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Washington Area Commercial Real Estate Market Update: Second Quarter 2015


Second Quarter 2015

CohnReznick is pleased to share the Washington Area CRE Market Update for the Second Quarter of 2015.
 
In collaboration with Delta Associates, the report examines the national and regional economy, reviews the state of the real estate market – office, apartments, condominiums, retail, housing, and flex/industrial – and discusses what mixed use leaders need to keep their eyes on.
 
According to the latest report, the Washington metro area has emerged relatively intact from several years of weak economic performance and is again showing signs of growth. The region posted a net gain of 61,600 jobs over the 12 months ending April 2015, its largest month-over-year employment increase in more than four years. This strong job growth is due in no small part to the fact that after several years of reductions, both Federal employment and procurement are again on the rise. We expect the robust job growth trend to continue through the rest of the year and beyond.
 
Key Findings:
 
  • Given the ominous, often-raised red flags about overbuilding, the multifamily sector continues to outperform other sectors by a significant margin. CohnReznick’s David Kessler talks about what’s sustaining multifamily’s forward momentum nationwide.
  • Office demand in the Washington metro area continues to be driven by private sector tenants in search of smaller, more efficient, and higher quality spaces in transit-accessible locations, at reduced prices. 
  • Shifts in demographics and lifestyle preferences benefit the regional apartment market, with another 12-month period of record-breaking absorption reported this quarter. 
  • The Washington condominium market experienced modest improvements. Same-store price changes are becoming difficult to track due to the supply constraints in the regional market. Sales activity in the Washington metro area’s condominium market has also slowed mainly to an ongoing shortage of new condo product. 
  • The Washington metro area retail market continues to improve on a steady, if modest, track. Development activity throughout the metro area highlights optimism among developers and their capital partners for retail centers to thrive throughout the region.
  • The housing market in the Washington metropolitan area has shifted from rapid recovery to a more stable phase. Average prices during the second quarter of 2015 fell for the first time since the fourth quarter of 2011.


For more information on this report and other commercial real estate issues, please contact David Kessler, CohnReznick partner and National Director, Commercial Real Estate Industry Practice, at david.kessler@cohnreznick.com or 301-657-7755.

In case you missed it, read the "First Quarter 2015" report.


This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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