14A— February 24 - March 9, 2017 — Commercial Office Properties — M id A tlantic

Real Estate Journal

NAI M ichael

Year End Office Market

The Washington DC Office Market The Washington Area office market includes the District of Columbia and adjacent suburban markets in Maryland and Virginia. The Washington Area office market consists of about 470 million square feet in 10,045 buildings.Net absorption for the overall Washington Area was positive 1,450.701 square feet for the fourth quarter 2016. That compares to positive 86,500 square feet in the third quarter 2016, positive 501,096 square feet in the second quarter 2016, and negative (565,786) square feet in the first quarter 2016. The Washington Area vacancy decreased to 14.8% with 10.4% vacant in Washington D.C.’s Central Business District (CBD) and 16.9% vacant in the suburban markets. The Washington Area asking lease rates at the end of the fourth quarter averaged $35.23 per square foot. The lease rates averaged $52.04 in the CBD and $29.34 in the Suburbs. Sales activity tallying office building sales of 15,000 square feet or larger, Washington office sales figures rose during the third quarter 2016 in terms of dollar volume compared to the second quarter of 2016. In the third quarter, 34 office transactions closed with a total volume of $1,844,001,625. The 34 buildings totaled 7,391,712 square feet and the average price per square foot equated to $249.47 per square foot. Cap rates have been lower in 2016, averaging 6.42% compared to the same period in 2015 when they averaged 6.79%.

By Dave Wills/NAI Michael | Q416

Prince George’s County, MD Office Market Prince George’s County encompasses all of Washington D.C.’s eastern boundary, which includes the Capital Beltway from I-95 to the north of DC then south to National Harbor. The Prince George’s County office market totals

approximately 26 million square feet in 1,137 buildings at rates averaging $21.45 per square foot – a good value when compared to over $50 psf in DC’s central business district and $30 psf in other comparable suburban markets. Prince

George’s County office vacancy rates steadily declined every quarter of 2016 from 19.2% in the first quarter and ending the year at 18.8% at the end of the year. Using 5-year averages and known construction activity, vacancy is forecast to drop to 17.0%

by the end of 2017. The average quoted asking annual rental rate for Prince George’s County office space steadily increased ending the year at a rate averaging $21.43 per square foot on a full service basis. Full service rates usually include utilities, janitorial services, and

maintenance of the building common areas. Net absorption of vacant space county wide for 2016 averaged positive 40,642 square feet

for each of the 2nd, 3rd, and 4th quarters. The central to northern county submarkets rebounded in the fourth quarter netting positive 92,896 square feet. New

leases signed late in 2016 show that the northern submarkets will have a positive net absorption of over 300,000 square feet in the first quarter 2017.

Source: CoStar 2017

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