Fourth quarter 2012 statistics for the Washington, D.C. metro area released Tuesday by Cushman & Wakefield show a real estate market tempered federal uncertainty.
The looming fiscal cliff – part of which was averted by Congress ― as well as sequestration and the debt ceiling worked together to dampen activity throughout the region, the report said.
Overall, in the investment market, total 2012 sales volume in the D.C. area fell to $5.6 billion in 2012 from $7.5 billion in 2011. While some investors stepped back due to weakening office market fundamentals, sales volumes in the District were off by only 5 percent, compared to a 48 percent decrease in the suburbs.
A brief look at some of the areas:
The office market contracted, posting negative absorption and increasing vacancy rates.
“This was due mainly to both government and private sector tenants’ drive to achieve efficiencies,” said Paula Munger, regional research director of the Mid-Atlantic and Southeast for Cushman & Wakefield. “Organizations are looking for economies everywhere, and that translates into occupying less space.”
Leasing activity, however, increased over last year’s level as several large law firms committed to space in projects under construction or still-to-be developed. For instance,
In Northern Virginia, office market indicators weakened further with total negative absorption of 2.5 million square feet and vacancy rates that reached 18.9 percent, the highest in nearly a decade. What Cushman/Wakefield described as “a perform storm” of events hit NOVA hard: government agencies vacated space in Crystal City and the Rosslyn/Ballston Corridor as dictated by BRAC, government contractors retrenched as a result of budget cuts and a general slowing of the economy were responsible for NOVA turning in one of the worst performances in recent history, the report said.
Investment sales volume fell to $1.8 billion, from $3.3 billion in 2012.
Like the District, new construction is attracting tenants both inside and outside the Beltway, so things are looking up for 2013.
“Our research does reveal a few bright spots, including new construction as well as continuing opportunities for investors willing to wait two to three years for a return,” Brian Dawson, head of Cushman & Wakefield operations in the Washington region, said in a statement. “We think 2013 will end some of the uncertainty and stabilize the marketplace, leading to a dynamic 2014.”
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