Washington DC November 2023 Key Take Aways
DC REGION:
Despite the current stress, there is good activity. Deals are right-sizing from 10,000 sqft to 7,000 sq ft on average with a 2-4 year lead time. However, firms looking for less than 6,000 sq ft are on a shorter 6-12 month timeline.
GSA is being active with its revival of transactions as well as beginning the renovation of buildings.
550-650 $/sq ft is down to 250 or less with the 800-1000 experiencing a compression as well in prices. Conversions were 275$/sq ft and are now at 375$/sq ft. There is a lag in office-to-residential conversions.
There is a backlog in permitting across the region due to a lack of institutional knowledge. Large cohorts entering retirement have greatly reduced the handling capacity of the government services required in development.
PARKING:
Driving to work and parking are still the standard with autonomous vehicles not emerging as a market disruptor any time soon. Non-metro-connected offices are sustaining parking demand.
Many parkers are opting for a daily pass instead of a monthly pass as in office is still a few days a week.
Landlords are also dropping block leases and shifting costs to employees.
EV charging is an imminent need that has many opportunities for innovation. However, obstacles to adoption remain on the fee structures as well as infrastructure costs.
INDUSTRIAL:
Industrial sector volume is down 25-30%, with new construction slowing. However, occupancy is still high. A return to normal is emerging with the pace of transactions stabilizing. Onshoring, a phenomenon of the past decade, is still an influence on the industrial sector especially in border states.
NATIONAL TRENDS:
Midwest cities are offering major economic attractions with tax incentives and states offering land. However, this may be curbed as the quality of infrastructure and education may deter talent and their families from staying.
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