CRE in DC

[Anonymous]

Fannie Mae is still in the building for another 5 years. But I can’t imagine many current employees will be looking to buy in DC after this announcement. Those who already own in DC will probably seek other jobs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hooray! More affordable housing.

Those buildings were recently constructed and could not easily or affordably be repurposed. Of course, it is TAX REVENUE, including CRE taxes that pay for ALL city services.

Since Ted is leaving, Bowser can use the arena renovation money to refurbish those buildings. Besides, it you need more money, raise taxes.

[Anonymous]

It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s a disaster. Not just for CRE, but residential too as their highly paid workers find the commute from upper NW to Reston cumbersome.

Most Fannie May employees make the equivalent of federal GS-13 and GS-14 employees ($125K to $175K). I know an about a dozen Fannie May employees and nearly all who regularly go into the DC office, rent in DC. They can’t afford to buy a home in DC.

A lot of houses are within reach for a household earning $250k to $325k. And then there are the executives who make much much more.

[Anonymous]

Anonymous wrote:This was just announced, not only will a huge space be vacant, it's notable that they are exiting the lease EARLY. The conventional wisdom had been that when CRE leases and fed leases expired they would be renegotiated for a smaller footprint. This seems to accelerate that timetable.

I used to work nearby and even pre-cv when newly developed it was a bit of a ghost town in that area.

This does not seem to bode well, but anyone who knows more about CRE, can you give us some context?

Fannie Mae to exit its D.C. headquarters lease years early

The mortgage giant, whose 15-year, $770 million lease at 1100 15th St. NW was among the most rich such deals in D.C. history, first occupied Midtown Center in 2018.

FBI gone
Monumental Sports gone
Fannie Mae gone

I am just so glad that there is a plan and our City Council and Mayor saw all of this coming and will deftly maneuver through it. But hey, we can get more mixed use housing there. That will be great.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This was just announced, not only will a huge space be vacant, it's notable that they are exiting the lease EARLY. The conventional wisdom had been that when CRE leases and fed leases expired they would be renegotiated for a smaller footprint. This seems to accelerate that timetable.

I used to work nearby and even pre-cv when newly developed it was a bit of a ghost town in that area.

This does not seem to bode well, but anyone who knows more about CRE, can you give us some context?

Fannie Mae to exit its D.C. headquarters lease years early

The mortgage giant, whose 15-year, $770 million lease at 1100 15th St. NW was among the most rich such deals in D.C. history, first occupied Midtown Center in 2018.

FBI gone
Monumental Sports gone
Fannie Mae gone

I am just so glad that there is a plan and our City Council and Mayor saw all of this coming and will deftly maneuver through it. But hey, we can get more mixed use housing there. That will be great.

Intelsat campus vacant.

[Anonymous]

This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

[Anonymous]

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

[Anonymous]

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.

The whole "death spiral" thing is being overdone. Despite the recent rise in crime and downtown hollowing out, there's been no decline in demand for residential real estate. In fact, DC 's population is growing again after shrinking slightly before and during COVID. I don't think CRE in the downtown core are strongly linked to residential demand anymore. When I was living in DC, many of my friends (me included) worked in the suburbs but chose to live in the city because of the urban culture and amenities. Young people will still want to live in the city even if their offices move. In fact, work from home liberates people to live where they want - lots will move out to the exurbs, but there will also be those who always wanted to live in a city who now can.

The tax on CRE is double that of residential real estate. This is actually a huge problem.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

What do you want the city to do to "incentivize" private companies like Fannie Mae to stay? I'm not sure sure I'd want my tax dollars being given to private companies to offset their lease obligations.

And your premise is incorrect--these places aren't leaving because its employees no longer live here. It's because of money. Companies don't need to spend as much on big fancy offices if most of their workforce isn't physically in an office. It's cheaper to lease space outside of the city.

The FBI is a different situation that's controlled by the GSA. Few FBI agents were even living in DC to begin with, and all of the reports cited space constraints as the reason they were looking outside of the city.

I do agree that DC should've done a better job trying to keep the sports teams here. They are leaving because VA offered Ted a better financial package and a huge plot of land. I don't think it has anything do with where its workforce lives.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

What do you want the city to do to "incentivize" private companies like Fannie Mae to stay? I'm not sure sure I'd want my tax dollars being given to private companies to offset their lease obligations.

And your premise is incorrect--these places aren't leaving because its employees no longer live here. It's because of money. Companies don't need to spend as much on big fancy offices if most of their workforce isn't physically in an office. It's cheaper to lease space outside of the city.

The FBI is a different situation that's controlled by the GSA. Few FBI agents were even living in DC to begin with, and all of the reports cited space constraints as the reason they were looking outside of the city.

I do agree that DC should've done a better job trying to keep the sports teams here. They are leaving because VA offered Ted a better financial package and a huge plot of land. I don't think it has anything do with where its workforce lives.

Agreed on all these points.

Fannie Mae is leaving because they are one of the most remote-friendly large employers in the country. They are not really enforcing any RTO mandates. They are actively recruiting from all over the country, including for (remote) management positions. The US government is Fannie's largest shareholder and has to show that its being responsible with costs. Remote and hybrid work allows Fannie to slash real estate costs, increase retention, all while keeping wages relatively flat.

Fannie is actually the canary in the coal mine. A lot more companies - particularly in tech - will relax RTO once they've cut enough head count. They can then look to cut RE costs and consolidate their physical footprint.

This is just the free market at work, all enabled by recent technological advancements to enable work-from-anywhere.

[Anonymous]

Anonymous wrote:Fannie Mae is still in the building for another 5 years. But I can’t imagine many current employees will be looking to buy in DC after this announcement. Those who already own in DC will probably seek other jobs.

They have limited in office time, could easily commute from DC to VA a minimal amount.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This isn't so much about crime as it is cost. It's costing businesses a lot of money to stay in leases that no longer suit their needs. A lot of business are grappling with this. Why continue paying for space that's 60% than what you need due to hybrid work? I'm not thrilled with anything that DC is doing these days, but I'm not sure what DC or any city can do about the fact that the hybrid work model is here to stay in the private sector.

They need to incentivize these companies staying. And of the companies which have announced they are leaving, only Fannie Mae might be WFH related. The Caps/Wiz and FBI leaving has nothing to do with WFH.

DC simply has no finger on the pulse of business in the city and has simply relied on the fact that a work force lives here while receiving a housing subsidy. Once that work force no longer works here and those people move, the city will see tough times.

Why do we want to lose FBI agents who are well paid and earn tax free housing allowances?

What do you want the city to do to "incentivize" private companies like Fannie Mae to stay? I'm not sure sure I'd want my tax dollars being given to private companies to offset their lease obligations.

And your premise is incorrect--these places aren't leaving because its employees no longer live here. It's because of money. Companies don't need to spend as much on big fancy offices if most of their workforce isn't physically in an office. It's cheaper to lease space outside of the city.

The FBI is a different situation that's controlled by the GSA. Few FBI agents were even living in DC to begin with, and all of the reports cited space constraints as the reason they were looking outside of the city.

I do agree that DC should've done a better job trying to keep the sports teams here. They are leaving because VA offered Ted a better financial package and a huge plot of land. I don't think it has anything do with where its workforce lives.

Agreed on all these points.

Fannie Mae is leaving because they are one of the most remote-friendly large employers in the country. They are not really enforcing any RTO mandates. They are actively recruiting from all over the country, including for (remote) management positions. The US government is Fannie's largest shareholder and has to show that its being responsible with costs. Remote and hybrid work allows Fannie to slash real estate costs, increase retention, all while keeping wages relatively flat.

Fannie is actually the canary in the coal mine. A lot more companies - particularly in tech - will relax RTO once they've cut enough head count. They can then look to cut RE costs and consolidate their physical footprint.

This is just the free market at work, all enabled by recent technological advancements to enable work-from-anywhere.

This CRE shrink/consolidation has been pending for a while, now seems to be here. As will the revenue consequences.

[Anonymous]

Anonymous wrote:It's devastating how Bowser and the Council have taken people's investment in our city for granted. At what point will there be a tourism drop off too? Here's a thought- make the city safe and welcoming? Spend money on that first and foremost. We've spent ten years on affordable housing and violence interruptors, and our city is more unpleasant than it's ever been.