First Quarter 2012 Market Review
The Washington DC office market finished the first quarter with a vacancy rate of 13.5%. The vacancy rate was slightly higher than the prior quarter whereby the vacancy was at 13.4%. While the DC market experienced an increase in office vacancy rates, the national office market improved whereby it stood at a 12.2% vacancy rate, down from 12.3% the prior quarter. For the Washington metro market, the increase in vacancy was largely attributed to the Federal Government vacating various properties reflective of Federal Budget cuts.
The Washington industrial market fared better than the office market, the former having a vacancy rate of 11.7% at the end of the quarter. This compares to a vacancy rate of 11.9% the prior quarter. The national vacancy rate for the industrial sector stood at 9.3% down from 9.4% the prior quarter.
Showing the best fundamentals, the vacancy rate for the Washington DC retail market at quarter’s end stood at 4.9% slightly up from 4.8% the prior quarter. This compares to a national retail vacancy rate of 6.9% down from 7.1% the prior quarter. Vacancy rates for all sectors are higher for the Maryland and Virginia suburbs.
Given the trends we have experienced year to date, the Tyler-Donegan team expects continued improvement with the commercial real estate sector over the balance of the year. Some of these trends include the following:
- Increased tenant and buyer activity in the market
- Increased liquidity with commercial banks and other financing sources loosening up credit
- Increase in U.S. consumer confidence, with a significant increase in the current month (April)
Despite these positive trends, growth in the U.S. Gross Domestic Product (GDP) was slower for the first quarter than anticipated at an annual rate of approximately 2%. Also, jobless claims fell short of expectations suggesting that hiring will remain weak. In short, the mixed signals, as conveyed by a variety of economic indicators, suggests a continued slow recovery for commercial real estate.
The following are a few select transactions carried out by the Tyler-Donegan team members during the first quarter.
1st Quarter Transactions
David Kaye and Joe Donegan represented Goodwill Industries of Monocacy Valley, Inc.® with an expansion of their warehousing and distribution requirements. Goodwill leased 22,000 square feet of warehouse space at 200 Monroe Avenue in Frederick. The space was required for sorting and bailing donated clothing in excess of the needs in Frederick and is ultimately shipped to other Goodwill Retail Stores. Goodwill® Industries of Monocacy Valley’s is a member of Goodwill® Industries International whose mission is to “Create Hope, Jobs and Futures in Our Community.”
Hyatt Center/Urbana Montessori School
Representing the Landlord, Hyatt Center IV LLC, TD leased 6,000 square feet to the Urbana Montessori School at 1896 Urbana Pike (Hyattstown). Urbana Montessori is owned and run by Mrs. Sangi Krishnaswamy. Mrs. Krishnaswamy, a Montessori-trained teacher, and her husband, Deva, said they decided to create the academy because they saw a need. The school is relocating and expanding from its current location in the Villages of Urbana. The new location will be ready for the fall enrollment. Chad Tyler handled the transaction.
New Hope Presbyterian Church
TD member Karen Frazier represented Frederick-based New Hope Presbyterian Church in securing a new location off MD 180, just east of the City of Frederick. New Hope leased 10,000 square feet which will soon be renovated for its new sanctuary and church offices. New Hope was established in 1983 and has experienced steady annual growth since its inception.
REO & Short Sales Marketing
TD partner Brian Duncan recently secured the designation of Certified Distressed Property Expert. Brian has engaged in an extensive amount of marketing and sales of bank-owned property over the last 3 years. This has included both residential and commercial property.
Whether you own a single home or second home, or you have a commercial property with multiple liens, we have a recognized system that is lender approved. In addition, if you are looking for investment properties, we have an early alert system that identifies properties per type. Give Brian a call to discuss selling or buying distressed properties.
Public Private Partnership & Financing
TD has been engaged by a large regional development company to provide land acquisition services, consulting services and to secure financing for a large public private partnership project in the Mid-Atlantic Region. This assignment further exemplifies TD’s strong expertise and experience in this growing segment of the commercial real estate development industry. As public sector budgets continue to experience tremendous pressures, more and more local and state governments are turning to such partnerships in order to complete needed economic development and infrastructure projects