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The Washington Business Journal is reporting that D.C. has the nation’s largest development pipeline, thanks to 9 million square feet of planned office space in the coming years.
Unfortunately, this news is not necessarily a positive reflection of our ra-ra-ra D.C. robust economy—-as most of the property hasn’t actually been leased out quite yet. WBJ reports: “Out of those 22 office projects under construction and renovation in D.C. — with estimated delivery dates ranging from this quarter to early 2011 — just 24 percent of the space has been leased.”
And who’s going to feel the pain the most?
“However, the impact will likely be most pronounced for non-core markets including Capitol Hill/NoMa, Southwest and Ball Park/Navy Yard, where nearly 80 percent of the speculative projects are located,” said Sigrid Zialcita, research director for Cushman & Wakefield.
Through the first quarter, only 20 percent of those new projects had been pre-leased.
Should the rest of those projects deliver empty — a worse-case scenario — the vacancy rate for non-core markets could double over the next two years, said Zialcita. That rate stood at 9.7 percent as of last quarter.