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December 17, 2008

This Saturday, DC will be the center of college football! The start of bowl season happens at RFK, at the first-ever EagleBank Bowl. Navy v. Wake Forest. Be there! Please see ad at right for details.


There's useful information out there when it comes to the economy. You just need to know where to look. Our quest to consult with DC's best "er's" continues today, as we chatted with a researcher, a builder, and an invester. (We know that's misspelled, but it's called poetic license.)


Gridlock will be the operative word for 2009 in terms of volume of sales, says Michael Brodsky, founder in '95 of Bethesda's Goldstar Group, a sort of private REIT for high net worth investors, focused on the mid-Atlantic, and partnered with institutional equity with a focus on office. Although we took this picture at a CPN conference a couple weeks ago, we talked again with Michael this afternoon, 'cause we like to be up-to-the-minute. He says DC is so institutional, owners simply won't have the need you might find in a Boston or New York to sell at prices buyers want. He thinks the main thing that will trade next year are high-end trophies or buildings where an owner has to raise cash. Privately, institutions will mark to market, he says, but you won't see those prices in public. He recalls the dot com bust where some expected to see lots of forced selling along the Toll Road, but there wasn't, because of institutional ownership. Similarly today, even though debt is coming due, many backers can pump in "$5 or $10 or $20 million into an asset," he says.


Jones Lang research manager Scott Homa and research VP John Sikaitis: We couldn't resist this dark and stormy background to foreshadow the news. They say the tenant's market will continue the next 12 to 18 months. Already, rents in many new, vacant developments have been cut 15% from 12 months ago, tenant improvement packages have increased 36% since the beginning of 2007, and free rent (almost non-existent several years ago) is commonplace across most deals. Nationally, tech firms, which began the slowdown in good shape, now appear to be most vulnerable, announcing layoffs exceeding 50,000 jobs over the past several months. Regionally, job growth will remain (due to the Feds), but will slow further. The slowdown in demand coupled with 15.5M SF under construction in the region will likely drive vacancy levels to 13.5% from the current 10.5% rate.


Chuck Brawley, Executive VP, Skanska DC office, foresees favorable pricing for raw materials in '09. (We're calling steel, oil, and cement this year's stocking stuffers.) However, he adds, increased worldwide demand forecasted for countries such as India and China will affect price levels in 2010/2011 and beyond. Also, with the possibility of state-funded projects being delayed, he encourages seeking out public/private partnerships, an alternative to overcoming state budgetary constraints. One way companies can beat the inevitable cycles in this industry is appropriate marketing shifts. Make certain the projects being pursued have reliable funding sources and are critical to the customers operations, and are thus less likely to be deferred.


We were on hand at BeBar, below Work Spaces' office on 9th Street for the latter's holiday party-kind of like other parties they've had there, crowded with young real estate types, but we know it had a Christmas theme because Dos Equis was being served by people in (sexy) Santa outfits. Above, Hickok Cole's Jessica Maples, Skanska's Brennan McReynolds, CBRE's Nicole Thomas, and Skanska's Tony Goodman, Tricia Newton, and Alissa Roberts


Wisnewski Blair & Associates' Elizabeth Fulton, Catherine Gengo, Emily Trout, and Natalie Smith. We don't normally take pictures of just one firm's personnel, but they just looked too festive.

Reznick Group
Eagle Bank
Cardinal Bank
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