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One of the biggest problems facing Downtown is as plain as the empty storefronts along F Street: There’s too much commercial space for the demand, and hundreds of thousands of square feet are in the pipeline. Meanwhile, folks wanting to live downtown have increasingly limited options.
That’s the takeaway from the (otherwise very upbeat) Downtown BID’s 2009 State of Downtown report, which rolled out this morning with a breakfast panel of development mucketymucks.
“If you’re looking to buy a new condo for your daughter in the downtown area, there really aren’t any,” said David Mayhood, president of the Mayhood Company. “You’re going to see this total lack of inventory, like a rope just snapping.” He pointed to the latest big condo projects in the area, Madrigal Lofts and City Vista, each of which have only nine units left.
The retail market, on the other hand, is totally oversupplied, with 215,000 square feet available now and 400,000 more coming online over the next five years at the old convention center site alone. Office space vacancy jumped from a healthy 8 percent in 2008 to 14.3 percent in 2009, and is projected to grow by at least another point in the next year.
But rents haven’t declined proportionately—downtown office space will cost you twice as much as the same square footage in suburban Maryland. And all of that square footage exists in smaller chunks that are unappealing to huge companies that could take a lot off the market at once.
Case in point? Northrop Grumman, which had just leaked its choice of Northern Virginia for a new headquarters. Deputy Mayor for Planning and Economic Development Valerie Santos was philosophical about the District’s loss.
“As for Northrop Grumman, what would it have taken?” she asked, arguing that DC did well under the circumstances. “Northrop Grumman didn’t think the District would be as competitive as it was.”
A few more tidbits from the report, which is stuffed with awesome charts and graphs:
- The first quarter of 2010 will be the sixth consecutive quarter with no major groundbreaking—2009 was the first year with no new projects since 1995 (the number of new groundbreakings peaked at 30 in 2003).
- But! 16 new “destination restaurants” opened in the downtown BID in 2009.
- 63 percent of downtown residents have incomes above $100,000, and 37 percent have incomes above $150,000
- National Place, at 1331 Pennsylvania Avenue, has the most retail space available, with 31,000 square feet available.
- While theater attendance in the Washington region is the same as it was ten years ago, butts in seats have increased substantially at downtown theaters over the last decade, from 740,000 to 773,000.