Washington, DC Is Officially #1 In The Nation Tops NYC By A Few Decimal Points
January 21, 2010 1 Comment
by Elias Shams
No! not because AwesomeDC is headquartered in town :-)
As the Wall Street companies are going down, our Government is going up – thanks to the collapse of Lehman Brothers and other financial companies nearly two years ago. The fortunes of New York are dependent on the financial industry, while D.C. obviously is dependent on the size of the government. I am sure you all can tell how big our Government has become these days.
Besides, what should we expect when one of the largest Aerospace company, Northrop Grumman Corp decides to move their headquarter to DC from Los Angeles, as well as a planned move by Hilton Hotels Corp. to Washington from Beverly Hills. Not to mentioned many other businesses, lobbyists and corporations alike are also flocking to DC. These corporations will likely choose offices in Virginia or Maryland, depending upon the incentives they get from the States or District of Columbia.
Not sure how many of you recently drove through the SW and SE DC region recently. There are a massive number new office constructions under way in the area which could eventually knock DC off its perch at the top, as vacancies rise until the new space is absorbed by the marketplace. Long term as the financial markets heal and DC changes political leadership, New York will likely take the top spot back from DC.
According to Reis Inc., a New York based-research firm, since the fall of Lehman Brothers,
. The average rent in midtown Manhattan fell from $61 per square foot to $41.07
. New York’s vacancy rate rose just 0.1% to 11.5%,
. Effective office rents fell 5.3% in the fourth quarter of 2009 and almost 20% year-over-year, the largest fall since they began tracking data in 1980.
Considering the office space in DC is around $41.27 per square foot, Congratulation! we are now the most expensive city for office space in 2010. Here is the sortable Table: The Office Market in 12 Cities from WSJ.
Of the 16 largest leasing transactions in Washington last year, 10 were by government agencies, according to tenant-brokerage firm Studley. In the fourth quarter of 2009 alone, the Department of Agriculture leased 330,000 square feet in southwest Washington, and the General Services Administration, which handles leases for government agencies, added 1.4 million square feet of new leased office space last year, bringing its total in Washington to 8.4 million.
In conclusion, Government’s growth and firms that associate with the government needing office space are direct examples of the office space rental fees going up. This might jack up the price of residential housing in D.C. which I think they are poised to become more expensive anyway. Well, that would be good News for me personally, considering I live in DC :-)