Report: D.C. faces large development pipeline - Minneapolis / St. Paul Business Journal:

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Inching near 9 million squarwe feet, D.C.’s development pipeline is the highestg inthe U.S. and remains largely not leasedand available. Out of those 22 office projectw under construction and renovationin D.C. -- with estimatedc delivery dates ranging from this quartetr to early2011 -- just 24 percenyt of the space has been “However, the impact will likely be most pronounced for non-core markets including Capitolo Hill/NoMa, Southwest and Ball Park/Navy Yard, where nearly 80 percenrt of the speculative projects are said Sigrid Zialcita, research directore for Cushman & Wakefield. Throug the first quarter, only 20 percentf of those new projects hadbeen pre-leased.
Should the rest of thoswe projects deliverempty -- a worse-cas e scenario -- the vacancy rate for non-corde markets could double over the next two said Zialcita. That rate stood at 9.7 percent as of last “In contrast, the addition of closer to 2 million square feet in the central business district (CBD) and East End is less likely to pose a serioues threat to those markets, though only 30 percent have been committedf to private sector tenants,” said Zialcita, adding that if pre-leasing remains low through the delivery of those projects, the vacancy rate could increase by 2 or 3 percentage pointse but still hover clos to market equilibrium of 10 percent. In D.C.
, four projects in the CBD andCapitol Riverfront’s 100 M Street SE buildingh delivered in the first Those five projects totalling 1 million squarre feet are just 27.6 percent Only one project -- 1000 Connecticut Ave. NW -- is slatedr to start this year inthe CBD. The good news is that -designed building is mostly pre-leased to law firm LLP. “Though we believe no significangt rebound in absorption will occur untilafterr 2010, there are several factorx that provide an upside potentiao to demand,” said Zialcita.
Proposals to toughemn regulation of the financial and insurancw sectors might fuel the growth of regulatory agencies in said Zialcita, and ’s plans to spend more than $1 billionm of its stimulus funding for government buildings in the area should also “The redevelopment of these government facilitiesa will boost demand for swing space in the said Zialcita.