The Washington, DC metropolitan area maintains a plethora of commercial office space tenants. The industries represented varies from A to Z. The points below represent a running list of my thoughts pertaining to business concerns throughout the Washington, DC metropolitan region beginning from 2014 to the present.

• What is unique to the Washington area is a minimal industrial component; there is very little ‘made’ in this town except for policy. We are not a blue-collar / union town and with a few small exceptions, the business of Washington revolves around the political lifecycle. So long as bills are introduced, signed into law AND appropriated, the myriad of organizations who feed off of the political lifecycle will continue to perform.

• The challenge to the Washington business community is the congressional stalemate and political brinkmanship being witnessed over the past several years.

• From a non-partisan position, if our elected leaders are not providing a 3-5 year target for our business leaders to hit, then how can our business leaders guide their organizations over the same term?

• Post Lehman collapse, the implosion of Bear Stearns as well as other financial ‘mishaps’ (2008), the Washington Region experienced a significant rate of growth, which was fueled mainly by the Federal Government. From a real estate perspective, investment grade properties were able to trade at all-time highs due to the perceived ‘stability’ emanating from the Washington Region. In turn, we have seen upward pressure on leasing rates in order to support the elevated / appreciated costs of commercial real properties.

• Given the results of the 2010 mid-term elections, the ‘reds’ were able to gain control of the House of Representative. However, any economic path forward remained elusive due to partisan politics.

• With the results of Nov 2014 elections seeing the Republicans win control of the Senate, the Washington players seem to be jockeying yet again so the market is seeing signs of velocity. Still, Sequestration has maintained a firm chokehold on the region and many Washington-area business have felt the pinch.

• The 2016 Budget Act, signed into Law by President Obama, includes a rare showing of bipartisanship. Some aspects of Sequestration will be rolled-back so Washington-area businesses may realize an uptick in government contracting procurement.

• President Trump has signified significant spending in some areas with decreased funding in others; business leaders seem to be taking a 'wait and see' attitude

• The 2016 Commercial Real Estate data reflects positive net absorption in some part of the Region while others still continue to struggle

• The D.C. Region is witnessing an increase in velocity - the throttle seems to be engaged; executives are bullish on the region

• The METRO expansion is fueling optimism specifically in Tysons and points West towards Dulles

• Commercial lease concessions still remain at an all-time high while rental rates have slightly increased

• Thus far in 2018, the vacancy rate reflects opportunities for Tenants to pick and choose while Landlords compete for business. Vacancy Rates are hovering around 13% for Commodity A and Class B buildings and closer to 16% for Trophy Assets

• The Trump Administration has put a curb on GSA leasing, which has impacted the overall vacancy rate in the region.

• The Region is participating in an all-time low unemployment rate, although wage growth remains minimal; consistent jobs report as well as consumer confidence / spending reports all point towards a bullish 2nd half of 2019

• Real estate concessions remain at an all-time high with rents having slightly decreased - this is due to the tremendous supply of property on the market

• Right when things were going well (2019 / early 2020), the world was introduced to a new coronavirus, aptly named COVID-19. What started as a 2-week hiatus from work / school (March 2020) has since extended into a world-wide pandemic (WHO).

• Prior to COVID-19, the market heavily favored Tenants or users of commercial office space

• During COVID, due to a dearth of long-term planning, many real estate officers are unable to sign long term leases

• The business world is discussing, “… a new normal…”

• In a post-COVID world, the remote work equation is still being formulated! Interestingly, remote work was always in place as around the Metropolitan DC area, folks took some liberties here and there. Going forward, with many professionals out of the office and relatively happy with not having to navigate beltway traffic, organization culture is taking a hit.

  • So many professionals who are responsible for the real estate decision (C-Suite executives, managing partners, business owners) have personally expressed to me that the business they have built (or are charged with building) and the people put in place around them, what we call culture, is being eroded in the name of convenience.

• The results of the 2022 mid-terms seem to reflect a bipartisan Congress so hopefully our elected leaders will put politics aside and get down the business of running our country.

•  Given extraordinarily high interest rates, the commercial real estate industry is taking a pounding!

• There is the perfect storm of remote work, high interest rates and employee leverage over employers

• The forecast of ~ US $3tn CMBS debt coming due over the next 12-24 months bodes doom and gloom for the commercial real estate sector

• Currently, tenants in the market are requesting a Landlord’s financial position; this is very rare in the marketplace yet appropriate given the current market conditions