by James A. Bacon
While most commercial real estate markets across the United States are slowly recovering from the recession, office vacancies in the Washington metro area ticked higher over the past year, to 13.8% in the first quarter, according to the Wall Street Journal. Clearly a sequester-related decline in federal spending was partially responsible, particularly in Northern Virginia, home to the Pentagon and locus of the defense industry, where vacancies hit 15.8%.
But that’s not the whole story. Buried in the article was an anecdote that should send shivers down the backs of commercial property owners, real estate brokers and local government officials everywhere — not just NoVa, but everywhere — who depend upon commercial property tax revenue to balance their budgets.
Booz Allen Hamilton Holding Corp. signed up in 2011 to take one quarter of the space in MetroPark VI in southeast Fairfax County near a National Geospatial-Intelligence Agency base. But late last year, the WSJ reports, the firm reversed course. The company halted construction and put its entire space on the market for sub-lease. The reason for the move? Not just defense cutbacks.The conclusion:
James Fisher, a spokesman for Booz Allen, said the decision to sublease at least a portion of the space came as more employees have been working from home or at clients’ offices, and as the company has been looking to trim its real-estate footprint.Companies everywhere are realizing that they have way too much office space. . .
If I were a commercial property owner in the Washington area, I would be very afraid.
If I were a Northern Virginia government official dependent upon property tax revenues to balance my budget, I would be very afraid.
If I were anyone, anywhere, counting on metropolitan growth and development patterns to continue on the same trajectory as the past six decades, I would be very afraid.Click here for this excellent overview of the WSJ article, which requires a subscription to access. (UPDATE: You can read the full article by doing a Google search on "DC-area office parks feel pinch.")
So we ask again, why is Fairfax County's Department of Planning and Zoning insisting that the office space per worker will climb to 300 GSF? Their assumption that it will is the foundation of a major planning failure for Reston.