The commercial real estate market of Washington, D.C. area is set to witness growth in 2019, according to a recently released report by Avison Young.
The report called the area’s “strong economic performance and expanding tenant base” the driving force for growth in the office and industrial sectors in 2018.
About 68 markets in the commercial real estate sectors are covered in the report titled “2019 North America, Europe, and Asia Commercial Real Estate Forecast.”
The report revealed that the region’s office market in 2018 was “predominantly tenant-favorable,” gaining 2.7 million square feet in occupancy, most of it in Class-A space. The overall vacancy rate remained unchanged at 14.6 percent year-over-year.
According to John Kevill, Principal and Managing Director of U.S. Capital Markets for Avison Young, relatively stable Washington is increasingly attracting investors who look for valuable deals.
Kevill added that new residents and technological advancements in the previously “sleepy submarkets” in the region have created opportunities for increased growth.
The report said the overall sales volumes in 2018 were “on track to meet prior-year totals” despite a minor slowdown in transactions closed in the third quarter. It added that institutional and private investors also continued to dominate the market in the region.
“The availability of supply and continuous liquidity in the capital markets are anticipated to drive overall deal volume higher in 2019 while the introduction of federal opportunity zones program could bring new sources of capital to the region,” the report said.
In the industrial market, according to the report, there was demand from a wide spectrum of users in 2018, including Amazon, Sofive Soccer Centers, and Frito-Lay, and the construction pipeline increased 156 percent over year-end 2017 level.
The advantages brought by new occupants, the control of the federal government, and availability of capital will propel growth and investment in the region, the report concluded.