Washington DC office vacancy rates, rent oulook during recession - Business Insider

Meanwhile, this recession's bailout doesn't appear to expand the footprint of government as other downturns have.

Washington DC's office vacancy rate rose to 15.2% at the end of the second quarter, according to data from CBRE, the first time it has surpassed 15% in the 28 years since brokerage and real estate services firm began tracking the measure and 1.3% higher than it was just six months ago. Past periods of strength, such as during the mid-2000s, have pushed Washington DC's vacancy to less than half of that.Companies from banks to tech giants are looking to shed huge chunks of office space.

Vacancy has steadily accrued over the last decade as new office supply has been built. During the past four years alone, about 6 million square feet of new space has been added to the market, according to CBRE research. Those shiny new offices lured away tenants, but left behind vacancies in older office properties that have been harder to fill, adding about 2 million square feet of net vacancy to the market, CBRE found.

In the recession a decade ago, the number of jobs in the city actually swelled by 10%, according to JLL, as government grew rapidly to administer a massive bailout of the financial system and added staff to oversee a tightened regulatory regime. Towards the tail end of that downturn in 2010, 4.3 million square feet of space was absorbed, a record figure, according to CBRE data and vacancy swung from 11.8% to 9.8%, a major tightening of the office market.

There are some signs for optimism. Washington DC lost about 337,000 total jobs year over year in April compared to nearly 2 million in New York City, about 1 million in Los Angeles, 630,000 in Chicago, 485,000 in Boston, and 375,000 in San Francisco, according to data from Cushman & Wakefield.

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