Washington’s commercial real estate market is one of the hottest in the country, according to a report released today by the National Association of Realtors.
The region — especially Northern Virginia and the District — pulled in billions in commercial-space sales last year and was one of the most popular markets for both office- and retail-space investors.
“The major players [in the commercial real estate market] are here for the long haul,” said Tony Calabrese, a land use lawyer for Cooley Godward, which represents numerous developers in Northern Virginia. “The stability of the cash flow from the U.S. government make this an incredibly healthy market.”
The Washington region has the sixth-lowest office-space vacancy rate in the country at 8.8 percent and — with an average of $47 per square foot — is second only to New York City in the rates charged. The District was sixth in the nation in total office-space sales with $5.2 billion, while Northern Virginia was fifth with $5.9 billion.
Suburban Maryland has not been as successful as Northern Virginia with its office-space sales because its heavy focus on biotech companies makes it harder to entice to developers, Calabrese said.
“Maryland has significant biotech and life science office space,” he said. “Right now that market is struggling a bit. It’s not as stable and predictable and therefore not as stable for investors.”
Northern Virginia is measured independently in NAR’s quarterly report because the area is “such a growth market,” said Walter Molony, a spokesman for the National Association of Realtors.
In fact, investors pumped $1.3 billion into Northern Virginia’s retail market last year, making it the sixth-most popular market in the country for retail investment.
Record job growth and a stable economy have bolstered Washington’s standing, said Lawrence Yun, a senior economist with the National Association of Realtors.
“The D.C. region has just had spectacular job growth,” he said, which means a need for more office space, more stores and, with high home prices, more apartments.
“Everything related to commercial real estate is boosted by job growth.”
