Although almost everyone in the nation’s capital bought into the “Yes, we can!” mentality, economic pressures have largely stifled private development in Washington, D.C.
Federal stimulus funding has allowed a few infrastructure modernization efforts and new-building projects to move forward. “The public and institutional sectors are active,” says David Kitchens, principal in charge of Cooper Carry’s Alexandria, Va., office, located just down the Potomac River. But lack of funding from “private-sector funding sources continue[s] to be the primary reason that projects are not starting or are on hold.”
Rod Garrett, director of Skidmore, Owings & Merrill’s D.C. office, agrees. “Everybody’s very cautious and calculated,” he says. “There is plenty of equity that wants and needs to be placed. The development community wants to do more work, but the financing world is not producing the funds for debt placement at reasonable underwriting standards.”
Still, there are projects under way, and not all are related to federal government activities. “The Washington market has consistently generated over 50,000 new jobs per year, and it is our expectation that, as the economy recovers, the region will again experience strong job growth,” predicts Tasha Stancill, director of marketing for D.C.-based developer Monument Realty. “That will translate into increased demand for housing and office space, which will drive new construction, particularly in strong locations around the Metro,” she adds.
And though the city gets a bad rap for uninspired architecture, “great opportunities exist in D.C. for design excellence and innovation,” says Skidmore’s Garrett. “Every project solicitation, whether coming from the government or commercial developers, lists design as a major project driver, coupled with demands for high performance and energy conservation.”
POPULATION/EMPLOYMENT
The city is a few hundred residents shy of breaking the 600,000 mark. Job growth through 2010: less than 1%.
OFFICE MARKET
91% occupancy; average asking rate: $49.70/s.f.
RESIDENTIAL MARKET
Median home sale price, November 2009: $417,000.
MARKET STRENGTHS
• Access to political power
• Highly educated workforce
• Public transportation
MARKET CONCERNS
• Cumbersome entitlement and approval process
• No real urban design scheme
• Reputation as a government-only town
FORECAST
“We want businesses to expand their view of D.C.,” says Mary Margaret Plumridge, communications director at the Office of the Deputy Mayor for Planning and Economic Development. “Look beyond the Capitol and the White House to see a vibrant city offering optimal conditions for success.”
