Washington Business Journal Thursday, November 19, 2009: The initial U.S. commercial real estate recovery is likely to begin in the second half of next year, according to Jones Lang LaSalle’s 2010 forecast.
Nationally, leasing demand levels are expected to bottom out this
quarter and remain stagnant next year. And national office vacancy are
expected to near 20 percent by late 2010.
D.C., which has a 12.3 percent vacancy rate that includes sublease
space, is expected to come close to topping out at about 15 percent
before stabilizing, said John Sikaitis, research manager in the D.C.
office of JLL.
“We have significant supply issues with a large development pipeline
but significant demand with the government looking to mitigate the
problem,” said Sikaitis.
Expected boosts in the federal budget will continue to cushion the
D.C. office market and shift absorption back into positive territory in
But the continued delivery of speculative construction projects in
the area is expected to force vacancy rates further upward and keep
leverage squarely with tenants, said JLL.
The D.C. area’s 15.5 percent vacancy rate is expected to escalate to 17 percent by the end of 2010.
Northern Virginia’s rate of 16.5 percent is expected to go up
slightly to 17.2 percent and in suburban Maryland, its 18.5 percent
rate is expected to go up to north of 19 percent, added Sikaitis.
One region that’s fairly tight, he said, is the Rosslyn-Ballston
corridor which “outperforms the rest of the region” based on the lack
of development activity and tenant demand from D.C. and areas outside
Rental rates are expected to keep dropping through the first half of
2010 but will stabilize in the third quarter due to pent-up federal
demand soaking up large blocks of vacancy in the market, said JLL.
The region’s asking rents have already come down about 12 percent
since the height was established at the beginning of 2008, he said.
Effective rates -- which includes rental concessions -- have come down
even further, at 20 percent, and are expected to see a 25 percent
It looks like conditions will get really ugly in the DC area before a turnaround, even if JLL is correct on a recovery mid 2010.
Office Rental , Office Space , Office Vacancy Rate , Washington DC Office Space