- The Washington Times - Thursday, July 17, 2003

The Washington area remained one of the best office markets in the country during the second quarter, due mainly to big leases from law firms and the stabilizing force of the federal government.

While the rest of the nation’s major office markets reported virtually no new job growth, the metropolitan area posted 50,000 new office-using jobs, Cushman and Wakefield said in its quarterly office market report.

The District and suburban Maryland filled more office space from April through June than a year ago, but excitement has been tempered by high vacancy rates in Northern Virginia.

The District continued to have the lowest office vacancy rate of any city in the country, at 7.9 percent. Asking rents for office space are at record highs, and more than 500,000 square feet have been filled in the District this year.

“Sustained stability in the Washington, D.C., office market remains one of the bright spots when considering this current environment of economic volatility and uncertainty,” Cushman and Wakefield’s report said.

Reasons for the District’s strength are twofold, the commercial real estate brokerage said. First, the big presence of the federal government and its contractors has created a host of stable, credit-worthy tenants. Also, several major law firms signed leases during the quarter, including 412,000 square feet by Dickstein Shapiro Morin & Oshinsky at International Square and 85,000 square feet by Powell, Goldstein, Frazer & Murphy at 901 New York Ave. NE.

Wilmer Cutler and Pickering leased 475,000 square feet in three buildings along Pennsylvania Avenue, the largest lease this year.

Among office-leasing transactions involving more than 40,000 square feet, law firms made up 44 percent while government transactions made up 26 percent. Law firms have long been a driver of the office market in the District, because most firms view offices near policy-makers as essential.

Though the region’s office market is relatively strong, Northern Virginia still has a glut of empty office space created by the collapse of the technology sector.

More than one-fifth of the office space in the market is vacant, and landlords are leasing space at record-low prices in many spots. More than 1 million square feet has become vacant in Northern Virginia this year, and a recovery is not expected until at least the end of the year.

“While an upturn is in sight, the recovery is not expected to ramp up until the end of 2003 and into 2004 — and even then demand growth will still likely be mild,” Cushman and Wakefield said in its report.

In suburban Maryland, leases from defense and government contractors prompted the vacancy rate to fall from 15.5 percent to 15.2 percent.

So far this year, about 242,000 square feet of office space has been filled in Maryland’s suburbs, compared with the emptying of nearly 610,000 square feet in the first half of 2002. Vacancy rates are expected to drop by next year, though, as leasing activity catches up to the rate of new construction.

In other news …

• The Urban Land Institute named Harry Frampton III chairman. Mr. Frampton, 59, is managing director of East-West Partners, a Colorado resort developer.

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

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide