The federal government is riding to the rescue of D.C.-area landlords, scooping up office space and staving off a commercial real estate collapse that has many analysts worried, a new report finds.
The Washington area shed nearly 53,000 jobs in 2009, but the government’s demand for desks has kept the region’s offices from falling into the same foreclosure morass that is threatening to swallow other markets, analysts at Delta Associates found in a new report. The federal government accounted for more than one-quarter of the offices that were leased in 2009, Delta reported. That’s more than double the government’s share from two years ago, when the recession began.
“It’s wonderful to have Uncle Sam as the primary employer in the economy,” Delta Chief Executive Officer Greg Leisch told the Washington Examiner. “It certainly helps.”
Delta’s report comes amid dire warnings that the nation’s skyscrapers and office complexes are in deep trouble. In February, a congressional oversight panel said that the value of commercial real estate has fallen by nearly 40 percent since 2007. In the next five years, some $1.4 trillion in loans will come due and nearly half of the buildings are worth less than what their owners owe on them.
But Delta’s report points to an only-in-Washington irony: Lower-paying jobs are being shed, but higher-paying ones are being created. In the 12 months before February 2010, about 17,600 construction workers were fired or laid off. At the same time, there were about 13,400 new federal hires, Delta found.
The “new government jobs typically are office-using, higher-wage managerial positions, as the Obama administration staff up to manage the financial services rescue program … and the stimulus package,” Delta analysts found.
Since February 2008, the government has created about 23,900 jobs in the Washington area, the Delta report states.
In fact, only two sectors of the Washington economy grew in the past year: the federal government and education/health care, Delta found. Even state and local governments have shed about 11,800 jobs, Delta found.
Delta’s report, “The Impact of Government Leasing,” is short-term evidence that supports long-term projections. Earlier this month, George Mason University economist Stephen Fuller predicted that the federal government would help the Washington area nearly double its economy by 2030. Fuller predicted that the growth of domestic security, defense and securities regulation sections of the government would help make the D.C. area one of the nation’s fastest-growing local economies, behind Atlanta and Dallas-Fort Worth.
The federal government rents nearly one-third of offices’ available square footage in Northern Virginia, nearly half in the District, and nearly one-sixth in the Maryland suburbs.
Area; Percentage of square feet of office space leased by federal government in 2009; percentage, 2008; percentage, 2007
District; 48 percent; 30 percent; 15 percent
Northern Virginia; 31 percent; 21 percent; 7 percent
Maryland; 14 percent; 3 percent; 8 percent
Source: Delta Associates
