After years of DC's office market being a tenant's market, it has shown signs this year of turning in the landlord's favor. Developers at Bisnow's DC State of Office event expect this trend to continue next year and generally feel good about where the leasing market is headed, even with the likelihood of an upcoming recession.

"It's going to be great for a developer and landlord, it's finally going to be our turn on top of the table next year," Trammell Crow managing director Tom Finan, right, said. "You’re seeing big blocks of space disappear and you’re seeing tenants have less and less bargaining power because of it."

Tom added that he believes DC's office market is "on the way up," and he doesn't think it will be as prone to recession—which he predicted would come around 2018—as the San Francisco or Seattle markets, because the District doesn't rely on tech companies for tenants.

Brookfield EVP Greg Meyer, left, shared Tom's optimistic view, adding he expects to see an overall pickup in leasing activity next year.

"I think 2017 is going to surprise us in terms of being a lot better than the last couple of years have been," Greg said. "This election, God help us, is going to be behind us. We’ll be able to make decisions and businesses will be able to make decisions."

Principal Real Estate Investors managing director Jim Halliwell also sees a recession coming in the next couple of years and thinks DC will weather it well with an opportunity to come out stronger.

"This market during recessionary times, I think, again will be an outperformer," Jim, on the right bumping fists with Transwestern's Phil McCarthy, says. "Hopefully during the next expansion we’ll get those jobs that all the Millennials are filling in Silicon Valley and San Francisco and Austin."

Carr Properties CEO Oliver Carr expressed less optimism about the leasing market, saying it has been slow because government contractors and law firms downsizing have offset job growth, and he doesn't expect activity to pick up without broader growth in the US economy. But he noted that a slower economy does have its benefits.

"I actually think this economy makes you better because you’re forced to differentiate," Oliver, in the center next to VTS regional director Alec LeFort and Greg, said. "You’ve got to be better than your competitor. It's a war for talent, it's a war for tenants. We’re trying to be different. We want to build really cool new developments that companies want to move to."

Wingate Hughes principal Gavin Daniels moderated the state of office panel.

On the construction and design panel, speakers discussed the trend of office tenants consolidating and how companies should adapt smaller spaces to make them more attractive for employees.

DPR Construction project executive Adrienne Rosenbaum, speaking in the center, said companies shouldn't condense their office space without including amenities like outdoor space, conference areas and telephone booths to make private calls.

"If you miss that part because you’re trying to cut square footage or cut money out, then your densification is going to fail and you’re going to miss that boat on making your employees happy and getting that employee retention," Adrienne said.

Attracting Millennials became a central topic of the panel, and health and wellness emerged as a key way to make young employees happy. But Perkins+Will senior technical coordinator David Cordell, second from left, says health is just as much about company productivity as employee happiness.

"Every year in the US, American businesses lose $153B through loss of productivity specific to dealing with chronic health issues," David said, citing a Centers for Disease Control statistic. "I think organizations are really seeing data like that and they’re understanding the quality of environments and what that means on productivity through reduced healthcare costs and through higher levels of engagement."

The State of Office event, attended by roughly 400 industry pros, was held on the ninth floor of Franklin Court at 1099 14th St NW. The owner, Lincoln Property Group, is marketing this 40k SF raw space to prospective tenants.