The Post reports that Washington area market for office space continues to deteriorate as vacancy rates keep increasing, rents keep dropping, and few new buildings have started construction.
From WaPo: The slump is likely to continue for the rest of 2009….as roughly 11 million square feet of new space is under construction and expected to come on line in the coming years.
As of yesterday [5/24 ’09], the vacancy rate for the District and the close-in suburbs was up to 12.5 percent from 11.1 percent at the end of the second quarter last year, according to CoStar Group, a real estate research firm. Rents were down to $33.47 a square foot from $34.55. [The weaker demand will make the rents inevitably fall to lower levels.]
Developers who had expected to get rents of $40 a square foot…are now hoping to earn around $30 a square foot on buildings in the city and the surrounding area.
“The deals have not just slowed — they’ve virtually stopped“, Dennis K. Moyer, a commercial real estate lawyer said.
The Washington office-space market, which has seen a great overall weakening of demand since 2008, has suffered one of its toughest stretches ever so far this year.