If Big Data is the electricity of today’s economy, Newmark’s annual BenchMarks DC event was a lightning storm of information for the commercial real estate sector. At the November 9th invitation-only conference held at the National Portrait Gallery in Washington DC, Greg Leisch, Newmark’s Senior Managing Director of Market Research, presented a summary of key developments in the region’s economy and commercial real estate market to a large audience of senior decision makers. With deep market research to undergird its conclusions, the presentation quantifies what is happening now and the trends for the future that this data suggests.
John (Chip) Akridge III, Founder and Chairman of AKRIDGE, received Newmark’s 2017 Lifetime Achievement Award and Maryland Governor Larry Hogan was the featured guest at BenchMarks DC. During his conversation with Sandy Paul, Newmark’s Senior Managing Director of National Research, Governor Hogan noted that while he does not follow the real estate market as closely as he did when he worked in the industry, developers should follow the money - where the state is investing tax dollars. This would include the nine-billion-dollar lane expansion along I-270, the Beltway and the Baltimore-Washington Parkway, as well as the Purple Line light-rail system.
Leisch’s presentation from BenchMarks DC can be accessed here. Major findings include:
- MegaTrend #1: Economy Expands
The regional economy continues to expand, even as 2017 marks the eighth consecutive year of recovery and economists have predicted a deceleration in growth.
- MegaTrend #2: Influx of Foreign Capital Continues
Investment capital is growing more cautious on a national level, but there is a continued focus on gateway cities for investment, and Washington has remained a target.
- MegaTrend #3: Sharing Economy Shapes Market
The sharing economy both benefits and disrupts our marketplace.
- MegaTrend #4: New Administration Has Limited Impact
The Trump Administration’s policies have had a modest effect on Washington area commercial real estate - so far.
- MegaTrend #5: Office Demand is Bifurcated
Commodity Class A office space will remain oversupplied for several more years.
- MegaTrend #6: Net Out-migration of Millennials
More millennials are leaving than moving to DC, and the effects of their departure are rippling through the real estate market.
“With 33,000 multifamily units under construction and 7.7 million square feet of new office space set to deliver over the next two years, landlords and developers may soon find a more competitive market, requiring they find niches to be successful in the period ahead,” said Leisch. “With the right niche, there is plenty of market opportunity.”
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