New Developments and Opportunities in Our Commercial Real Estate Market
Two weeks ago, we discussed an unexpected driver of our region’s commercial market— large tech companies building large data centers within the D.C. metro area.
Today, let’s take a quick look at a new report that highlights two more big drivers of our commercial real estate market.
CBRE recently released their report of our region’s Q3 office market performance. In their report, they found that our commercial market experienced its highest quarterly volume in over 2 years, producing a gross leasing activity of 3.6 million sq. ft., resulting in a net absorption of 1.1. million sq. ft. Combined with a lack of significant new deliveries this past quarter, our region’s office vacancy rate declined by 60 basis points, or 13%.
This activity was led by a small number of large deals. Our region’s five largest commercial transactions in Q3 totaled 2.2 million sq. ft., which represented 62% of our Q3 commercial volume, and which represented about half of the year’s total commercial leasing volume.
Of these five deals, the three largest transactions accounted for 1.7 million square feet. These transactions were:
- Whittle School & Studios: 666,000 sq. ft.
- The FCC: 602,000 sq. ft. (lease extension)
- The U.S. Attorney’s Office: 416,000 sq. ft. (lease renewal)
These transactions highlight the simple fact that, despite the growth of the private sector in D.C., the government remains a major player in our commercial real estate market.
However, CBRE’s report does highlight a second, growing driver of our commercial market— co-working space. As the report notes, co-working space has been growing faster than any other tenant category in the D.C. metro area, tripling its footprint to about 3 million sq. ft. over the past 5 years. In Q3 alone, six new leases for co-working spaces were signed, adding an additional 178,000 sq. ft. of co-working space to our region.
Government leases, demand for co-working spaces, and technology infrastructure all offer potential opportunities for investment within our growing commercial real estate market. To discuss this opportunities, and many others, contact us today. Call us at (202) 713-9072 or email us at firstname.lastname@example.org.