Washington office market shrinks in first quarter

Another report highlights a weak first quarter for the Washington region’s commercial real estate market, with net absorption at a negative 1.7 million square feet, compared to a positive 1.1 million square feet in the first quarter of 2011, according to Delta Associates.

Delta’s report comes a week after one from Jones Lang LaSalle Inc. estimated the region lost nearly 1.4 million square feet of space in the first quarter.

The Delta Associates report also says sublease activity decreased by 128,000 square feet and the overall vacancy rate rose to 12.5 percent from 12.0 percent one year ago, though the vacancy rate remains one of the lowest in the nation.

Delta Associates expects weak local conditions to continue through the 2012 election.

“We expect the share of government leasing to remain limited during 2012, as Congress scrutinizes any large lease deals worth more than $2.6 million and agencies are forced to do more with less,” it said in a report. “Leasing by the private sector should gradually start to rise during 2012.”

Delta Associates notes asking rents are starting to climb, but concessions by landlords remain high.

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