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.
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. . .
The conclusion:
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.