OFFICE CONVERSION TO HOUSING:
There is great interest in retail in the market. However, there is limited space to move into, and clients do not want to refit spaces. Georgetown is back to almost pre-pandemic rent levels. Gallery place is bad for the office market with the city center gaining a few small leases.
There are very few areas in D.C. that can outperform Navy Yard. It will be hard to attract young couples moving into the” former” downtown business district.
D.C. LARGE-SCALE VIEW:
- We are seeing revenue losses on the tax base in The City.
- The City needs more food vending options for Groceries. D.C. does not have space for food warehousing.
- There is some emerging excitement in life sciences.
- Contractors need money to finish up Jobs, trending along with a higher demand for loans in the lending market.
LEASING TRENDS:
When people are moving, they are taking less space but keeping the budget. Therefore, they are shopping for higher-rated spaces.
Trophy space with common/shared space is the emerging preference among tenants. Two-month concession per year of lease puts a lot of pressure on owners, delaying profits to years 5-6. Developers are taking at least a floor and speculatively constructing 7-10,000 Sq ft so lease capture and closing can be within 60 days.
Ask and strike are a 3-5% margin. People want explicit pricing!
Recent Comments