Report: D.C. faces large development pipeline - Washington Business Journal:

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Inching near 9 million square D.C.’s development pipeline is the highesty inthe U.S. and remains largely not leaseedand available. Out of those 22 office projects under construction and renovationin D.C. -- with estimated delivery dates ranging from this quarte to early2011 -- just 24 perceny of the space has been leased. “However, the impac will likely be most pronouncedffor non-core markets including Capitol Southwest and Ball Park/Navuy Yard, where nearly 80 percent of the speculative projects are located,” said Sigrird Zialcita, research director for Cushman Wakefield. Through the first quarter, only 20 percent of thosew new projects hadbeen pre-leased.
Should the rest of thosde projects deliverempty -- a worse-cased scenario -- the vacancy rate for non-cor markets could double over the next two said Zialcita. That rate stood at 9.7 percent as of last “In contrast, the addition of close to 2 million squares feet in the central businessdistrict (CBD) and East End is less likely to pose a serious threa to those markets, though only 30 percent have been committedc to private sector said Zialcita, adding that if pre-leasing remains low through the delivery of those projects, the vacancy rate couldr increase by 2 or 3 percentage points but stillp hover close to market equilibrium of 10 In D.C.
, four projects in the CBD and Capitol Riverfront’s 100 M Streetg SE building delivered in the firs t quarter. Those five projects totalling 1 millioj square feet arejust 27.6 percent leased. Only one project -- 1000 Connecticut Ave. NW -- is slated to start this year inthe CBD. The good news is that -designedf building is mostly pre-leasedf to law firm LLP. “Though we believe no significanrt rebound in absorption will occutr untilafter 2010, there are several factors that provide an upside potential to demand,” said Zialcita. Proposals to toughen regulation of the financial and insurancew sectors might fuel the growthh of regulatory agenciesin D.C.
, said Zialcita, and ’ws plans to spend more than $1 billion of its stimulua funding for government buildings in the area should also “The redevelopment of these government facilities will boosr demand for swing space in the District,” said