- The Washington Times - Thursday, December 25, 2003

Commercial real-estate professionals said an improving economy will give a boost to office, retail and warehouse markets next year and predicted that enough jobs will be created to fill more than 70 million square feet of office space nationwide.

The National Association of Realtors (NAR) said last week rates of occupancy in most commercial real-estate sectors should improve gradually next year, and perhaps beyond.

The NAR analyzed 54 real-estate markets, using statistics compiled by Property & Portfolio Research. In its most recent report, the NAR noted that nationally, occupancy rates rose in every commercial sector in 2003, including office, warehouse, retail and multifamily. The group credited the improving economy, particularly the rise in gross domestic product, consumer spending and corporate profits.

“All the economic cylinders will be at full steam in 2004,” said David Lereah, the NAR’s chief economist.

NAR said it expects 101.8 million square feet of office space to be filled next year, compared with about 32 million in 2003. It said vacancy rates should fall from 17.9 percent to 16.8 percent, with a slight increase in asking rents for office space.

Commercial real-estate professionals downplayed the slow creation of jobs has not grown along with other economic indicators. Economists say slow job growth often hurts the commercial real-estate sector, because of the lack of workers in need of space.

NAR President Walt McDonald said he expects 2 million new jobs to be created next year and that will “directly feed demand for commercial real-estate space.”

NAR has advocated a weak dollar, arguing that it boosts exports and helps the manufacturing sector. An improvement in the manufacturing sector helps the warehouse market, and NAR said it anticipates that 98.3 million square feet of warehouse space will be filled in 2004, compared with 70.6 million this year.

The market for rental apartments is expected to improve slightly. With interest rates still low, many people are choosing to buy rather than rent, but NAR said about 155,000 units will be filled next year, up from 118,000 in 2003.

D.C.’s shrinking space

Real-estate professionals surveyed by Spaulding and Slye Colliers said they expect the availability of office space to decline next year in the Washington area. About 40 percent of respondents said they thought the District would show the largest drop in availability, compared with about 36 percent for Northern Virginia. Only 9 percent expected an increase in available office space in 2004.

In other news …

• Corporate Office Properties Trust announced that the U.S. government signed a lease for 120,000 square feet at 140 National Business Parkway in Anne Arundel County. The government will occupy all four stories of the building, which was a recently completed addition to the National Business Park.

• Toronto-based Brookfield Properties paid $157.5 million for 1625 I St. NW, a 386,000-square-foot office building two blocks from the White House. The Union Labor Life Insurance Company, which developed the building, signed a lease for 65,000 square feet.

Property Lines runs Fridays. Tim Lemke can be reached at [email protected]washingtontimes.com or 202/636-4836.

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