The Buzz with Greg Leisch
Gregory H. Leisch founded Delta Associates in 1980 and serves as its Chief Executive. He has been active in the real estate business since 1970 as a consultant and advisor. Delta Associates serves its public, private and institutional commercial real estate clients with cutting edge consulting, subscription data, and valuation services.
What is Delta Associates’ forecast for employment in the District?
While the national job picture remains bleak in the Fall of 2009, the Washington region has turned the corner. The local recession ended in January and the region has been growing jobs since. The area has added 20,200 jobs since January, and most of those are in the District of Columbia. The District of Columbia has added an average of 7,100 jobs per annum over the past 15 years. I am projecting it to add 6,500 per annum over the next five years, due largely to the expanded role of the Federal government. And this bodes particularly well for the commercial real estate industry as it works off some excesses created at the end of the last development cycle.
What is the outlook for the Office Market?
The DC office market has undergone significant deterioration over the past 12 months. Absorption has been negative 168,000 sq. ft., while vacancy has increased 360 basis points to 10.2%. Rents are in decline throughout DC as concessions are on the rise. Notwithstanding these negatives, DC remains one of the nation’s strongest office markets. It is my view that these weak conditions will peak quickly in 2010 and market recovery will be underway thereafter, with product shortage emerging by 2014.
What are you forecasting for the Condominium Market?
Relative to the suburbs, the DC condominium market was early to respond to peaking demand in 2004–2005 and early to slow down in 2007–2008. So also is its recovery, in my view. I expect new condo product shortage in DC by the end of 2010.
What is the intermediate and long-term outlook for DC?
The outlook remains positive, as DC currently retains one of the lowest vacancy rates and is home to the most premier space options for tenants in the region. A well educated populous and a solid job market produces continued demand for quality residential product, as we move past the worst of this recessionary cycle. However, given the time it takes for entitlements and construction in DC, this means the following dates for construction commencement, in select submarkets, to catch the sweet spot of the next cycle:
• Now: Condominiums
• Mid 2010: Apartments
• Second Quarter 2011: Office
To read more about the shape the recovery will take and its relevance to the Nation’s Capital, pick up a copy of The DC Development Report at WDCEP’s Annual Meeting and Development Showcase December 4th. Register here