- The Washington Times - Monday, September 25, 2000

Most real estate investors still pour their money into office buildings in the D.C. area, although apartments and industrial property are also becoming popular, local brokers say.

A recent survey of investors by Bethesda-based brokerage Transwestern found high-rise apartments are the fourth most popular kind of real estate investment in the D.C. area.

This marked a dramatic increase from 1997, when investors ranked high-rise apartments as the ninth most popular kind of real estate investment in the area.

Industrial property, meanwhile, rose from sixth place in 1997 to fifth place today.

"This doesn't necessarily mean investors are fleeing office space. It is more accurate to say more investors are getting into the multi-family housing and industrial markets than before," said Al Cissel, a senior vice president at Transwestern.

Delta Associates, an Alexandria-based real estate research firm, said investors spent $163 million on industrial property in the D.C.-Baltimore area during the first six months of 2000, up from about $145 million during the first half of 1999, a 12 percent increase.

By comparison, Delta said investors spent $1.3 billion on office space in the D.C. area alone at midyear 2000, up from $853 million during the like period in 1999, an increase of about 63 percent.

The level of investment in apartments in the D.C. area was not available from Delta.

Mr. Cissel said so-called institutional investors are the most common real estate investors in the D.C. market.

Institutional investors include retirement funds and real estate investment trusts, mutual funds that allow investors to pool their money in order to purchase property.

Jim Darby, Transwestern's senior vice president for investment sales, said the move toward industrial property is being driven in part by the growing popularity of data centers sophisticated, warehouse-style buildings that house equipment used by local technology companies.

"In general, supply is not keeping up with demand" for industrial space, Mr. Darby said.

Delta said the market is for both industrial property and apartments is the hottest it has been in years.

The vacancy rate for industrial space in the D.C.-Baltimore region is 8.3 percent, the lowest since the early 1980s, with approximately 6.5 million square feet of new space under construction.

Delta said the vacancy rate for apartments in the area is less than 1 percent, with more than 25,000 apartment units on the drawing board.

Experts say local developers are racing to meet demand for new apartments in the city.

A recent report by the National Multi Housing Council, a D.C.-based association of apartment building owners and managers, said the District has the oldest apartments in the nation.

Only 8.3 percent of the 108,000 apartments in the District were built after 1979. Most of the apartments about 26,000 were built before 1940, the study said.



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