Photo by FIZ

Written by former DCist Editor-in-Chief Ryan Avent

The District office market has long been one of the strongest in the country for reasons that are easy to understand. On top of the extremely stable base demand provided by government offices and related businesses (running the gamut from media to law firms and lobbyists to diplomatic groups), has lately been piled new demand from entrants in finance and technology. The market is doubly insured against economic variability, both because of the countercyclical nature of government – it spends more when everyone else spends less – and because it’s at the center of the metropolitan area, while more speculative enterprises and projects tend to locate near the outskirts.

But the District isn’t invulnerable. Washington’s latest economic boom led to soaring commercial real estate prices in downtown and the Golden Triangle, both of which are largely built out at this point. Pressure grew to expand office construction elsewhere, and expand it did – into the area around the New York Avenue metro station and south of the Capitol into the Ballpark district. Both places have been constant construction sites for the past two years and will remain so for much of the next five. In all, some nine million square feet of new office space is in the pipeline – 22 buildings – and according to the Washington Business Journal, just 24% of it is leased.

The funny-if-it-weren’t-sad part of the overhang is that it’s fairly mild relative to other business districts, and very likely to be short lived. Washington’s office surplus is less threatening in no small part because the surplus nationally is so bad. The government is currently drafting new regulatory and oversight rules and authorities that will apply to banking and finance, housing, consumer lending, and other business areas, in an effort to prevent a repeat of the current crisis. Those agencies will have to staff up and occupy office space, and they’ll attract complementary business services – from lawyers to copy shops – as well as more lobbyists angling to be near to the action.