DC Office Market Shifting In Landlords' Favor, Developers And Brokers Say
For several years now, DC has been widely viewed as a tenant's market, but some office developers and brokers say that may be changing. The shifting landscape of the office leasing market will be a hot topic of conversation at Bisnow's Property Management and Leasing Forum on July 14.
Washington REIT VP Anthony Chang says some of its repositioned buildings, including the Silverline Center, have so much demand the landlord is offering termination buyout packages to existing tenants.
"We have tenants bidding on space and we're turning down tenants saying 'you were outbid by somebody else,'" Anthony, pictured above with his 1-year-old daughter, tells Bisnow. "If you’re one of the winners in close proximity to the Metro, with the right amenities package to partner with tenants on employee recruitment and retention, tenants are moving to those buildings."
Cushman & Wakefield senior director Mark Wooters agrees. Over the last 18 months, repositioned buildings in good locations have seen rising demand. He cites 2001 L St NW and 2233 Wisconsin Ave as two buildings where the landlord has been able to increase the rental rate while also raising occupancy.
"We could all point to examples of buildings that have done these things and are winning despite the feeling that this is a tenant's market," Mark, who also welcomed a new child to his family, pictured above, just nine days ago, tells Bisnow. "I don't think thats necessarily the case. I don't think it is a tenant's market in the best spots, in the properly positioned buildings in DC."
Scott, a former leasing director for PS Business Parks, says with the millions of square feet of office space under construction, he is curious to learn where developers expect that demand to come from.
"That’s a question everyone I talk to, brokers, landlords, everyone has," Scott tells Bisnow."'How is all this space going to get filled and who's going to fill it?'"
Mark, who has been representing The Wharf in its leasing efforts, is confident office demand will continue to increase. He says companies that were displaced during the economic downturn are finally regaining enough size to open new city offices. Young companies with Millennials looking to live urban lifestyles will look to open DC offices.
He also says a traditional force in DC, the federal government, will continue to attract more private companies that want to open offices close to the nation's power center to lobby for their interests.
"What we had to do originally was educate people about what this project is. It's different than what DC has seen before," Mark says, noting that it is the second-largest private development in the US. "It's truly an extension of the CBD and not its own enclave in the city. It's a unique opportunity for people to locate themselves on the water in a new development in a new community within the district."
The Wharf has yet to sign any office tenants at 1000 Maine, its trophy office building, but Mark says he has a number of companies that have expressed strong interest.