Real Estate Investment Market Report for Pennsylvania, Virginia, and Washington D.C.: February 2021
Five policies from the Biden administration that could affect the multifamily housing industry
Although the 2020 election felt more like an election week than an election day, ultimately Joe Biden emerged as the new President of the United States. As the smoke has cleared on the election itself, attention has turned to President Biden’s administration. As private equity lenders, we are naturally examining what the new administration will mean for the real estate development market. Specifically, what will the new administration’s policies mean to a housing market that has shown strength despite an economy that has been heavily impacted by the pandemic?
See full articleMarket Activity
Richmond recorded its first negative annual office absorption since 2009. Most of the negative absorption is driven by Altria vacating its office at 6603 W Broad St., which has been available since Q4 2019. Berkshire Hathaway moved into 79,386 square feet in the final quarter of 2020. Overall, 144,845 square feet of office space is still available in the market. Relatedly, office sublease space has not seen a dramatic increase in availability due to the pandemic.
Market Activity
Office leasing activity in the Philadelphia area totaled 1.3 million square feet in 2020, which is 38.5 percent less than the previous three-year average for this market. The decreased activity is driven by tenants’ unwillingness to sign long-term commitments. There were two large leases that made up nearly half of all leasing activity for the year – Jefferson Health (462,000 square feet) and the Army Corps of Engineers (116,000 square feet).
Market Activity
Due to tenants giving back space, downsizing, and terminating their leases, Washington, D.C. is up by nearly 3 million square feet in vacant space year-over-year. This is magnified by the Federal Government and law firms, the largest sectors in the market, contracting and consolidating spaces to minimize their footprints. It’s important to remember that this market continues to face influxes of new space in addition to the lack of new demand. Additionally, nearly 550,000 square feet of new space will hit the market in the next 12 months, amplifying the imbalance between supply and demand.
