OFFICE LEASING ACTIVITY SLOWS in D.C.
July 15, 2012
By: Savannah Duncan

With the focus on November’s presidential election currently all-consuming for the business community, the Washington, D.C., metro office market has experienced a slowdown in leasing activity. ...

... “We’re seeing a slowdown in tenant demand,” says Wendy Feldman Block, managing director of Studley’s Washington, D.C., regional office. The company is a commercial real estate services firm that focuses on tenant representation.

“There’s just so much uncertainty because of the federal budget, the debt crisis, the cost of energy and outsized exposure to government leasing,” explains Block. “A lot of government agencies in private-sector firms are in a holding pattern and that won’t change until after the election.”

While the government is definitely the largest tenant in the region, other industries such as law firms, non-profits, trade associations, corporations, government contractors and professional firms are present in the market as well. ...

Recent Transactions

Although leasing activity is sluggish, a few sizable lease transactions have taken place during the past several months. ... 

The American Bar Association signed a 61,000-square-foot lease in March in the CBD as well. The firm will relocate its national headquarters from 740 15th Street NW to 1050 Connecticut Avenue NW in June 2013. Studley represented the tenant in the lease transaction ...

What Tenants Want

... “The bottom line is deals are being done and tenants are relocating, but there’s also an abundance of space,” Block says. “Landlords are going hard after tenants.”

In 2011, concessions such as tenant improvement dollars and free rent reached a record high. “We are maintaining that level. You’re not going to see any change until the first or second quarter of 2013,” Block adds. ...

... Because the market is soft, tenants are taking advantage of the opportunity to upgrade their space at rents that are not astronomical. To minimize any cost increase, tenants who choose to relocate to more desirable space frequently reduce their footprints. It’s not just a flight to quality, it’s a flight to efficiency, Block says. ...

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