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DC Office Comeback?
   
September 9, 2013
 
 
Manhattan (Sports)

DC Office Comeback?


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We know the answer to our headline about as well as we know how RG3 will do tonight. But, folks, there's reason to hope for both, as experts who will be speaking at our DC State of Office this Thursday tease us in advance.

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Brookfield's Dave Bevirt (right, with colleagues Greg Meyer and Simon Carney) says the District has healthy supply and demand in the trophy market, spurred by low office construction. (If you don't build it, they will come. It's confusing. We know.) While government tenants continue to be MIA for big leases, vacancy rates are at a reasonable level compared to other major US markets as 2013 winds down. Though it'll take a year-plus to get there, a marked leasing rebound could be in store for 2015, he says. (That means we all have next year free to compete in the Sochi Olympics. You hear that, JDRF Games studs?)
CohnReznick (Think) MDCRE

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The upper end of the market (including properties like Brookfield's trophy 799 9th St) continues to pace the District, and the flight of top-quality tenants to top-quality product won't end anytime soon, Dave says. But what's also keeping things afloat is what Dave calls a robust renewal market—more than half the gross leasing market—as owners seek to avoid having to underwrite downtime and dole out huge concessions in new deals. (The childhood lessons we learned at the public library still apply today.)

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And while DC office rents remain flat, it certainly hasn't stopped the flurry of investment sales activity so far this year, like Fosterlane Management's whopping $296M June buy of 1200 19th St from Hines. A lot of capital is still chasing what's left on the market, but a disconnect is popping up between cap rates and underwriting rents, making additional deals tough, Dave points out.

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Also on tap at Thursday's event at the Mayflower: DC office leasing legends Audrey Cramer of Cushman (above) and Studley's Lois Zambo will be recognized for lifetime achievement by conferral of the Nobel Prize of Real Estate (the "Bizzy") and make a rare appearance on stage together for an interview with the Charlie Rose of Real Estate, Mitchell Schear. (Sign up now!)


The Lease Scene

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We've got a couple more lease deals to bring you today. (With all the activity, there's going to be a lot of "For Rent" signs with nothing to do—Martha Stewart, please develop a crafts projects using them all.) Let's start with Baker Furniture's re-upping in Georgetown. Eastbanc and Jamestown just announced that the home furnisher, which occupies 9,000 SF at the firms' 3330 M St in Cady's Alley, has signed a 10-year renewal. The spot was actually Baker's first retail outlet, as well as Eastbanc's first-ever tenant in Cady's Alley.

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Cresa's Tom Birnbach (left, with some guy named LeBron) and colleague Dennis Tapiero just repped former Lockheed affiliate PAE in an 11k SF expansion at its 1320 N Courthouse Rd HQ in Arlington. Tom and Dennis also repped PAE in its original lease at 1320 N Courthouse, a 71k SF deal that closed last summer.

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And J Street's Geoff Kieffer (right, with colleague Eddie Trujillo) helped United Steelworkers lock down a 7,700 SF deal at 1155 Connecticut Ave. Geoff was joined by colleage Shea Byers on the deal, a full-floor lease for USW.


JLL's Property Managers Speak

Meredith Roark
JLL just surveyed its DC-area property managers on what amenities its tenants value most, with—no surprise here—parking and access to public transportation coming out on top. In-house cafes and fitness centers ranked just behind. Regional director Meredith Roark says the real takeaway is how tenants and managers alike are using technology to make buildings and portfolios run smoothly. Whereas tons of building systems used to be controlled manually by an engineer on-site, they can now be controlled by an employee remotely via smartphone apps. Meredith says keeping an eye on what tenants want and need to operate smoothly—especially as firms take less and less space—remains a high priority.

Are you going out to FedEx for the game tonight? Send us pictures! Email chris.baird@bisnow.com

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