As Gov’t Demand Buoys DC Office Market; ING Makes $73M Sale
- Oct 26, 2009
By: Tonie Auer, Contributing Correspondent
The Washington, D.C., office market may have reached a turning point in demand as the region experienced improved fundamentals last quarter—figures propelled by expanded demand for government office space. And if deals like the recent $73 million sale of an office building in Falls Church, Va., are any indication, buyers are taking interest in the area’s strong demographics..
The overall third quarter net absorption of negative 373,000 square feet is a significant improvement from the negative 748,000 square feet reported in the previous quarter, according to data from Cassidy & Pinkard Colliers. Additionally, the region recorded positive net demand of 87,500 square feet, a healthy rebound from the negative 231,000 square feet reported in the second quarter, Colliers said.
A government-led boom is in the works for the Washington, D.C., region with job growth expected to start in Downtown D.C., before eventually spreading out to the suburbs, stated Kevin Thorpe, vice president, director of market research for Cassidy & Pinkard Colliers. He predicts that the second half of 2010 throughout 2011 will be robust demand years for the D.C. region’s office sector.
Cassidy & Pinkard Colliers also reported that investment sales volume increased to $734 million in the third quarter of 2009, up from $240.7 million in the previous quarter. Average price per square foot rose from $269 in the second quarter to $348 in the third quarter.
Amid this backdrop, some large-scale investment sales are taking place. This week, ING Clarion Partners L.L.C. sold 3150 Fairview Park in Falls Church, Va., on behalf of the Australia-based ING Office Fund. The 252,600-square-foot, Class-A office building was constructed in 2001 and serves as headquarters for Noblis Inc., a non-profit science, technology and strategy organization.
According to Cassidy & Pinkard Colliers, the Falls Church area had a third quarter net absorption of negative 287,200 square feet, an improvement from the negative 664,600 square feet reported in the second quarter; vacancy ended the quarter at 14.4 percent, up from 11.9 percent a year ago. The report cited CoStar reports that average asking rents fell 5.8 percent from a year-ago to $29.50.