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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I say let DC do whatever it wants with bikes. It’s neither the region’s main population nor job center anymore.[/quote]
Exactly. They are only accelerating the decline. Already losing population and commercial tax base. Accelerating anti-growth transportation policies in the face of that headwind is an interesting policy choice and I think the pace at which they are trying to do this makes clear that the proponents know these changes will not stand up to the test of time.[/quote]

So the contention that the people who are buying up 7 figure properties now are going to be financial losers. Got it.[/quote] 
In finance parlance, they are called “bag holders”. Rising rates will continue to have a drag on valuations, which has already started with average sales price declines from July to August.

Just wait for the next DC budget. CRE is taxed at 2x residential and contributes 20% of DC revenue. However, CRE tax is based on valuations from revenue generation and the CRE vacancy rate for < Class A is rising quickly and overall office occupancy across the whole region has plateaued at 47% pre-COVID, with suburban office space, particularly in Bethesda and NOVA having substantially lower vacancy than DC. Effectively the only tenants saving the DC office market right now are law firms. CRE owners are very active in challenging valuations, which means that the tax they pay is effectively mark-to-market.

How do you think DC is going to make up the revenue shortfall? Increasing income withholding or residential property taxes at this time will lead to further erosion of the tax base, which has started with the two consecutive years of population decline that are expected to continue through 2022 and perhaps longer.

But have fun in your bike lane![/quote]

The extended vacancies in commercial office space are a good thing if they translate into conversions into residential apartments. Maybe you take a particular fancy to CBDs like Dallas and Houston which are as empty as a zombie hell-scape after dark, but most of the rest of us appreciate the vibrancy associated with a CBD where people live. NOVA and Bethesda can have all the boutique consulting firms and defense contractors they want. We’re quite happy to trade them for people’s homes that allow them to live closer to where they work.[/quote]
There will be no significant office conversions in downtown DC for many reasons. But a big one is because the PP was wrong about vacancy rates. Class A has the highest vacancy rate at 15% and rising while Class C has the lowest at 5%. This is because asking rents for Class A have not decreased despite decreasing demand for commercial office space while asking rents for Class C have declined to match market conditions. There are not enough law firms willing to pay Class A asking rents and Class A landlords have limited ability to decrease rents due to financing. Most of the Class A leasing activity you are seeing is tenants moving from older Class A buildings to brand new construction. GSA is also continuing to lease space in the suburbs while giving up space in DC, so even the number of government jobs in DC are declining with a preference for more car friendly suburbs. The future of downtown DC is a lot of half empty glass buildings. Perhaps even an “zombie hellscape” as you like to call it. Enjoy that on your bike ride in your protected bike lane.

[/quote]
All of the demand for Class C basically comes from GSA which creates a sort of interesting Catch-22 for office conversions. If GSA gives up those leases, then the Class C buildings - which would be the most likely for residential conversion - will become available. However, if the jobs move out to the suburbs then what’s the business case?

And bringing this back to bike lanes, how do folks plan to live in DC and bike to their Fed job in Springfield?[/quote][/quote]

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