Reply to The Pandemic Hit Cities Hard And Then There's Washington, DC

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The data is coming in about downtown DC commercial real estate values.

https://www.bizjournals.com/washington/news/2021/10/07/office-value-drop-downtown-dc-bid.html

https://wtop.com/business-finance/2021/10/dc-office-vacancy-rate-hits-record-high-18-2/

https://wtop.com/business-finance/2021/10/dc-region-near-the-top-for-shedding-office-space/[/quote]
Wow. The biggest concern for DC is in that it stands somewhat alone from other cities. [/quote]

Ouch. But DC is so cool and where all the smart educated people want to live.

“The great office give back is not universal. Among large cities, Austin, Salt Lake City, Miami and San Antonio have all seen a rise in office space being leased in the last year, and office rents are up on a year-over-year basis in 365 out of 380 metro areas tracked by CoStar, mostly secondary and tertiary markets.”[/quote]
I was reading a different article a few days ago that went into market dynamics a little. The conclusion was that mid-block Class B office space in DC is screwed. Class A is doing fine. Corner buildings that are Class B are being upgraded to Class A. There are great deals to be had in Class A space and it has the amenities that people are now demanding, like advanced air filtration systems, outdoor space, etc.

So what is being left behind is a glut of mid-block Class B space that used to be important because it provided affordability. But organizations are now shrinking their office foot prints for hybrid and moving to Class A space so their costs stay the same.

Mid-block Class B offices are an even bigger problem because they are not practical to convert to residential due to a lack of windows (all residential spaces need to be within 30 ft of a window) and large floor plates. Even with the downturn, office rents are still higher than residential so the financial incentives are also not there. 
But there is now a ton of Class [/quote]

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