NNN Lease Market News
WASHINGTON, D.C.—Hotel markets are largely affected by both macro and micro economic factors. However, the Washington, D.C. hotel market is somewhat unique because it includes the nation’s capital, which lends itself to many benefits. Most importantly, this hotel market is more resistant to economic recession than other U.S. metropolitan markets. Its international status contributes significantly to both leisure and group demand. Washington, D.C. is home to the federal government, and the private sector is closely aligned with the business of the federal government, which is an economic anchor to the lease market. As a result, the hotel market enjoys a consistent base of demand.
Economy
The Washington metropolitan area is the fourth largest in the U.S. with a US$454 billion gross regional product. Its economy ranked fifth globally for gross domestic product per capita in 2008, which led all major U.S. metropolitan markets (World Knowledge Competitive Index). Office Space: The metro’s office lease market realized modest positive absorption (630,000 square feet in 2009 as compared to 3.4 million in 2008), as government, health care, and contractors associated with the federal government leased office space. Although the overall vacancy increased 240 basis points in 2009, it remains lower than most large metro areas due to the stabilizing influence of the federal government. During 2009, vacancies rose; consequently, rents declined 6.9 percent. Construction levels have declined, but they remain elevated at this point in the cycle—particularly in the District. Despite weak conditions, the metro area remains one of the top performing markets in the nation, according to Delta Associates.
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