Trophy Buildings in D.C. Fuel Activity

WASHINGTON, DC--Trip Howell (top right photo), managing director, Jones Lang LaSalle, says market activity in Washington, DC was uncharacteristically slow during the first half of 2008.

However, Trophy assets fueled regional growth and claimed a disproportionate share of transaction volume. Despite accounting for just 10.5 percent of the inventory, the Trophy market claimed 84.0 percent of the District’s year-to-date net absorption and led regional demand for a third consecutive year.

Steady tenant demand and continued low vacancy in existing buildings indicated vitality in the Trophy market through mid-year. Direct vacancy rates ended the second quarter at 1.4 percent, substantially below the broader market’s 7.7 percent rate.

Through the second quarter, the 10,875,333 square foot Trophy market spanned 32 buildings, primarily located within the core markets of the Central Business District and East End, with three of the assets located in Capitol Hill rounding out the inventory.

An additional three million square feet of trophy product was under construction in 11 buildings scheduled to deliver between 2008 and 2012.

1099 New York Avenue, NW, was the only new Trophy building to deliver during the first half of 2008. The 177,506 square foot building was 55 percent leased to law firm Jenner & Block. The building increased the Trophy inventory by only 1.5 percent, but the availability contributed to an increase in direct vacancy, which climbed to 1.4 percent from 0.4 percent at year end 2007. Only two buildings (1099 New York Avenue, NW and 1301 K Street, NW) had direct blocks of space available over 30,000 square feet.

For a detailed copy of this report, please contact John Sikaitis, Vice President, Communications, Jones Lang LaSalle, john.sikaitis@am.jll.com