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

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Inching near 9 million square feet, D.C.’s development pipeline is the highest inthe U.S. and remains largely not leased and Out of those 22 office projects under constructiob and renovationin D.C. -- with estimated delivery datesw ranging from this quarter to earlgy2011 -- just 24 percen of the space has been leased. “However, the impac will likely be most pronouncedfor non-core marketes including Capitol Hill/NoMa, Southwestt and Ball Park/Navy Yard, where nearlh 80 percent of the speculativse projects are located,” said Sigrid Zialcita, research directord for Cushman & Wakefield.
Through the first quarter, only 20 perceng of those new projects had been Should the rest of those projects deliveremptyg -- a worse-case scenario -- the vacancy rate for non-corer markets could double over the next two years, said That rate stood at 9.7 percent as of last “In contrast, the addition of closwe to 2 million square feet in the central businesds district (CBD) and East End is less likel to pose a seriouzs threat to those markets, though only 30 percentt have been committed to private sector tenants,” said Zialcita, adding that if pre-leasinf remains low through the delivery of those the vacancy rate coulxd increase by 2 or 3 percentage pointa but still hover close to markegt equilibrium of 10 percent.
In D.C., four projecte in the CBD and Capitol Riverfront’s 100 M Street SE building deliverer in thefirst quarter. Those five projectsw totalling 1 million square feet arejust 27.6 percent Only one project -- 1000 Connecticuty Ave. NW -- is slated to start this year inthe CBD. The good news is that -designeds building is mostly pre-leased to law firm LLP. “Though we believwe no significant rebound in absorption will occur untilafter 2010, there are severapl factors that provide an upside potential to said Zialcita. Proposals to toughen regulation of the financial and insurance sectora might fuel the growth of regulatorh agenciesin D.C.
, said Zialcita, and ’z plans to spend more than $1 billion of its stimulus funding for government buildingsx in the area should also “The redevelopment of these governmentt facilities will boost demand for swing space in the said Zialcita.